Developers as Property Managers

[Account Closed]

Is it customary for the developer to also be the property manager? 

Recently closed on a commercial property (part of a larger shopping center development) and the developer of the property is also the property manager. Based on the CCR's, it appears that they manage the entire shopping center and then bill each parcel owner their separate piece of CAM charges and property tax. Also based on the CCR's, it seems like we don't have the option of electing to choose another property manager or manage the property ourselves.

I was just wondering it is this common in these large developments.

[Joel Owens]

You should have had your commercial retail attorney clarify and answer ANY CCC and R questions before due diligence ending on the property.

Developers will often do these big projects and sell off some of the STNL pieces. Sometimes in CCR's they will have tenant lease language that pushes lots of costs onto that particular parcel owner ( example maintaining a detention pond) and if your tenant has some caps then the landlord can be eating that cost ( CAM leakage ) which can reduce expected NOI. Also have to look at language for any special assessments and when they will be levied. The larger share property owner is typically the controlling declarant. Is this part of a condo association? If not but CCR's did you get estoppel sign off from controlling declarant? What rights does your parcel have for monument signage?

No legal advice given