COLUMN: Barbara Holland

Q. We live in an association where the first builder quit the project after phase two and filed for bankruptcy. A new builder took over and finished phase two and has sold all but one of 135 homes.

The new builder is trying to gain financing for a third phase of 96 homes through the Rural Renting Housing Guaranteed Loan Program. He is to build 48 homes and rent them for 15 years. The program is geared toward low-income occupants. There is some debate as to when and if the homes could later be sold.

Are we homeowners in any way protected by our covenants, which state the declarant's intent is to sell all homes but reserves the right to rent them until sold? Our concerns are the management of so many rental units in an association. We already have 30 homes rented by individuals. Also, this will give the developer 96 votes.

Is there anything we can do?

A. This issue pertains to the development rights that a declarant has under state laws. The concept of developmental rights is a simple one -- developers need some control over their investment, otherwise they would shy away from projects.

The problem for law makers is creating a proper balance between protecting home buyers and developers, especially when circumstances lead the developer to change the rules of the game.

In reviewing NRS 116, it appears the developer may have the right to finish phase three using the rental/purchase program you mentioned. The section of the covenants you cite states the declarant's intent was to sell the homes, but that it reserved the right to rent them.

There are a couple of resolutions possible. Could phase three be separated from the community and withdrawn from the association? If not, you could seek an agreement whereby the voting structure would be different while the units were under the developer's control until each unit was sold.

Questions for Barbara Holland may be sent to Association Q. & A., P.O. Box 7440, Las Vegas, NV 89125. Her fax number is 385-3759.

Barbara Holland, Certified Property Manager, is president and co-owner of H&L Realty and Management Co. She is a member of the Institute of Real Estate Management and is the author of two books on the subject. Holland is a past president of the Greater Las Vegas Association of Realtors.

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