Chicago Law Review
Copyright (c) 1994 University of Chicago
University of Chicago Law Review
61 U. Chi. L. Rev. 1375
LENGTH: 36022 words
MEDIATING INSTITUTIONS: BEYOND THE PUBLIC/PRIVATE DISTINCTION: Courts,
Covenants, and Communities
Clayton P. Gillette*
* Perre Bowen Professor of Law and Caddell and Conwell Research Professor,
University of Virginia School of Law. I owe thanks to Lillian BeVier, Mary Anne
Case, Ronald Cass, Jane Cohen, Doug Leslie, Saul Levmore, Dan Ortiz, Glen
Robinson, Lawrence Sager, Elizabeth Scott, Robert Scott, Rip Verkerke, and
participants in faculty workshops at Boston University School of Law and the
University of Virginia School of Law. For purposes of full disclosure, the
reader may want to note that the author is a member of the Board of Directors
of the Bellair Homeowners Association in Albemarle County, Virginia.
... In Part II, I then inquire into whether those objectives are more likely
to be satisfied if we allow associations to administer regulations essentially
free of judicial intervention, or if intervention is necessary in the same way
that we allow courts to review the decisions of localities. ... I will return
to the distributional issue both in discussing the role of covenants and, in
the last part of this Article, in analyzing when the external effects of
covenants may be so significant as to warrant judicial intervention. ... Under
these conditions, the need for judicial intervention to safeguard the
unrepresented (or underrepresented) is reduced. ... Judicial intervention,
however, is not always beneficial. ... Judicial intervention may be feasible
in such cases, just as in disputes about municipal regulatory authority. ...
As in those cases, however, judicial intervention is not an unqualified
benefit. ... On the other hand, we would take more comfort in relying on
associations to construe and administer covenants free from judicial
intervention if we were confident that association decisions systematically
represented the consensus of members' views rather than a failed political
process within the association. ... Hence, the need for external constraints
in the form of judicial intervention is reduced. ... Hence, judicial
intervention to interpret the covenant may be appropriate or necessary,
notwithstanding the relationship. ... Nor is it easy to find a surrogate for
them within the association, at least not in a case like Clem where the
purchaser of the home had not previously been an association member. ...
The dramatic rise of residential associations
n1 gives reason to believe that both the blessing and the curse of
decentralization can be realized more fully within these communities than
through more traditional local governments. Both consequences follow from the
fact that associations allow individuals with common preferences to gravitate
to a common location where they can pursue their conception of the good life.
The blessing of this possibility is illustrated by Chief Justice Burger's
dissent in Schad v Borough of Mount Ephraim.
n2 The majority in that case invalidated, on First Amendment grounds, a zoning
ordinance that prohibited live entertainment and that was directed specifically
at nude dancing. But to the Chief Justice, First Amendment interests had no
clear priority over the desires of residents within a small community who
wished to be
"masters of their own environment."
n3 Hence, the borough's exercise of its zoning power
"to provide a setting of tranquility" was nothing more than a legiti
[*1376] mate attempt
"to preserve the basic character of the community."
n4 Refusal to permit residents
"to shape their community so that it embodies their conception of the decent
" would, in Burger's view, destroy the diversity of local communities and force
all localities into
"a mold cast by this Court."
n5 Perhaps it is imputing too much to Burger's sympathetic view of small-town
life, but his appeals to mastery and to diversity seem to incorporate many of
the more academic justifications of decentralization: the creation of
opportunities for self-government, the opportunity to generate a mutually
respectful heterogeneity within the larger society,
n6 and--perhaps most relevant for current purposes--the creation of an
institution that the individual can identify more closely with than an
impersonal and distant centralized state.
The curse that confronts this idyllic view of small communities is evident in
those critiques of localism that view the pursuit of a common vision of the
good life as inherently exclusionary. Moreover, they contend, the bases of
exclusion tend to reflect selfishness, wealth, or ethnicity rather than a
unique preference for particular local public goods or an idiosyncratic, but
n7 While they do not necessarily ignore the possible virtues of decentralization,
these critiques of localism further imply that achievement of those objectives
requires satisfaction of highly idealized assumptions about wealth, mobility,
and the external effects of local decisions that seem inconsistent with
contemporary urban experience.
n8 Since not all individuals can live where they prefer, decentralization for the
select few will encourage them to seek isolation from the fiscal and physical
burdens of urban life instead of working for the improvement of the larger
community. Where communitarians imply that local
[*1377] ism can embody commitments to mutual respect among different groups, the
critiques respond with skepticism that the required levels of toleration and
altruism can be realized.
