Making common interest communities work: The next step

Urban Lawyer

Volumn 37, Issue 3, 2005, Pages 359-369

  French, Susan F ^a  

^a UNIVERSITY OF CALIFORNIA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

COMMUNITY DEVELOPMENT; LOCAL GOVERNMENT; PLANNING LEGISLATION;

EID: 27744449792     PISSN: 00420905     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (37)

1. Restatement (Third) of Property: Servitudes §1.8 (2000) defines a common interest community as: a real-estate development or neighborhood in which individually owned lots or units are burdened by a servitude that imposes an obligation that cannot be avoided by nonuse or withdrawal (1) to pay for the use of, or contribute to the maintenance of, property held or enjoyed in common by the individual owners, or (2) to pay dues or assessments to an association that provides services or facilities to the common property or to the individually owned property, or that enforces other servitudes burdening the property in the development or neighborhood.
2. In 2004, according to Community Associations Institute (CAI) estimates, 51.8 million people lived in 20.8 million housing units located in 260,000 association-governed communities in the United States. Of these, 55% to 60% were in planned developments, 35% to 40% in condominiums, and 5% to 7% in cooperatives. By contrast, there were only 10,000 such communities housing 2.1 million people in 1970, and nearly all of those were built after 1960. Comty. Ass'ns Inst., Data on U.S. Community Associations, http://www.caionline.org/about/facts.cfm (last visited June 27, 2005).
3. Data for California from 2002 show 36,000 common interest communities with nearly 3 million homes representing one-fourth of the state's housing stock. Sixty percent of new residential construction in California in the 1990s took place in common interest communities. Tracy M. Gordon, Planned Developments in California: Private Communities and Public Life (2004), available at http://www.ppic.org/content/pubs/ R_304TGR.pdf (last visited May 11, 2005).
4. To put these figures in context, U.S. Census data for 2000 show the total number of housing units in the United States as 115,904,641, and the population as of April 3, 2005 as 295,798,044. U.S. Census, available at http://www.census/gov/prod/2002pubs/c2kprof00-us.pdf (last visited May 11, 2005).
5. Additional factors that may also contribute to the appeal of common interest communities include the level of control over land use, design, and behavior within the community that can be granted by the covenants, conditions, and restrictions (CC&Rs) that burden the land in the community, and in higher-end communities, the ability to isolate the homeowners from the problems of the larger community. In her contribution to this symposium, Paula Franzese details some of the criticisms leveled against common interest communities and the socially undesirable consequences that may flow from them. See Paula Franzese, Privatization and Its Discontents: Common-Interest Communities and the Rise of Government for "the Nice," 37 Urb. Law 335 (2005).
6. Tracy Gordon's recent study of California planned developments suggests that the reality is not as bad - at least not yet - as the critics would have us believe, but adds that, in the longer term, we may find that planned developments (which do not include stand-alone condominiums) do contribute to increased racial segregation and a reduction in participation in traditional civic life. Gordon, supra note 2, at 49-50.
7. See Restatement (Third) of Property: Servitudes § 6, introductory cmt. (2000).
8. One problem that remains is that associations are run by an elected board of members who are not paid for their services, which leads to shirking and free-riding on the willingness of others to serve. Self-interest in the form of maintaining property values or quality of life, however, usually prompts enough members to volunteer their services to keep associations running. In larger communities, management companies are often hired to relieve the board of day-to-day operational responsibilities.
9. See U.S. Advisory Comm'n on Intergovernmental Relations, Residential Commmunity Associations: Private Governments in the Intergovernmental System? (1989), available at http://www.library.unt.edu/gpo/acir/Reports/ policy/a-112.pdf (last visited June 27, 2005).
10. Id.
