Developer Turnover · Lifecycle Stages I and II · Board Education

Declarant Control and the Transition That Never Happened

Stage I is where the trap gets set. It is not where it snaps. The two communities in this article — one still in developer control after two decades, one that discovered fifteen years late that its transition had never actually occurred — show the same failure from opposite ends of the arc.

Educational notice. This information is educational in nature and should not be construed as legal advice. Consult qualified association counsel regarding legal interpretation specific to your jurisdiction.

CIC-SC Working Paper No. 2026-01 places the first two stages of the community association lifecycle back to back for a reason. Stage I — Declarant — is the period in which the association exists legally but exists in the developer's filing cabinet: the board is appointed, the Declaration is written, the budget assumptions are set, the reserve schedule is drawn, and the first vendor contracts are signed, all by people who will not be governed by any of it. Stage II — Transition — is the statutory event in which control passes to owner-elected directors, and the operational priority is a single word: audit.

The paper's claim about Stage II is unusually strong. The first three years of owner control are the highest-leverage years in a community's entire life, and they are the years most quietly squandered — because it is the only period in which every contract can be questioned without the questioner having signed it. Three years later, those are the board's contracts, and challenging them means challenging itself. This article takes both stages through two documented communities, read as governance records rather than as legal conclusions about any party.

Part One — What Stage I Actually Looks Like From the Outside

The governing question during declarant control is not whether the developer is behaving well. It is a structural question: when does this end, and what is the number that decides?

Most states answer with an outside limit that operates regardless of what the Declaration provides, and each limit is expressed as a percentage of a denominator the Declaration supplies:

The same structural feature appears in all four. The trigger is a fraction. The transition date is set by the denominator, and the denominator lives in a document the developer wrote.

Southern Highlands, Las Vegas: When the Denominator Moves

Southern Highlands is a master-planned community in Las Vegas. What follows is drawn from two published Nevada Supreme Court opinions and from reporting by the Nevada Current. Where a proposition rests on reporting rather than a court's holding, it is identified as reported. No court has decided the central factual dispute described below, and nothing here should be read as a finding.

The structure, as described in the Nevada Supreme Court's June 18, 2025 opinion in Kosor v. Southern Highlands Community Association, 141 Nev. Adv. Op. 34: the master association is the Southern Highlands Community Association; the declarant is Southern Highlands Development Corporation; the governing documents establish a declarant control period running until 75 percent of the approved residential units are sold, during which the declarant appoints three of five board seats and homeowners elect two. The court's earlier 2020 opinion in Kosor v. Olympia Companies describes a community of nearly 8,000 residences and identifies Olympia Companies as the developer, "turned manager and operator."

The Nevada Current reported in September 2021 that the original declaration allowed 9,000 units, and that a 2005 amendment approved by the master association's three developer-appointed members raised the figure to 10,400. The same reporting recorded that the association's management company shares a location and telephone number with the association, and that the developer, the association, and the management company did not respond to requests for comment. In January 2025 the Current reported that the developer remained in control, appointing the majority of board members who in turn vote to pay his company to manage the association. That is the last public reporting located as of this writing.

One homeowner contended that the 75 percent line had been crossed and that the declarant nonetheless continued to appoint three of five directors. The association and the declarant, per the 2025 opinion, contested both his reading of the governing documents and his math — contending that he had improperly included commercial, multi-family, and other ineligible units in the count, and that subtracting them left the control period in place. Both sides agreed on the rule; they disagreed on the count.

That disagreement was never resolved. The 2025 opinion records that a trial date was set and that the homeowner — by then elected to one of the two homeowner-controlled seats — moved to dismiss his own action voluntarily, citing litigation expense and potential board conflicts. The association and the declarant agreed, but asked that dismissal be with prejudice and sought fees and costs; the district court granted both. The Nevada Supreme Court affirmed the later denial of relief from that judgment, holding that the statutory pre-suit alternative dispute resolution requirement in NRS 38.310 is a claim-processing rule rather than a jurisdictional limit — one that "must be enforced if timely invoked but that can be forfeited or waived" — and observing that jurisdictional treatment would "undo the result of years spent litigating a dispute to final conclusion and give the losing party a do-over." The merits of the unit count were never reached by any court.

Two documented points matter for boards and owners well beyond Nevada.

