Why is the budget subject to the approval of the Class B Member?

The Act provides that the declaration of covenants for a planned community may provide for a period of declarant control of the association, during which the declarant or persons designated by the declarant may appoint and remove the officers and members of the executive board.  Typically a declarant will maintain control of an association until the community is “built out” and the association is no longer subsidized by the declarant.

Section 6.3 of the CC&Rs and the Association Bylaws provides that the Association has Class A members, consisting of Unit owners, and during a “Class B Control Period” a Class B member, which will be the Declarant.  The “Class B Control Period” continues until the first to occur of (a) the issuance of certificates of occupancy for 75% of the maximum total number of Units in the Community have been issued, (b) December 31, 2025, or (c) the Class B member so determines.  The hope is that at the time of the expiration of the Class B Control Period the Association income will equal or exceed the Association expenses, making unnecessary a Declarant subsidy.

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