How should our HOA board bill builders for assessments on the lots they own?

By OurHOA · General information · Revised November 2, 2026

How an HOA board bills builders for dues on lots they own: reduced-rate clauses, Texas, Florida and Colorado rules, a lot schedule, a billing letter and collections.

Part of the HOA board handbook: treasurer and money.

Builders owe what the recorded declaration says

A builder that holds title to lots in your community is an owner. Unless the recorded declaration gives it a lower rate, a later start date or a deficit guarantee, it owes the same assessment on every lot as the family that moved in last spring. The board's job is to find the clause that sets the builder's rate, turn it into a written lot-by-lot schedule, bill builders on the same cycle as everyone else, and collect from them under the same policy. This matters most in a community that is still building out. A builder with 40 unsold lots in a 120-lot neighborhood is a third of your revenue. If it pays half rate it should not, or nothing at all, the other owners cover the gap through higher dues. State law and every declaration differ, so treat this as education, not legal advice, and have the association's attorney read the clauses before you change how a builder is billed.

Find the clause that sets the builder's rate

Start with the assessment article of the declaration, then the article on declarant rights, then every supplemental declaration that annexed a later phase. Phases often carry their own terms. Most declarations use one of four patterns: 1. Full rate on every lot, with no special treatment. 2. A reduced percentage, often 25 or 50 percent, on lots that are vacant or unsold, ending at a stated event such as issuance of a certificate of occupancy or the first sale to a homebuyer. 3. An exemption for the declarant while it pays whatever operating deficit the association runs. 4. Assessments that start only when the declarant conveys a lot to someone else. Then check who the clause covers. Many declarations give the discount to the "Declarant" alone. A national builder that bought 30 lots from the original developer is not the declarant just because it builds houses. It gets the declarant's rate only if the declaration extends it to builders by name or definition, or the declarant assigned those rights in a recorded document. Ask the builder for the recorded assignment. If none exists, the builder pays the regular rate. A side letter or purchase contract between the developer and a builder does not bind the association unless the governing documents say it does.

What Texas, Florida and Colorado add

Florida writes the most rules. Section 720.308(1)(a) lets a parcel's share of expenses differ among classes of parcels based on their state of development, so a reduced rate for vacant lots is lawful if the governing documents set it out. Section 720.308(1)(b) excuses the developer from assessments on its parcels only while it controls the association, and only for a period in which the declaration obligates it to pay operating expenses that exceed what other owners and other income cover. A guarantee that is not in the purchase contracts or declaration takes effect only with approval of a majority of the voting interests other than the developer, under 720.308(2)(a), and 720.308(5) sets the accrual formula for the developer's final payment when the guarantee ends. Section 720.3085(2)(a) makes every owner liable for assessments that come due while it owns the parcel, and 720.3085(2)(b) makes a buyer jointly and severally liable with the previous owner for unpaid assessments. A builder's arrears follow the lot to the homebuyer at closing. Colorado's rule is short. C.R.S. 38-33.3-315(1) says the declarant pays all common expenses until the association makes its first common expense assessment. After that, 38-33.3-315(2) assesses common expenses against all units under the allocations in the declaration, with interest on past-due amounts capped at 8 percent a year, and 38-33.3-315(6) makes each owner liable for assessments during its period of ownership. Those subsections cover communities created on or after July 1, 1992. For communities created before then, 38-33.3-117 lists only subsection (7) of section 315 among the sections that reach them, so the declaration carries more weight. Texas Property Code chapter 209 sets no builder rate at all. The declaration controls. The owner protections in chapter 209 still apply to builder-owned lots: under section 209.0064, a builder is not liable for collection agent fees unless the association first sends a certified-mail notice with the amounts owed and at least 45 days to cure. Section 207.003(b)(4) requires every resale certificate to show the total of all unpaid amounts attributable to the lot, so a builder's balance surfaces when it sells a house.