The first is the denominator. NRS 116.2122 provides that in a planned community, where the right is originally reserved in the declaration, a declarant may amend the declaration to add unspecified real estate, "but the amount of real estate added to the planned community pursuant to this section may not exceed 10 percent of the real estate described" in the referenced provision, and "the declarant may not in any event increase the number of units in the planned community beyond the number stated in the original declaration." Whether that provision reaches a given amendment in a given community is a legal question on that community's own documents. The governance point stands independently: the number a turnover percentage is measured against is not a background fact. It is the single most consequential figure in a Stage I community, and boards and owners are well served by establishing it in writing — original declaration count, current approved count, and every amendment in between, side by side — before anyone needs it in an argument.

The second is what owners may say while they are waiting. In Kosor v. Olympia Companies, decided December 31, 2020, the Nevada Supreme Court addressed an anti-SLAPP special motion under NRS 41.660 brought against a homeowner sued for defamation over statements made at open association meetings, in an election pamphlet and letter, on a campaign website, and in a neighborhood social-platform post. Applying NRS 41.637(4), the court concluded that all of the complained-of statements concerned matters of public interest, adopting California authority describing an association's governance as concerning a "democratic subsociety" and "an inherently political question of vital importance to each individual and to the community as a whole." It held all four settings to be public forums, and described the association — again quoting California precedent — as a quasi-government entity "paralleling in almost every case the powers, duties, and responsibilities of a municipal government." It reversed and remanded for the district court to consider the good-faith element.

One limit is worth stating, because the case is easy to over-read. The Nevada court expressly declined to hold that every publicly accessible website or every neighborhood post is a public forum, adopting instead a case-by-case test asking whether the particular post or site bears the hallmarks of one. The holding is about speech on community governance, not about the internet generally.

The governance reading, which does not depend on Nevada law: a board — developer-controlled or not — that answers owner criticism with a defamation suit is not managing a reputation. It is building a record. The durable answer to a critic with numbers is better numbers.

The Stage I Diagnosis

Applying the framework's own two questions — what stage was the community actually in, and what stage did the actors think it was in — produces an unusual result here. By every marker, the community was in Stage I: an appointed majority, a developer-affiliated manager, documents the developer wrote and later amended. Nobody disputed that. The dispute was whether Stage I had ended.

So what went wrong was not a board misreading its stage. It was that everyone outside the developer treated a design problem as a governance problem. Elections, regulatory complaints, records requests, speeches at open meetings, campaign literature — these are the tools of a self-governing community persuading its own board. They are Stage III tools, and aimed at an appointed majority they cannot reach the controls. The instruments that could are different in kind: the amendment provision, the statute, and the denominator. That is the Stage I lesson the framework predicts. The trap is set in the documents. It does not snap in a boardroom. It snaps in a definition.

Part Two — What the Transition Record Should Contain

Stage II is a set of tasks, not a date. The most itemized statutory statement of those tasks in American community association law is Fla. Stat. § 718.301(4), which requires a Florida condominium developer, at the moment owners elect a majority, to relinquish control and deliver at the developer's expense:

• Governing instruments: the recorded declaration and all amendments, certified articles, bylaws, minute books and other association records, and any house rules;
• Resignations of the officers and directors required to resign;
• Financial records and source documents from incorporation forward, audited by an independent CPA — with the accountant examining cash disbursements and paid invoices to determine whether expenditures were for association purposes, and examining billings and receipts to determine that the developer was charged and paid the proper assessments;
• Assets: association funds or control of them, and all tangible personal property with an inventory;
• Construction record: plans and specifications with an affidavit that they are the actual plans used; the contractor, subcontractor, and supplier list; certificates of occupancy; other applicable permits; and all still-effective written warranties;
• Operating record: insurance policies, the owner roster, common-element leases, employment and service contracts, and all other contracts to which the association is a party;
• A turnover inspection report under the seal of an architect, engineer, or credentialed reserve analyst, consisting of a structural integrity reserve study addressing roof, structure, fireproofing and fire protection, plumbing, electrical, waterproofing, and related components.

Boards outside Florida are not bound by that list, and Florida boards should read it in the statute rather than in a summary. Used as a governance checklist, though, it does something no general exhortation to "audit the transition" can do: it converts a vague obligation into line items, each of which is either in the file or is not. For the parallel Florida homeowners' association framework, see developer turnover under § 720.307; for the budget side of the first owner-controlled year, see developer transition budgets in year one.

