Tuesday, February 12, 2013

Dispute over Yard Sign Destroys Fairfax HOA

A Virginia Homeowner's Assocation appears to have gone bankrupt due to litigation over its attempts to enforce its rules against a four-inch violation by a couple's Obama yard sign during the 2008 election.  After four years, skyrocketing assessments, and hundreds of thousands of dollars in legal fees, the bankrupt HOA is considering selling off the central common area.  From the Washington Post, Feud over sign could force Fairfax's Olde Belhaven to sell square.

Such HOA disputes are as suburban as cul-de-sacs and two-car garages, but few metastasize into legal battles that spend years in the courts, break legal ground and bankrupt the HOA.

Most damaging of all, though, was a move probably unprecedented in area neighborhood feuds: The common area that is the literal and metaphoric heart of Olde Belhaven was put up for sale last year to settle its debts. It appeared that “the square,” as some called the neighborhood, would no longer have a square.

“It destroyed our community,” Maria Farran said.

The litigation ranged from a challenge to the HOA's power to fine the owners, and a retaliation claim.  It made some new law:

In 2010, a county judge sided with the Farrans on the fining issue. The case set a Virginia precedent that HOAs cannot claim powers, such as fining, that are not specifically laid out in their covenants. 

 You can read the whole article for a great description of the legal issues and the story.  As HOAs trend toward more extensive sets of rules, and as not everyone buys in, you can probably finds examples of similar (if not quite so expensive) conflicts in communities around the country.  And one thing that's common to both public and private regulation: when individual property rights clash with collective restrictions regarding people's homes, passions run high--even (especially?) when the stakes are as low as four inches on a political yard sign.

Thanks to Helen Jenkins for the pointer.

Matt Festa

February 12, 2013 in Common Interest Communities, Constitutional Law, First Amendment, Homeowners Associations, Politics, Property Rights, State Government, Subdivision Regulations, Suburbs | Permalink | Comments (0) | TrackBack (0)

Monday, May 7, 2012

New Article on Green CC&Rs

Robert J. Aalberts and Darren A. Prum have posted an interesting new article on the use of CC&Rs to promote sustainable development.  Their article, Our Own Private Sustainable Community, features case studies of specific communities in Oregon and Maine that have written aggressive green building and other sustainability-focused provisions into their CC&Rs.  The last major section of the article describes some of the benefits and potential challenges of such an approach.  Here's the abstract:

Residential and commercial property owners have sought for centuries to develop and enrich their physical environment through private land use planning. In more recent decades, residential owners residing in community interest communities (CICs) have been particularly active in crafting an evolving array of deed restrictions contained in Covenants, Conditions and Restrictions (CC&Rs). CC&Rs, which are generally created by the CIC developer, are mutually binding and enforceable against all those who live or conduct business in self-selected residential subdivisions or commercial developments. Importantly, CC&Rs are monitored sometimes quite forcefully, under the watchful eye of an empowered planned development association.

Although the typical post World War II CC&Rs were often mundane, governing setbacks, parking and vehicular restrictions, architectural requirements, non-household animals, sight and smell nuisances, trash containment and landscaping and plants, more recent CC&Rs are venturing into new and generally uncharted waters by promoting environmental sustainability. More specifically, a growing number of CICs are establishing green building goals, such as those certified by the United States Green Building Council’s (USGBC) which maintains its now familiar Leadership in Energy and Environmental Design or LEED rating system. Initial attempts at promoting environmental sustainability ratings, even while opposed by some, have placed an emphasis on improved water usage and environmentally compatible landscaping, but are now expanding in ever greater directions, including architectural design requirements. This article evaluates some of the potential problems green developments likely will face in this emerging approach to private regulation through an extensive discussion of our two case studies.

The use of CC&Rs as a tool for promoting sustainable development is likely to continue to evolve in the coming years, so this article makes for a timely and thought-provoking read.

Troy Rule

May 7, 2012 in Common Interest Communities, Environmentalism, Green Building, Servitudes, Smart Growth, Sustainability | Permalink | Comments (1) | TrackBack (0)

Friday, April 6, 2012

Wiseman on Castles, Tenements, and the Private Governance Divide

Hannah J. Wiseman (Florida State), another of our fabulous former guest-bloggers, has posted Castles, Tenements, and the Private Governance Divide.  The abstract:

The revered status of American home ownership has deep and seemingly impenetrable roots. In our modern mythology/reality, the castles that shelter and nurture our pursuit of the good life are under siege. A narrative common to both popular media accounts and a burgeoning property literature warns that private homeowners’ associations hold dominion over millions of Americans, dictating what they may do with their property and foreclosing when they cannot pay association fees or fines In response to this threat, legislatures, courts, and academics are fighting to stave off these intrusions by constraining servitudes. In focusing on the harms to property owners, these critics have unjustifiably omitted a large and growing segment of the population: renters. Nearly every American rents living space at one stage of life, and rentals are expanding as the real estate market continues on its uncertain trajectory. Tenants have no less lofty life goals than do homeowners, yet they, too, are governed by private rules for property use that severely constrain their freedom and allow termination of their property interest through eviction or sale. The rules in rental communities, moreover, serve fundamentally the same purpose as those set by homeowners association controlling neighbors’ uses to increase property value. The key difference between the two types of communities, beyond simple physical layout, lies in tradition: a woman’s home is her castle, but her apartment is her rickety tenement. Even this distinction is vanishing, however, as private communities with now-familiar, “intrusive” rules continue their decades-old proliferation, objections notwithstanding. If, then, private governance of property is fundamentally problematic, it is no less problematic for renters. But if, as seems more likely, we are generally willing to accept certain private rules in communities as a reasonable response to the interests of both owners and tenants, critics of private governance must explain why traditional notions of property should prevail over a modern approach to property consumers’ demands.

Very timely.  With the future of American housing patterns in flux, it's really important to discuss the intersection of private-public as well as renting-owning.  Hannah has written on related ideas before, and I look forward to reading this piece too.

Matt Festa

April 6, 2012 in Common Interest Communities, Housing, Landlord-Tenant, Property, Scholarship | Permalink | Comments (0) | TrackBack (0)

Thursday, May 5, 2011

Boyack on Keeping HOAs Above Water in Foreclosure Storms

Andrea Boyack (GW) has posted Community Collateral Damage: A Question of Priorities. In it, she deals with the very timely issue of lien priority for statutory condominium and homeowner association (HOA) dues. Many such common interest communities are facing high homeowner foreclosure rates and an inability to maintain services without a viable collection mechanism. The Maryland state legislature has now passed a lien priority bill of the kind discussed in the article. The Governor should be signing it into law any day now. Here's the abstract:

Today’s soaring mortgage default rate and the uncertainty and delay associated with mortgage foreclosure proceedings threatens to cause financial tragedies of the commons in condominiums and homeowner associations across the country. Assessment defaults in privately governed communities result in an inequitable allocation of upkeep costs, and current law provides no way to prevent this spillover effect. But the collateral damages caused by delayed foreclosures and insufficient recoveries can be minimized by gradually increasing the priority position of the association lien.

In a majority of states, association liens are completely subordinate to the first mortgage lien. At foreclosure of the mortgage lien, the junior priority assessment lien will be extinguished whether or not there are sufficient proceeds to reimburse for community charges. Assessment delinquencies grow over time, so the longer it takes to complete foreclosure, the greater the costs to the neighborhood. Although several states have adopted a limited lien priority for up to six months’ worth of unpaid assessments, foreclosures today take far longer than six months, and the amount ultimately owed to a community can be significant and far exceed that cap. Federal housing policy impacts the resolution of the issue because the FHA, Fannie Mae and Freddie Mac only permit qualifying mortgages to be subject to a six-month assessment lien priority. The decelerating pace of foreclosure further exacerbates the already unjustifiable financial impact borne by non-defaulting neighbors. The lien priority status quo fails to adequately protect communities in today’s context of widespread and delayed foreclosures and under-collateralized mortgage loans. Decreasing the first mortgage lien’s priority during a foreclosure delay would mitigate the harm.

Lien priority statutory changes can protect association finances in the future, and such provisions may be applied retroactively as well. In other contexts, states have held that changes to a lien priority regime can apply to existing associations and existing mortgages without unconstitutionally impairing contract or property rights. This is particularly true where the association’s lien is deemed to be created as of the date the organizational documents for the community were recorded (prior in time to any unit’s mortgage). Bank lobbyists have historically opposed any enhanced assessment lien priority, but supporting property upkeep and making assessments more predictable and collectible would actually benefit lenders by shoring up the value of their collateral. Better certainty with respect to homeowner payment obligations will also enable more responsible credit underwriting and contribute to economic recovery. Shoring up assessment lien priority not only ensures a fair allocation of community costs, but also helps to contain the current housing market decline.

Jim K.