Thus, we suffer, in the words of one commentator, from the
"instincts of inclusion and exclusion."
n10 Because both the blessing of a participatory, communal system in which
individuals can pursue their goals and the curse of irresponsible isolation
from needy neighbors are entrenched in the way we think of our society, we face
substantial ambivalence about attempts to carve out enclaves that depart from
majoritarian norms. Our ambivalence toward communities is apparent in an
inconsistent and often disconnected series of constitutional law decisions that
sometimes allow, and sometimes prohibit, majority interference with the
practices and preferences of discrete ways of life.
In this Article, I argue that nonconstitutional doctrines also reflect our
ambivalence about decentralized communities. My interests here lie in judicial
review of the efforts of residential associations, primarily homeowners
associations, to define their members' lifestyles in ways akin to the use of
ordinances by traditional local governments. Local governments assume
identities by selecting a particular basket of goods and services at particular
tax prices, and then regulating the activity of those who are attracted by the
goods and services offered. Yet the size of contemporary cities, combined with
legal doctrines and political obstacles that prevent localities from
differentiating among residents for purposes of service provision, drives some
individuals to seek more decentralized institutions to satisfy the search for a
specialized service package.
The very fact that residential associations can fulfill the goals that we
identify with traditional local governments makes us more skeptical of
conferring on them the latitude that we grant to other voluntary associations,
such as the Boy Scouts, the Rotary Club, the country club, or a law firm
n12 There seems an initial incongruity about applying different standards to
review the same kind of directive (for example, aesthetic regulation of
architectural styles for residences), depending on whether the regulator is a
private association or a municipality.
But our desire to obtain the benefits of community--participation,
connectedness to others--seems to demand greater tolerance of associations that
purport to serve a narrow, self-defined constituency. The strength of the claim
for tolerance may depend on the extent to which we believe that those who
reside in small communities have significant interactions with outsiders or are
isolated from nonmembers. The communitarian critique of the atomistic premises
of liberalism relies in large part on the theory that individuals form their
preferences and their identities through social interactions.
n13 Residential associations that are occupied by homogeneous populations
(typically by those best off within the society) and whose members eschew the
[*1379] company of outsiders may be considered the archetypal representatives of
self-interested liberalism. But if residents of associations enjoy interactions
with others at work, in social contexts, or in politics (to name some
alternatives), then the fact that they seek a more private preserve for
interactions with a more homogeneous population does not necessarily translate
into a narrowly self-interested lifestyle.
Residential associations, small enough to disaggregate desirable from
undesirable services and uniform enough to create enclaves of social security,
may satisfy both these objectives. Indeed, I take it that part of the project
for communitarians in law is to nurture distinct communities while finding
common ground among seemingly exclusive groups, to
"help undermine the power of suburban consciousness by organizing interlocal
negotiations to highlight these contradictory instincts."
n15 If that is the case, then the combination of homogeneous residential
associations and interaction with diverse groups in other contexts may actually
serve the communitarian goal (although I suspect that the residential
association would constitute too thin of a community to satisfy many
Notwithstanding my implicit assumption that associations attract similarly
situated individuals, migration to a common locality does not mean arrival at a
frictionless society. Members of homeowners associations may conflict with each
other or, as a group, with outsiders. Residents may find that their concept of
the good life is less consistent with that of their neighbors than they had
originally believed, or that it falls so far from majoritarian norms as to
provoke the active disapproval of nonresidents. Thus, disputes are likely to
arise as residents of an association implement their vision of their community
or its relationship to nonresidents. It is through resolution of these disputes
that the legal system reveals the value we ultimately place on autonomous
associations. The more that we value the development of communities that have
selected either a discrete package of goods and services or that have opted for
a more privatized form of regulation than that offered by traditional
municipalities, the more the law should defer to associations as
[*1380] they seek to regulate their members. On the other hand, if we consider either
the objectives or the decision-making processes of these institutions to be
suspect, we presumably would limit our deference.