Circle C Ranch, Austin: A Transition That Only Looked Like It Had Happened

Circle C Ranch is a large master-planned community in southwest Austin. The account below is drawn from contemporaneous Austin Chronicle reporting between 2002 and 2004 and from pleadings filed in Travis County district court. Statements drawn from pleadings are allegations of a party, and are identified as such. No characterization of any individual beyond the published record is intended.

By early 2003 the association governed roughly 2,700 homes on an annual budget of about $1 million, and had been run since its formation in 1988 by a three-member board whose composition had scarcely changed. The Chronicle reported in February 2003 that no Circle C board member had ever faced serious election opposition, and that the board's officers included a former business partner of the developer who had served as a director since inception.

The Chronicle also reported that in 2002 the association paid nearly half a million dollars to a landscape company owned by a former director, who had purchased the company from the developer in 2001, and that the same individual also owned a management company paid by the association and was separately compensated for inspection and review services. A 2000 audit, as reported, listed two directors as employees of entities formerly owned by the developer that had billed the association more than $500,000.

The board's answer, in the published words of its own secretary-treasurer, was that the landscape company was paid "a fraction of what other companies would charge," that the board had gone through a formal bidding process once and learned that, and that newer residents "can be educated over time" — that "homeowners knew and trusted the actions of the board."

Residents who sought records reported a different reply. The Chronicle quoted a resident and attorney characterizing the board's stock response as: you're the only person who's ever asked for this; why are you asking; this is a beautiful place, and you should be happy to live here. Calls and emails, per residents, went unanswered more often than not. In October 2002 an owner put up an anonymous community website so questions could be raised somewhere, and residents discovered they were not alone. One, identified only by first name, put it this way: all this time I thought I was the only one with questions.

Then the structural fact. The Declaration, as quoted in the petition later filed, provided for two classes of membership — Class A homeowners and Class B, the developer — with Class B holding three votes for every one Class A vote and converting no later than December 31, 2002. The first contested election in the association's history was scheduled for March 26, 2003: eighty-five days after the developer's weighted vote expired on paper. The community was, in the framework's terms, in Transition — in 2003, fifteen years after its formation, having never performed the audit that Transition exists to perform.

What happened next is documented in the pleadings and in contemporaneous reporting. A resident architect ran for the seat held by the developer's former partner, on a platform of expanding the board, adopting a conflict-of-interest policy, and rethinking the fees and bookkeeping. The petition alleged that the nominating committee set a February 10 cutoff noticed by email only to roughly 1,300 of more than 2,700 homeowners; that the candidate's name was submitted and acknowledged but kept off the ballot; that the board used the association's own email list and funds to campaign; that on the Sunday before the Wednesday election the board circulated "election rules" capping the votes of members paying the full assessment, under a Declaration that assigned votes by appraised value; and that owners who asked to inspect the voting list were told no such list had been prepared.

Suit was filed the afternoon of the election. A temporary restraining order stopped it, with hundreds of owners already assembled to vote. On May 9, 2003, per a contemporaneous television report republished at the time, a Travis County judge granted a temporary injunction prohibiting the election and barring interference with the plaintiff's inspection and copying of the association's books and records. Mediation followed. Per the Chronicle’s follow-up reporting, in early February 2004 the incumbent lost his seat, and by late March the fourteen-month contest had ended with the board expanded from three seats to seven.

Not everyone read the insurgents as heroes, and the record is better for it. Neighbors wrote publicly to the plaintiff that the lawsuit was costing the association money, that it should have been filed weeks earlier rather than inconveniencing hundreds of owners who showed up expecting to vote, and that they did not appreciate being caught in the cross-fire. Those are fair objections from people who arranged an evening to vote and got a lawsuit instead.

The Stage II Diagnosis

What stage was Circle C actually in? Transition — and unusually, the record supplies a date. The developer's weighted vote expired December 31, 2002. A former developer partner held a board seat. The landscape vendor was the developer's former company, sold to a former director. On every axis the framework offers, this was a Stage II community in 2003, fifteen years old, that had never done the Stage II work.

What stage did the board think it was in? Stage V. The secretary-treasurer said so in his own published words: a mature community with a founding generation, a history, a culture, and newcomers who could be educated over time. "The homeowners knew and trusted the actions of the board" is a maturity sentence — it describes an institution running on inherited trust, and it may even have been accurate for the first decade. That is precisely what made it dangerous. The sentence stayed true in the board's mind long after the community it described had been replaced by a different one, and the board heard the sound of the owners finally arriving and diagnosed it as a failure of their education.