Build a lot-by-lot billing schedule

Do this once, carefully, and the monthly work becomes a lookup. 1. List every lot from each recorded plat in the community, phase by phase. 2. Look up the owner of record for each lot on the county appraisal district or property appraiser site. Builders sometimes hold lots under a land-banking entity or a subsidiary with a different name. 3. Tag each lot: declarant-owned, builder-owned or homeowner. 4. For each builder or declarant lot, record the rate category, the clause that sets it (article and section) and the event that ends it. 5. Ask each builder for a monthly report of closings and certificates of occupancy. Cross-check it against county deed records every quarter, because a lot that sold in March and stayed on the builder rate until October is the most common leak. 6. Prorate the first period for any lot whose rate changes mid-cycle, using the method your declaration states or, if it is silent, a daily proration the board adopts and applies to everyone. Keep the schedule in one spreadsheet the treasurer updates and the board reviews at each meeting. A row might read: Lot 14, Block 3, owner Example Homes LLC, 25 percent rate under Article 8.4 until certificate of occupancy, CO issued June 12, full rate from July 1.

Wording the board can copy

A motion to adopt the schedule: "I move that the board adopt the builder and declarant lot assessment schedule dated [date], based on Article [__] of the Declaration and the supplemental declarations for Phases [__], and direct the treasurer to bill each lot at the rate shown beginning with the [month] assessment." A paragraph for the billing letter: "Our records show [Builder name] holds title to the [number] lots listed on the attached schedule. Under Article [__], Section [__] of the Declaration, these lots are assessed at [rate] until [event], after which the full assessment of $[amount] per [period] applies. Payment is due on [date] each [period]. Please send monthly reports of closings and certificates of occupancy to [email] so we can update the rate on each lot. If you believe any lot qualifies for a different rate, send the recorded document that supports it by [date]." Send the letter to the builder's division office and copy its registered agent, which you can find on the secretary of state's business search.

A sample year for a community still building out

Ninety days before the budget meeting: the treasurer reconciles the lot schedule against deed records and asks each builder for its projected closings for the coming year. Budget meeting: the board adopts the budget using a realistic count of full-rate and reduced-rate lots, then adopts the updated schedule by motion. January: invoices go to every owner, builders included, on the same date. Each month: the builder's closing report comes in, the treasurer moves sold lots to full rate and prorates the change. Thirty days after any missed payment: the builder gets the same statement and late charge any owner would get. Each quarter: a second director checks a sample of builder lots against county records. At turnover: the owner-controlled board or its CPA reviews whether the declarant and builders paid the right amount on every lot. Our guide on what a new board should do after developer turnover covers that review.

Collecting from a builder that falls behind

Use the collection policy you use for everyone. A builder budgets for association dues and should get no softer treatment than a retired couple on a fixed income. Our timeline for collecting past-due dues walks through the notices and steps in order. Do not wait for closings to collect. Some builders let balances run and plan to pay them from the sale proceeds. That strategy shifts the problem. In Florida, the homebuyer becomes jointly liable for the arrears under 720.3085(2)(b), and you end up arguing over an estoppel figure with a title company on a deadline. In Texas, the balance lands on a resale certificate and the closing becomes the collection. A builder holding many lots can run up a large balance in a few months. Bring any builder account more than 60 days past due to the full board, and talk to the association's attorney before liening a block of lots, because a builder with active construction loans will negotiate quickly and the board should know its position first.

Mistakes boards make

Billing from the builder's own numbers. Use your schedule and county records, not the builder's list of what it thinks it owes. Letting a reduced rate outlive its trigger. If the discount ends at a certificate of occupancy or a closing and nobody tracks either, the builder pays the discount for months on finished, occupied homes. Giving a builder the declarant's deal without an assignment. If no recorded document extends declarant rights to the builder, it pays the regular rate. Missing lots annexed later. A supplemental declaration can add 30 lots to the community without anyone updating the billing roster. Waiving late charges as goodwill. Waiving them for a builder and not for owners invites an argument that the board enforces its policy unevenly. If the board waives, it votes on the record and applies the same standard to everyone.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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