I want to introduce one additional puzzle before examining the legal responses
to these issues. One of the salient characteristics of community life is the
capacity to exclude along lines that are selected by the community itself.
n16 The explicit bases of exclusion with which I am concerned focus less on the
discredited efforts of associations to create islands of ethnic harmony than on
common ventures to attain the assumed pleasures of suburban life, free from
satellite dishes, trailer homes, tall fences, or commercial vehicles. These
criteria for exclusion do not necessarily carry the weighty social consequences
of racial or religious discrimination (unless we believe they are merely
surrogates for prohibited classifications). They are instead characteristic of
n17 of economically or socially exclusive organizations. Yet the negative
reactions to homeowners associations appear to be predicated on these forms of
At the same time, both liberals and communitarians seem to be tolerant of
highly distinct subcultures. For the liberal who values individual choice, as
for the communitarian who purports not to select among visions of the good, it
seems odd to afford substantial protection to communities furthest from the
n18 while affording little protection to those only marginally different from the
majority. There seems something anomalous about arguing for protection of
groups such as orthodox Jews
n19 or the Amish
n20 when their cultures conflict with majoritarian norms while opposing similar
license for those who seek residence in artificially pastoral settings free
from technologies that they deem unsightly or who live in such fear of crime
that they literally wall themselves off from the outside world.
n21 I am not
[*1381] certain what underlies this greater affection for the distant than for the
n22 Since many of the protected groups claim religious or ethnic affiliations,
some, but not all, of the explanation may lie in a general concern about
discrimination based on religion or ethnicity. I do not point out this puzzle
because my argument about associations demands that we accommodate minor
deviations from majoritarian norms as readily as we do more divergent
subcultures. Instead, I want only to point out that there is nothing unique or
obviously implausible to claims that associations should enjoy a level of
autonomy based only on the desire of their members to achieve their common view
of the good life.
Part I of this Article explains some basic features of association structure
and decision making. I also offer some explanations of why individuals may seek
refuge in rule making by associations rather than exclusively by traditional
governments. That discussion suggests various functions that associations
perform and the role of covenants in fulfilling those functions. The variety
of functions indicates that there is no monolithic explanation for associations
or the covenants that define them. The role of covenants may vary from
association to association and from individual to individual within the same
association. The common theme that pervades all these institutions is that
associations (largely through the drafting and enforcement of covenants)
provide some value that traditional governments
[*1382] cannot, whether it be a good or service, an opportunity for private
rulemaking, or assurances of stability.
In Part II, I then inquire into whether those objectives are more likely to be
satisfied if we allow associations to administer regulations essentially free
of judicial intervention, or if intervention is necessary in the same way that
we allow courts to review the decisions of localities. Finally, in Part III, I
consider the extent to which judicial intervention is necessary to restrict
association activities that affect nonresidents. This last inquiry returns us
to the point with which I began, the relationship between communities and the
larger society, and offers some thoughts about the circumstances under which we
should protect community idiosyncracies, notwithstanding their adverse effects
I. The Promise of Residential Associations
A. The Structure of Residential Associations
Residential associations range from condominium, cooperative, or homeowners
associations with fewer than ten residents to city-sized developments with tens
of thousands of residents.
n23 While cooperative and condominium associations share most of the features of
homeowners associations that I discuss,
n24 these associations are most like local governments in that they encompass
significant geographical areas rather than a single building or series of
n25 Like municipalities, associations frequently hold property in common for their
resident members, and either provide or contract out for the provision of
services that benefit members. Associations supply goods and services ranging
from the most common municipal functions, such as security patrols and street
maintenance, to more exotic but still common municipal services, such as
maintaining golf courses or community centers. Like municipalities,
associations have the authority to
[*1383] impose exactions on residents (annual dues or assessments for the maintenance
of association property) and to enforce that power by imposing liens on the
property of nonpayors.
This is not to suggest that all associations offer the same services.
n27 Indeed, it is partly through the selection of public goods and services that
associations foster individual identities. Just as municipalities may
distinguish themselves by offering superior schools, spacious parks, or
proximity to workplaces, so may associations offer singular services such as
security gateways, a golf course, or a
" Caribbean Island' motif."
n28 But also like municipalities, which may pass ordinances affecting zoning,
condominium conversion, or other aspects of residents' welfare, associations
assume distinct identities through the regulation of residents. It is through
the enforcement of these regulations that legal disputes about the scope of
association autonomy are most likely to arise.