May 5, 2011 in Common Interest Communities, Financial Crisis, Mortgage Crisis, Mortgages, Real Estate Transactions | Permalink | Comments (0) | TrackBack (0)

Monday, April 11, 2011

Hybrid Communities with Public-Private Rules

This weekend at the American Planning Association's National Planning Conference I suggested in my presentation during the "Land, Covenants, and Law" panel (organized and led by Professor David L. Callies) that municipalities increasingly apply a combination of private covenants and zoning to form unique communities, which I call "hybrid communities."  Hybrid communities typically arise when a municipal development authority decides to redevelop an area--often a brownfield or a blighted section of a city--into a mixed-use residential/commercial neighborhood.  To form this hybrid community, the municipality initiates a lengthy and open public process to create a master plan, which the municipality's city council or similar legislative body eventually approves or rejects .  If the council approves the plan, the developer of the community forms a private homeowners' association and records a set of covenants, conditions, and restrictions that also govern the community. 

Most traditional "private" common interest communities (those with homeowners' associations and recorded covenants, conditions, and restrictions) operate under both zoning codes and servitudes, but there is not usually an explicit interaction between the public zoning rules and the private servitudes.  Rather, those in the private community know (hopefully) that they must follow the zoning rules and also the servitudes, which are typically more detailed and restrictive than the zoning rules.  The zoning rules typically require minimum setbacks and provide basic use restrictions, while the servitudes and associated design guidelines and rules add more use restrictions and include detailed aesthetic and design restrictions. 

In a hybrid community, unlike a traditional private community, there is often more of an explicit relationship between the public zoning and the private servitudes, and the zoning itself often contains detailed design requirements.  In the Lowry Redevelopment in Denver, for example, the redevelopment authority has aimed to create a green community through its public zoning work, and the private Lowry Community Master Association Rules and Regulations similarly reflect these "green" goals.  They provide, for example, that "rocks used in landscaping should be material native to Colorado" and that "planting concepts, plant varieties, and irrigation techniques which minimize water consumption (xeriscape) are encouraged," referring residents to Denver Water Department publications for more information. 

Other hybrid communities use a similar mix of private servitudes and detailed public zoning to create green, mixed-use living spaces, and these provide interesting case studies in what I argue is a relatively new public-private land use model.  For examples beyond Lowry, see Playa Vista in Los Angeles, Symphony Park in Las Vegas, and the Mueller redevelopment in Austin, among others.  It appears that all of these communities operate under both a public master plan and private servitudes.  In some cases, the municipality might even serve as the "backstop" enforcement authority when a homeowners' association in the redevelopment fails to enforce one of the private rules; according to one conversation at the National Planning Conference this weekend, Missouri City, Texas follows this type of enforcement scheme in its Planned Development Districts.  Professor Marc B. Mihaly describes these types of public-private developments--and the process of forming them--in his excellent article Living in the Past:  The Kelo Court and Public-Private Economic Redevelopment

Will public zoning and private land use controls eventually merge?  Likely not.  As attorney Jo Anne Stubblefield points out, cities have been slow to develop "traditional neighborhood design" districts that allow for mixed-use communities.  But the growth of hybrid communities suggests that new, creative relationships between the public and private land use realms will continue to expand. These communities are not perfect, of course; they may displace low-income populations despite typically requiring a certain percentage of new affordable housing.  And all communities with detailed design and aesthetic restrictions, whether public or private or hybrid, must ensure that those moving in are notified of the restrictions prior to purchase.  These communities do, however, provide interesting food for thought--and possibly good case studies for the classroom, too.  

Hannah Wiseman

April 11, 2011 in Aesthetic Regulation, Common Interest Communities, Community Design, Servitudes | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 1, 2011

Three Dimensional Master Plan?

Helsinki Underground 
Hello all and thanks for the welcome, Matt.

For years cities, such as Montreal (the RESO), have been developing space underground.  In what CNN reports as a "first," Helsinki has developed an Underground Master Plan.  The plan designates a diverse group of uses for the underground area, ranging from industrial to recreation uses, such as an existing swimming pool (which, fortunately, doubles as a bunker when necessary).  According to the report, Helsinki sits on bedrock strong enough to support the existing streetscape even when space is carved out for the lower levels.  The CNN report claims a host of environmental benefits from the action, many of which are disputed in the comments.

As cities such as Helsinki start to think about the relationship between the street level and the subsurface (as inhabitable space), the next step may be to craft a three dimensional master plan.  And who knows, this may be Seattle's chance to recommission its underground, although "[w]hen your dreams tire, they go underground and out of kindness that's where they stay." (Margaret Fuller).

