Two proposed manufactured home estates in Maitland's west are now in the hands of the Land and Environment Court.
Maitland City Council will oppose the plans in court, which include 282 lots in Windella and 209 lots at nearby Lochinvar.
Windella Action Group spokesperson Warren Baldacchino said it was "incomprehensible how developers can bypass the council".
"The council hasn't said yes or no to either development yet [in a council meeting]," Mr Baldacchino said.
"Because it's taken more than 60 days for the council to make a decision, both developers have decided it's a deemed refusal without a decision by council.
"That's obviously a loophole they can use, but it's ludicrous."
The deemed refusal laws give an option for developers concerned about bureaucratic red tape and planning politics.
Adjoining property owners can attend planned court hearings on the development sites.
"I'll be one of them," Mr Baldacchino said, adding he would share residents' concerns about the plans.
The development application for Denton Close, Windella, is listed for a "conciliation conference" on September 16 at the site.
A council statement of facts and contentions, submitted to the court, said the plan should be refused.
"The proposed location is unsuitable," the statement said, adding it was "isolated from public transport and other services" and close to the end of a Maitland Airport runway.
The airport is a crucial issue because the 2021 state planning policy for housing states that a manufactured home estate isn't allowed in an "airport/industry buffer area".
The 14-hectare development site is about 200 metres east of airport land.
The council statement said it received 209 objections to the plan during community consultation.
A submission from the Civil Aviation Safety Authority (CASA) "did not raise objections".
The developer Mavid Group didn't comment for this story, but previously said its proposal was "carefully designed".
The plan it submitted to the council stated that "the proposal is generally compliant" with relevant laws and plans.
Meanwhile, the plan at 34 Wyndella Road, Lochinvar, is listed for a "conciliation conference" on October 25 on the site.
The council will argue to the court that the plan is "prohibited" and not allowed under the 2021 state planning policy for housing.
This was because dwellings would be constructed on site.
A state regulation says manufactured homes must be "constructed and assembled" outside the estate and transported to the site.
However, the project applicant - Commercial 7 - said in plans submitted to the council that it would seek an exemption from this regulation.
It added that the state housing policy encouraged manufactured home estates to be developed "close to urban areas with adequate access to infrastructure".
"The proposal will provide a diverse form of housing that will help ease the housing crisis," it said.
The council document said 85 submissions were received during community consultation for the plan, with all raising "objections or concerns".
This included that the plan was a "high density development" in a rural area that would affect "character and amenity" and conflict with the land's rural zonings.