Regulation by an association typically takes the form of conditions,
covenants, and restrictions (which I will refer to collectively as
"covenants") that constitute servitudes imposed on the lots within the association's
boundaries. The covenants are initially drafted by the developer of the area
before individual units are sold to the public.
n29 In addition, it is routine for voting control over amendment or enforcement of
covenants to remain with the developer until a certain number or percentage of
units within the development are sold.
n30 At that point, the developer transfers control to the association, or more
specifically, to its board of directors. The developer will also create the
governance structure of the association by drafting bylaws or articles of
incorporation that allocate voting rights within the association and that
typically delegate interpretive and enforcement authority over covenants to the
[*1384] Regulatory covenants may be quite lengthy and detailed. They typically
purport to regulate such issues as architectural design,
n33 use of structures,
n34 use of common property,
n35 and subdivision of lots.
n36 They may restrict the activities of residents far more than would be expected
as a matter of common law or by local ordinance.
n37 Although they no longer control the ethnicity of residents,
n38 covenants may regulate at a microlevel, so that they address such issues as
the kinds of pets
[*1385] that can be kept within the association, numbers of guests that can be
accommodated, the erection of a satellite dish,
n39 the size of a mailbox,
n40 exterior colors,
n41 and types of vehicles maintained on the premises.
n42 In short, it is largely through the explication and enforcement of these
covenants that the association signals its vision of the good life to current
and prospective homeowners.
Even for those within the association, covenants, which are intended to bind
current owners and their successors for decades, necessarily contain
n43 The passage of time can only exacerbate these ambiguities as technologies
develop and social norms change.
n44 The original purposes for restrictions on fencing, perhaps intended to ensure
unimpaired vistas, may have little application to electronically controlled
"invisible" fencing that keeps pets from wandering; limitations on uses to
"singlefamily" residences may have uncertain application in an age when group homes challenge
traditional concepts of what it means to be a
"family." Efforts to resolve these ambiguities have caused both courts and commentators
difficulty in determining how rigorously and by what standard to review the
application of association covenants.
One approach has been to incorporate rules drawn from seemingly analogous
areas. Most commonly, covenants are sub
[*1386] sumed within the law of servitudes, even though covenants governing many
associational concerns will have difficulty satisfying the technical
requirements of servitude law, such as the prerequisite to enforcement that the
"touch and concern" the land.
n45 Incorporating these covenants within traditional servitude law loads the dice
against the party seeking enforcement of the covenant; property law has a long
history of disfavoring restraints on alienation.
n46 The legal doctrine that has evolved from this disfavor insists on strict
construction against limitations on the contested use.
n47 In myriad rulings on association covenants, courts explicitly invoke the rule
of strict construction with reference to little other than historical
Other courts, and several commentators, rely on the contractual nature of
association membership to justify a different approach.
n49 They purport to invoke the intent of the parties,
n50 or the volitional nature of the undertaking,
n51 in spite of evidence that association residents tend to be ignorant of the
covenants by which they are governed.
n52 Hence, much of the debate about the
[*1387] enforcement of covenants simply reflects broader debates about the scope and
meaning of freedom of contract. Landlord-tenant law,
n53 local government law,
n54 and the law of private corporations
n55 have also been impressed into service to explain the scope of association
decision making and the proper scope of judicial review. In addition,
regardless of the specific analogy used, courts frequently examine the
"reasonableness" of the restriction and its application.
n56 Commentators have found this reasonableness test to be more stringent than the
test that courts apply to the regulations imposed by the entities to which
associations are compared.
While these analogies provide some context by which to measure the role and
autonomy of associations, none of them reaches the issue most relevant to
judicial intervention into associations'
[*1388] affairs: the core question of institutional competence. The level of
associations' autonomy to govern the relationships among their members or
between members and nonmembers should depend on the threshold questions of what
roles associations play and the extent to which, left to their own devices,
covenants will fulfill those roles. It is to these threshold questions that I
B. Models of Residential Associations
1. The public goods model.
a) Associations as providers. For those who consider a primary value of local
governments to be their capacity to provide local public goods efficiently, the
ability of residential associations to achieve that same objective underlies
much of their appeal. Local public goods are susceptible to misallocation for
a variety of reasons. Most obviously, a locality's boundaries may not coincide
with the ideal service area for a good or service that the locality provides.
This follows from the fact that local public goods tend to be impure. Over some
range, they exhibit the nonrivalness and nonexcludability characteristics of
public goods. Were that not the case, there would be little reason to rely on
collective provision, rather than market mechanisms, to make the good available
at all. The range over which a good displays these characteristics, however,
may be larger or smaller than the locality as a whole. Because localities
provide an array of goods and services, it is unlikely that any one of them
will fit perfectly within municipal boundaries. Ideal areas for police
services, for instance, may have little to do with the ideal areas for water
service or schools.