Jon Rosenbloom

March 1, 2011 in Architecture, California, Common Interest Communities, Community Design, Community Economic Development, Comparative Land Use, Comprehensive Plans, Density, Development, Downtown, Economic Development, History, Homeowners Associations, Housing, Local Government, New Urbanism, Planning, Politics, Property, Property Rights, Property Theory, Real Estate Transactions, Redevelopment, Smart Growth, Sprawl, State Government, Subdivision Regulations, Urbanism, Zoning | Permalink | Comments (0) | TrackBack (0)

Monday, January 31, 2011

Judith Wegner, Annexation, and the Boehl Lectures

Thanks, Matt, for the wonderfully kind introduction.  I am excited to be guest-posting on the Land Use Prof blog.  Despite the flood of emails (and steady stream of students and professors wanting an associate dean's immediate attention), I read the Land Use Prof blog every day, and find the posts both helpful and thought-provoking.  It is a real honor to be a part of the great work that y'all do!

For my first post, I want to share some insights from Judith Welch Wegner's Boehl Distinguished Lecture in Land Use Policy at the University of Louisville this past Thursday, January 27, and to highlight the value of a land-use lecture series generally.  Professor Wegner is well known in legal education for her past roles as a 10-year Dean at the University of North Carolina-Chapel Hill, President of AALS, member of the Order of the Coif Executive Committee, and Senior Scholar at the Carnegie Foundation for the Advancement of Teaching.  In the land use field, she is known as the Burton Craige Professor of Law at the University of North Carolina-Chapel Hill and for her especially influential article "Moving Toward the Bargaining Table: Contract Zoning, Development Agreements, and the Theoretical Foundations of Government Land Use Deals," 65 N.C. L. Rev. 957 (1987).  I predict that she will play a major role in reviving interest in annexation as a land use legal and planning issue.

Judith gave her Boehl Distinguished Lecture in Land Use Policy on "Annexation, Urban Boundaries, and Land Use Dilemmas: Learning from the Past and Preparing for the Future."  Her basic concern is that annexation is often disconnected from land-use planning, which results in problems of sprawl, uncoordinated growth, inadequate infrastructure, and fiscal stress.  Drawing on census data and examples from North Carolina's famous "annexation wars," Judith pointed out that there are no quick-fixes, no one-size-fits-all model solutions (a point that I particularly like and have addressed most recently in "Fourth-Generation Environmental Law: Integrationist and Multimodal").  Local culture matters.  Some of the worst conflicts do not arise from expanding large cities but from small municipalities in rural or at least non-urban areas, making it difficutl to get a handle on what exactly "smart growth" might mean in these low-density communities.  Water and wastewater dynamics play significant roles, as do municipalities' desires to improve their fiscal health by increasing their property-tax base through annexations.  When municipal annexation is difficult, though, alternatives to annexation take its place, including the proliferation of special districts, the rise of county authority over land use, and the dominance of gated communities.  All in all, according to Judith, annexation conflicts demonstrate why local governance structure is a "wicked problem" but one that is critically important to land use practices and sustainable development.  I am looking forward to the publications that will result from her research.  Annexation issues have received too little attention in the land use legal literature.

But her lecture implicitly makes another point -- the value of a land-use lecture series.  More on that tomorrow . . . .  [OK, maybe not as tantalizing as who shot J.R., but hopefully something of a hook to bring you back.]  Again, thanks for letting me come aboard!

Tony Arnold

January 31, 2011 in Agriculture, Common Interest Communities, Comprehensive Plans, Density, Development, Exurbs, Lectures, Local Government, Planning, Politics, Smart Growth, Sprawl, State Government, Suburbs | Permalink | Comments (1) | TrackBack (0)

Thursday, January 27, 2011

Schutz on Grassland Governance and Common-Interest Communities

Anthony B. Schutz (Nebraska) has posted Grassland Governance and Common-Interest Communities, published in Sustainability Vol. 2, pp. 2320-2348, 2010.  The abstract:

In the United States, today’s ranches are engaging in small-scale nature-based endeavors to diversify their income base. But the geographic boundary of the land they own creates a relatively small area within which to operate, and fragmented ownership diminishes the ability of any single landowner to produce nature-based income. Collective action among nearby landowners can produce a set of resources from which all members of the group can profit. Such action can enhance the economic, social, and environmental sustainability of grasslands and the populations that use them. This article shows that common-interest communities can be used to provide and allocate wildlife and other resources on ranchlands, enabling individual landowners to generate more income from selling nature-based experiences to customers. Common-interest communities are familiar in urban settings but they have not yet been used in this setting. Thus, the article proposes a new approach to ranchland management based upon a familiar set of largely private legal arrangements. More broadly, the article illustrates the relevance of private law and private property to sustainable development by explaining how property owners can use private law to engage in environmentally beneficial and economically profitable enterprises on the vast privately owned landscape of the U.S. Great Plains.

Matt Festa

January 27, 2011 in Agriculture, Common Interest Communities, Environmentalism, Property, Scholarship, Sustainability | Permalink | Comments (0) | TrackBack (0)