Why Developers Keep Control of the HOA During Construction — and What It Means for Homeowners

Last Updated: November 9, 2025By HomeOwner

In many Texas communities, developers maintain control of the homeowners association (HOA) long after the first homes are sold. While this can feel one-sided to residents eager for a say in their neighborhood, it is a common and legally recognized phase of community development.This article explains why developers hold that control, what the law allows, and what homeowners should watch for as their community approaches turnover.

Understanding Developer Control

Under Texas Property Code §209.0041, a developer (also called a declarant) may retain control of the HOA until certain thresholds are met. Typically, the declarant appoints and removes board members, manages budgets, and oversees all enforcement actions.

This arrangement generally remains in place until at least 75% of the lots are sold or as otherwise stated in the recorded Declaration or Bylaws. After that point, control must legally transition to a homeowner-elected board.

Developer control is intended to help ensure that construction, infrastructure, and community standards are completed in accordance with the original development plan. It can also create tension when homeowners feel that decisions are being made without transparency or accountability.

Five Primary Reasons Developers Retain Control

The reasons behind continued developer authority generally fall into five categories. Each has a legitimate business rationale but can also carry risks if abused.

1. Protecting the Investment

Developers invest substantial capital in land acquisition, engineering, infrastructure, and marketing. By controlling the HOA, they seek to safeguard property values and ensure that early homeowner decisions do not jeopardize ongoing sales.

2. Enforcing Construction and Design Standards

Uniform design and construction practices help preserve the community’s visual appeal and compliance with municipal requirements. Developer control allows consistent enforcement of architectural guidelines, fencing, landscaping, exterior colors, and similar standards until build-out is complete.

3. Overseeing Infrastructure and Legal Obligations

Until final acceptance by the city or county, the developer is responsible for completing drainage systems, roadways, utilities, parks, and other common infrastructure. Maintaining HOA control supports coordination with contractors, engineers, and regulators so that these items meet applicable standards before turnover.

4. Maintaining Marketing and Sales Consistency

An unfinished development depends heavily on first impressions. By controlling signage, landscaping, amenities, and community events, developers work to protect the project’s public image and present a consistent experience for potential buyers.

5. Managing Risk and Limiting Liability

Developers often retain liability for unsold lots, construction defects, and common-area maintenance during the build-out period. Remaining in control of the HOA allows them to manage budgets, contracts, insurance coverage, and risk exposure until these obligations are substantially complete.

When Control Must Transfer to Homeowners

Texas Property Code §209.0041(h) requires the developer to call a meeting for the election of a homeowner-controlled board no later than:

When 75% of the lots have been conveyed to owners other than the declarant, or
At a smaller percentage if required by the Declaration, or
Earlier, if the developer chooses to relinquish control voluntarily.

Failure to initiate this transition in a timely manner can raise legal and ethical concerns, particularly if homeowners are being assessed dues without adequate oversight or representation.

Potential Risks During the Control Period

While developer control is legal, it can lead to problems if transparency and good governance practices are lacking. Common homeowner complaints include:

Decisions made without adequate notice or open meetings.
Selective enforcement of deed restrictions or architectural standards.
Lack of financial reporting, audits, or clear budget information.
Delays in maintaining or completing common areas and amenities.

Homeowners can help minimize risk by keeping written records, attending any available meetings, and requesting copies of the Management Certificate and financials where permitted under Texas Property Code §209.005.

Preparing for Transition

As a community approaches the 75% sales threshold or other specified trigger in its governing documents, residents may want to begin preparing for turnover. Practical steps can include:

Reviewing the bylaws to understand the turnover procedure and meeting requirements.
Forming a transition committee to communicate with the developer or management company.
Requesting confirmation of any remaining developer obligations, such as completion of drainage, streets, or park facilities.
Verifying how records, contracts, and association funds will be transferred to the new board.

A transparent, well-documented transition process can reduce disputes and protect both homeowners and developers.

Final Thoughts

Developer control is a normal part of community development in Texas, not a loophole or a failure in governance. However, homeowners should understand how long this period is expected to last, what rights they have during it, and what legal standards apply to the transition.

Clear information helps homeowners monitor the process, ask informed questions, and support a fair hand-off to a homeowner-elected board when the time comes.

If you want to better understand your HOA’s transition timeline, review your community’s recorded Declaration and Management Certificate in the county property records and consider consulting with a Texas attorney who focuses on HOA and property law.