This lack of fit may lead a state or its localities to offer a particular
service through a more centralized entity, a fact that explains the
attractiveness of special districts or metropolitan organizations.
n58 But the lack of coincidence between municipal boundaries and ideal service
areas may also compel further decentralization, since local governments may
otherwise be unable either to measure accurately the demand for the service
within the locality or to provide the service to those who value it most
highly. A primary source of this inability is the divergent preferences of
municipal residents. In the absence of highly styl
[*1389] ized assumptions concerning mobility, numbers of localities, and consumer
information, all residents of a locality will not share the same tastes for all
n59 The result may be that residents within the locality have very different views
about what local public goods and services should be provided, and in what
Provision in accordance with the community's median preferences may be
frustrated by the ability of discrete majorities or privileged minorities to
form and impose their own tastes on others who neither desire the good nor can
take advantage of it, but who also cannot effectively lobby against its public
provision or escape payment for it. Escape will be frustrated where the price
of the good is bundled--through taxes--with the price of desired goods. Those
who favor a municipally financed golf course, for instance, may successfully
lobby for its creation, even though (1) the spillover benefits to nonusers are
minimal, (2) nonusers represent a substantial segment of the population, and
(3) those who favor the golf course would be unwilling to incur the entire cost
themselves if they could not impose some of the cost on other residents. If a
measure to construct the golf course passes, those who oppose it and who do not
benefit from it will be unable to avoid subsidizing the project if financing is
procured through property taxes that all residents must pay. As a result,
localities will tend to overspend on goods that are not desired by all
constituents and that are only impurely
"public" throughout the locality.
A discrete group that prefers a good not desired (or more of a good than is
desired) by others within the community, however, will be successful in
obtaining it only if the group can secure the support of the local
decision-making body. Legal doctrine as well as political concerns usually mean
that the group faces an uphill battle. Localities are bound by legal
obligations of equal service
"public purpose" spending
n62 that are imposed to pre
[*1390] vent invidious discrimination within the municipality or to preclude discrete
groups from lobbying successfully for unique benefits.
n63 As one result of these doctrines, even where the effects of public provision
coincide with local boundaries, localities cannot readily respond to
differential demand by residents. Residents within the locality who would
prefer to trade one service for another are unable to do so. For example, a
locality that provides more police services to one neighborhood than another
will likely face claims of unequal service provision and will have difficulty
claiming that it has compensated for the disparity by providing more of a
different service in the area underserved by police. Even a group that desires
unique services and that can overcome these doctrinal difficulties in securing
its agenda will face obstacles because traditional free-riding problems induce
rational residents to eschew participation in the effort to secure desired
services. Those who prefer the service may be difficult to identify or to
monitor, especially where they are spread throughout the locality.
Thus, residents who desire a service not preferred by a majority within the
locality may be better off if they can bind themselves to pay for the service
through private funds. Associations provide just such an opportunity for those
with similar preferences to gravitate to a common area and bind each other to
make payments for the goods that they find most attractive, but that cannot be
easily obtained through political processes. It is important to note, since I
will return to this theme, that those joining the association thereby evince a
desire for private ordering rather than for politics. At the same time,
provision of the service by the association may be socially desirable, since it
reduces the incentives of the group to seek subsidies through the public
treasury for goods and services that the majority would prefer not to provide.
In these circumstances, the further decentralization of provision requires
those who idiosyncratically prefer a different good or more of a good than the
majority to pay something closer to its full cost. Individuals who, for
instance, desire more police services than the average resident of the
municipality may find it easier to coalesce in a section of the municipality
and hire private
[*1391] security forces rather than to lobby for more police services citywide.
n64 The result of all these phenomena is that residential associations hold out
the promise that services can be more directly linked to the tastes of
particular residents. By matching more precisely the supply and demand of
public goods, associations play much the same role that municipalities seek to
accomplish by privatizing local services or by shifting to user fee schemes to
pay for publicly provided services.
Associations may also solve the allocational problems that can arise even if a
local public good has a benefit range consistent with municipal boundaries. A
public good may be subject to congestion if the entire public is able to use
it. Again, the golf course serves as an example. Within a segment of the
locality, the demand for the golf course may be sufficiently small that it
takes on the nonrival features of a public good; once open to the entire
locality, however, congestion and the concomitant need for size restrictions
n66 Providing the good to members of a restrictive
"club" creates a pattern of provision consistent with actual preferences; those who
pay for the golf course will be able to enjoy its full use, not a use limited
and devalued by congestion.