11. The scope of the association's obligation to provide services, which is determined by the CC&Rs, is not limited to management and maintenance of common property. Depending on the market and the demands or preferences of the local government with permitting authority over the project, the association can be required to provide a wide range of services, which might include things such as security patrols, child care facilities, and recreational and educational programs.
12. The services are not really free, of course. They are paid for out of general city revenues, but they are not charged directly to the homeowners benefiting from the services.
13. Some older neighborhoods, particularly those with large houses, established street trees, and a full set of services may provide better value than newer communities.
14. See Franzese, supra note 3.
15. Restatement (Third) of Property: Servitudes § 6.16.
16. Id. §§ 6.4, 6.5, 6.6.
17. Rancho Bernardo, California, for example, is a master-planned community of 7,000 acres with a mix of commercial, industrial, and residential uses and about 45,000 inhabitants. Although part of the City of San Diego, it is governed by its CC&Rs that provide for a community council, a planning board, and a recreation council, which represent the community at city functions. For more information, visit the Rancho Bernardo Chamber of Commerce's website at http:// www.ranchobernardochamber.com (last visited May 11, 2005).
18. Restatement (Third) of Property: Servitudes § 6.9 cmt. c.
19. See id. § 6.9, reporter's note.
20. Id. Ibid
21. Id. §§ 6.7, 3.1.
22. Id. §§ 8.1, 8.3.
23. See Levandusky v. One Fifth Ave. Apt. Corp., 553 N.E.2d 1317 (N.Y. 1990) (leading case on applying the business judgment rule to common interest communities);
24. see also Restatement (Third) of Property: Servitudes § 6.13 cmt. b (discussing the business judgment rule).
25. See generally Unif. Condo. Act (1977).
26. The Nat'l Conference of Comm'rs on Unif. State Laws (NCCUSL), Common Interest Ownership, at http://www.nccusl.org/Update/ CommitteeSearchResults.aspx?committee=244 (last visited June 28, 2005);
27. see also NCCUSL, Draft Amendments to Uniform Common Interest Ownership Act (Feb. 24, 2005), at http://www.law.upenn.edu/bll/ulc/ucioa/ 2005MarPartsland2.htm (last visited June 28, 2005). Link to other works by the Common Interest Ownership committee can be linked to from the committee's NCCUSL page at http://www.nccusl.org/Update/ CommitteeSearchResults.aspx?committee=244 (last visited June 28, 2005).
28. Restatement (Third) of Property: Servitudes § 6 (2000).
29. Id. § 6.13.
30. Protection of associations against abusive members is also important. The provisions placing the burden of proof on the member and requiring a showing of injury, combined with the "loser pays" provisions of most governing documents, provide some protection, but still leave the association vulnerable to the collateral damage inflicted by court proceedings.
31. Restatement (Third) of Property: Servitudes § 6.4.
32. One benefit that might flow from confronting and interpreting the wide variety of rules now found in association governing documents could be the development of a uniform set of operating bylaws for associations. The states of New South Wales and Queensland, Australia, provide by statute a set of model bylaws for common interest communities (called strata schemes in New South Wales), which apply until amended. See Peter Haler, Australia Field Study - March 2001, at http:// www.lease-advice.org/ausmain.htm (last visited June 28, 2005). While not forcing communities into a straighjacket, the default rules tend to produce more uniformity than a system that places responsibility on the developer to come up with an initial set of governing rules.
33. In Montgomery County, Maryland, a County Commission on Common Interest Communities provides dispute resolution services. If mediation is unsuccessful, the dispute may go to a hearing at which the dispute will be resolved and damages, costs, and attorney's fees may be awarded. Judicial review is available for decisions that do not comply with the law, are not supported by substantial evidence, or are arbitrary or capricious. Of the forty to sixty-four cases filed on average in recent years, an average of only three per year are appealed to the courts. Cal. Law Revision Comm'n, Tentative Recommendation, State Assistance to Common Interest Developments, available at http://www.clrc.ca.gov (last visited May 11, 2005).
34. California currently mandates, by statute, the use of alternative dispute resolution without providing the dispute resolution services. Cal. Civ. Code §§ 1354 (West 2005).
35. See Cal. Law Revision Comm'n, supra note 28.
36. See NCCUSL, supra note 22.
37. See Cal. Law Revision Comm'n, supra note 28.