How a Transition Goes Wrong Quietly

Neither community above failed dramatically. Both illustrate the same four-move sequence, which is the ordinary way Stage II is lost:

What a Board Does With This

Find and record the conversion date. Read the Declaration for the developer's voting class, the control period, and the turnover trigger, and put the date — or the trigger and the denominator — in the minutes. If it has already passed, record that too. A board that cannot state when its own transition occurred has not had one. See the Declaration in practice and where board authority comes from.

Inventory the inherited contracts and bid the largest. Not because the price is presumptively wrong — it may well be right. But a price that has never been tested cannot be defended, and the defense is what the board owes the membership. Bid it, keep the incumbent if the incumbent wins, and the contract becomes the board's own.

Treat the first records request as a fire drill. "You're the only one who's ever asked" is a diagnosis of the association, not of the asker. The list of who may vote, and how many votes each holds, is the one document a board should be able to produce on demand — because the day it cannot is the day the courthouse door opens.

Plan to be audited by the newcomers, not to educate them. Every Stage II community receives a wave of owners who do not know the history, and the mistake is hearing that as ignorance. It is the transition finally showing up. Give them the documents, seat one on the finance committee, and let the culture survive contact with people who did not build it. It will, if it deserves to.

Reading the Two Cases Together

Southern Highlands and Circle C sit at opposite ends of one problem. In the first, the structure was built so that owner tools could not reach the controls, and the fight was over whether Stage I had ended. In the second, Stage I had ended on paper years earlier and nobody noticed, and the fight was over whether Stage II would ever begin. In both, the decisive fact sat in the recorded documents the entire time — a denominator in one, a conversion date in the other — and in both, the community spent years and substantial money discovering what a careful reading of its own Declaration would have surfaced in an afternoon. That is the argument of Working Paper 2026-01 in miniature, with the diagnostic that follows from it set out in the stage self-assessment and further Council research in the Research Center.

When to Consult Counsel

Boards and owner groups typically bring the following to counsel rather than resolving them internally:

• Whether the declarant control period has ended under the governing documents and the applicable statute, and what the operative unit or lot count is;
• Whether an amendment to the declaration that changed the permitted unit count was validly adopted;
• What records an owner is entitled to inspect during declarant control, and what the response procedure requires;
• Whether a turnover was legally complete, and what remedies remain if it was not;
• Whether an election procedure or a voting-rights limitation conforms to the Declaration and to current law — before the meeting, not after it.

Many states also require covenant disputes to go through a pre-suit alternative dispute resolution process. Where that process exists, it is generally the least expensive room in which a control dispute can be aired, and it is most useful before anyone has filed rather than after years of litigation.

Tags: declarant control · developer turnover · transition audit · Southern Highlands · Circle C Ranch · § 209.00591(c) · § 718.301 · § 720.307 · NRS 116.31032 · NRS 116.2122 · Working Paper 2026-01 · records access · inherited contracts

Disclaimer. This article is published by the Common Interest Community Standards Council for educational and informational purposes only. It is not legal advice and does not establish an attorney-client relationship. Statutory text is drawn from Tex. Prop. Code § 209.00591, Fla. Stat. §§ 718.301 and 720.307, and NRS 116.31032 and 116.2122 as published by the respective legislatures. Descriptions of Kosor v. Olympia Companies, LLC, No. 75669 (Nev. Dec. 31, 2020) (Pickering, C.J.) and Kosor v. Southern Highlands Community Association, 141 Nev. Adv. Op. 34, No. 87942 (Nev. June 18, 2025) (Pickering, J.) are drawn from the slip opinions published by the Nevada Supreme Court, are descriptive of those decisions only, and are not predictive of how any other dispute would resolve. The 2020 decision was reversed and remanded on the good-faith element and does not hold that websites or neighborhood posts are public forums generally. Assertions attributed to news reporting, to party pleadings, or to individuals are identified as such and are not findings of fact. No court has adjudicated the unit-count dispute described in the Southern Highlands discussion; the 2025 decision turned on a claim-processing question and did not reach it. CIC-SC provides educational resources, governance standards, and practical advisory support. CICSC does not provide legal advice, accounting advice, tax advice, engineering advice, insurance advice, or reserve study services. Board members and associations should consult qualified professionals for matters requiring professional judgment or legal interpretation.

Published by the Common Interest Community Standards Council (CICSC). Companion to CIC-SC Working Paper No. 2026-01, The Five Stages of American Community Association. Part of the CICSC Member Education Library. © 2026 CICSC. Educational use permitted with attribution.