Once more, associations allow those who share preferences to create a system
that restricts access and thereby makes an asset more useful. At the same time,
the binding nature of the association's covenants that obligate members to pay
for the asset overcomes holdout problems and transaction costs that would
likely frustrate efforts to restrict access through a series of explicit
n67 While we might be justifiably concerned with some grounds for restriction, for
the moment I am concerned only with establishing the principle that
restrictions on access by a club are not inherently suspect, and may be
essential to ensure optimal use of a resource.
This optimistic story about the allocational benefits of decentralization,
however, may be offset by distributional effects of
[*1392] allowing residents to pick and choose municipal services. The pessimistic
story is that municipal residents who can afford to do so will isolate
themselves in associations where they can contract privately for desired
services and oppose additional municipal funding of the same services for
outsiders. For instance, those who seek above-average levels of security and
can afford to do so will take refuge in privately patrolled enclaves and then
oppose significant funding of municipal police services in order to minimize
their total of tax payments and private payments. To the extent that private
deterrents do not reduce crime, but only redirect it, allowing private funding
of police services not only invites underfunding for outsiders, but also
imposes disproportionate amounts of crime on those who are not association
Although the pessimistic story may accurately describe some consequences of
association autonomy, the issue of who is imposing undesirable activities on
whom is more complicated. Even assuming that we wish to address questions of
redistribution at a decentralized level,
n68 some checks exist on the willingness or ability of association members to
reduce benefits to others. Residents who provide their own services might still
wish to maintain property values throughout the locality in order to support
their own values, and hence support a high level of services throughout the
locality. Think, for instance, of whether those who send their children to
private school would necessarily oppose increases in public school funding. The
desire to maintain resale values of their homes might lead even those who do
not directly use public schools to contribute to quality education in the
community. Further, those within the association are likely to view the
question of external effects in a different light. Association members are
likely, for instance, to consider crimes committed within the association by
nonmembers as externalities imposed by the rest of the community on them. There
seems little basis for an ethical claim that they should be disabled from
taking protective measures that reduce these externalities, whether those
measures entail the purchase of expensive locks, neighborly agreements to watch
each other's homes, contractual agreements between a homeowner and a private
security firm, or contractual
[*1393] agreements by an association on behalf of numerous homeowners and the same
security firm. Indeed, given the signalling role that we often attribute to
individual choices, it seems odd to suggest that we might prohibit those
dissatisfied with municipal services from obtaining a different level of
services from another provider. Just as customer exit from a firm's product
indicates a competitive failure, if substantial numbers of residents opt out of
a municipal service, we typically think we have received important evidence
that local officials have misunderstood the preferences of residents.
n69 It would be difficult to bar residents from acting on their distinct
preferences for a particular level of service without simultaneously hindering
residents' ability to signal their dissatisfaction to their officials.
Finally, private provision of services may actually have a positive
distributional effect on nonmembers. Members who make payments to associations
for services that would otherwise be provided in whole or in part by the
locality are typically not permitted to offset those payments against local
taxes. The locality, therefore, can either reduce tax payments for all
residents or expend additional funds for locality-wide services.
n70 In either case, payments for private services that reduce the need for
municipal services within the association increase the ability of the locality
to address the needs of nonmember residents.
The distributional effects of associations and the justifications for them,
therefore, are more ambiguous than might be thought from simplistic initial
reactions that view these entities either as mechanisms of escape for the
privileged or as social benefactors that limit wasteful cross-subsidies. I will
return to the distributional issue both in discussing the role of covenants
and, in the last part of this Article, in analyzing when the external effects
of covenants may be so significant as to warrant judicial intervention. For the
moment, I conclude only that facile responses to the issue are unsuitable.
b) Covenants as proxy and as common plan. Even if we accept that associations
can play a substantial role in matching service preferences and payments, it is
not obvious that association covenants are necessary to accomplish that
objective. Covenants other than those relating to payment obligations
n71 rarely address issues of service, and the legal disputes that construe
association covenants are seldom directly related to service provision.
Instead, the cases, at least those that are reported at the appellate level,
tend to be concerned with maintaining prohibited structures or land uses or
acting in a manner that offends the aesthetic tastes of other members.
n72 Hence, one might conclude that the goal of providing an optimal level of
public goods within the association has few implications for the interpretation
of the association's covenants.
On reflection, however, the relationship between covenants and services may be
more substantial. As noted above, the goods that associations provide tend to
be impure public goods beyond a limited geographical range. At some point,
congestion will threaten the ability to take advantage of roads, lakes, golf
courses, or other common areas typically administered by localities or
n73 Hence, some sorting mechanism is necessary to separate those who are and are
not entitled to the good. Explicit pricing, first come/first served, or
auctions may all be used for such separation; association covenants provide an
alternative: selection on the basis of homogeneity.
n74 While we do not necessarily value homogeneity where it is based on invidious
forms of discrimination, association covenants (at least those that courts will
be willing to enforce)
n75 typically discriminate on more mundane characteristics of lifestyle. Covenants
that indicate socially acceptable, if not universally commended, lifestyles
permit individuals who seek to live among those with similar tastes
n76 a rela
[*1395] tively costless means of identifying each other. At the same time, covenants
allow individuals to define characteristics of the favored lifestyle. As
indicated above, lifestyle choices may be reflected in a desire for
differential levels of service, such as security; but lifestyles may also be
reflected in an aversion to certain activities or land uses to which a segment
of the population is uniquely averse. The legal effects that we give to
covenants, effectively making them operative in perpetuity, provide the added
assurance that homogeneity of preferences will remain. The same stability
cannot be attributed to zoning ordinances, which are susceptible to political
In this way, covenants solve a coordination problem. Individuals who seek a
specific package of services may (or may not) also care about the other
characteristics of those with whom they share club goods. For those who are
indifferent, traditional neighborhoods or associations with few covenants
unrelated to service will be appropriate. For others, however, service packages
and homogeneity are inherently related. For these groups, covenants provide a
salient signal, reducing both the search costs involved in finding like-minded
individuals and the risk of regret that would be suffered should one discover,
after making an expensive home purchase, that the neighborhood is less
hospitable than originally assumed.
n77 For those to whom service packages are secondary to concerns about the
externalities imposed by living within the immediate range of particular
activities or structures, and who desire more control than can be afforded by
zoning or market mechanisms alone, covenants provide both a private means of
rulemaking that reflects those desires and a stabilizing precommitment device
against changing preferences.
My claim, then, is that covenants may play multiple roles in the allocation of
local public goods. They permit individuals whose preferences to encourage or
discourage discrete activities are sufficiently common to serve as a
coordination point, but not so robust as to warrant supervision by a
governmental body, to enact regulations that supplement those of the state. For
those who consider any competing lifestyle to be an externality imposed on
them, covenants produce a tranquil homogeneity. And for those who seek security
in the status quo, covenants also provide
[*1396] a mechanism that binds both themselves and others against radical change in
But covenants do not simply regulate the specific activity they address. The
preferences that motivate individuals to migrate to a particular location or
association may not be readily susceptible to precise description. Covenants
may serve as rough, but appropriate, surrogates, providing signals of
sufficient salience to allow coordination among individuals with vague, but
similar, lifestyle preferences. In this sense, covenants are indicators of a
way of life, rather than simply restrictions on specific land uses.
For instance, even where individuals do not have an aversion to certain
practices that are prohibited in covenants, such as maintenance of trailer
homes, they may believe that there is a correlation between the subject of the
covenant and characteristics that can serve as the basis for a desirable
affinity. I may have nothing against trailer homes, other things being equal.
That is, I may believe that they are not aesthetically displeasing, and may
believe that they offer the best available housing opportunities for a large
segment of the population. I may, however, simultaneously seek a relatively
noise-free environment, or assurances that I live among others who do not mind
a high degree of regimentation, and hence are less likely to be offended when I
complain of what to me is excessive noise. A covenant against
"unreasonable noise" may be too imprecise to accomplish my objectives. I therefore may prefer a
more certain surrogate that reflects the level of comfort to which I aspire. If
I believe that the presence of trailers is positively correlated with
bothersome levels of noise, a covenant against trailer homes may serve this
proxy role. Similarly, while few might object to a general standard that
neighbors not engage in activities that are
"unsightly" or that
"diminish property values," the difficulty of agreeing, ex post, on what activities satisfy these criteria
might warrant, ex ante, precise restrictions that reduce subsequent costs of
deciding whether the community standard has been violated.
More than serving as proxies for less describable characteristics, however,
covenants that bar specific activities describe a common plan. A set of
covenants taken together may be attractive to some and repugnant to others. For
some, the set of covenants may indicate order, belonging, and security. For
others, the same set may signal regimentation, exclusion, and elitism. But the
very fact that the set of covenants, taken as a whole, can send either signal
suggests that covenants have the capacity to
[*1397] form a basis of association for those who share a view of the good life. In
this sense, homogeneity serves as an appropriate discriminant for ascertaining
who is entitled to a club good. As common plans, more than as specific
governance structures, covenants form private constitutions;
n78 thus, the judicial role in construing covenants should be debated in light of
their implicit constitutive benefits, not merely their formal provisions.
While I believe that these characteristics accurately capture the utility of
covenants, I admit to some discomfort about allowing too much to turn on them.
Some proxies will either be irrational or will be used too readily as
surrogates for discrimination on bases more invidious than I want to endorse.
Those who live in trailer homes, for instance, may in fact be no more prone to
noisy behavior than others, notwithstanding my irrational view. Alternatively,
the ban on trailer homes may serve more as a surrogate for wealth than for
noise; it is less clear that we would embrace an explicit exclusion on that
basis, even if constitutionally permissible.
Nevertheless, neither irrationality nor prejudice (short of the type that
triggers constitutional concerns) necessarily means associations should be
condemned or receive greater judicial scrutiny than would otherwise apply.
Covenants that are based on irrationality should become obsolete or be repealed
without external intervention, since their enforcement would reduce market
values for the rational majority of prospective homeowners. In addition, the
"rationality" of some reactions, for example, whether satellite dishes are aesthetically
displeasing, may be quite subjective. In such cases, there is little reason to
convert courts into arbiters of collective rationality.
Covenants that exclude on the basis of common prejudice are more problematic.
Recall that part of our ambivalence about decentralization has to do with the
tendencies of communities to isolate themselves, to cut themselves off from the
problems of the larger society rather than to embrace some idiosyncratic view
of the good life. If our reaction to associations is predicated on their
tendencies for residential isolation, however, then placing constraints
uniquely on these entities seems inappropriate. Isolation or sorting may take
many forms other than the creation of homogeneous associations. Established
neighborhoods and even com
[*1398] plete towns or cities (certainly suburbs) tend to sort by income or
socioeconomic status, even without covenants. Sorting may be assisted by zoning
regulations that restrict or invite certain types of housing or individuals
with certain incomes. Indeed, some neighborhoods invite sorting into diverse
groups by offering a mix of housing alternatives within a relatively small
geographical area. Thus, even if we rejected or narrowly construed covenants
that had these tendencies, we would not eliminate the sorting that may be
attributed to homogeneous associations. One may object, however, that even if
we permit this kind of sorting, we need not facilitate the practice by
embracing covenants that allow relatively costless patterns of homogeneity.
Indeed, the high costs associated with sorting by incorporating a municipality
or enacting zoning regulations to codify isolationist preferences might be
considered a means by which we ensure that those who sort themselves do so only
after considering (and internalizing) some of the social burdens associated
with their preferences.
This reaction, however, seems questionable on a number of grounds. Most
obviously, sorting that occurs within neighborhoods of a municipality requires
fewer, not greater, costs than the formation of an association, although the
permanency of covenants means that neighborhoods may be less stable than
associations. In addition, if we believe there is something untoward about
sorting on these characteristics, then it seems odd to allow them to be
embodied by a governmental entity, such as an incorporated municipality, but
not by private individuals.
More to the point, however, the attack on homogeneous sorting denies the very
condition that seems to underlie the desire for community. If we attribute any
positive significance to distinct communities, we are hard pressed to forbid
all exclusions that maintain the social cohesion that defines the community.
n80 As Gregory Alexander has written:
[*1399] Precisely because communities are constituted by shared commitments to some
specific good they must, in symbolic effect if not in conscious intention,
exclude some members of the society, precluding those individuals from
participating in the group's internal life.
Thus, the fact that some people select residence on the basis of homogeneity
while others select on the basis of diversity seems to strengthen rather than
threaten the objectives pursued in community's name.
Finally, the concern for the use of covenants as proxies for discrimination on
the basis of wealth may make sense against a background in which most
associations are seen as weapons of the wealthy. But there are reasons to
believe that the same tools may be used by those less advantaged. Recent press
accounts indicate that residents of low-income housing units have attempted to
bar certain undesirable activities, and those efforts would presumably be
simplified if they could be embodied in covenants that bound all tenants.
n82 Given that the distributional issues surrounding covenants are, at best,
complicated, courts do not necessarily have any advantage over political
processes or housing markets in identifying situations where the community's
exclusion becomes inappropriate. And judicial competence is least plausible
where a covenant's exclusions rely on bases that do not offend constitutional
protections. In Section III, I return to this question in order to identify
situations in which courts might refuse to enforce covenants that have
substantial effects on nonresidents.
c) Associations as enforcers of covenants. Even where covenants among private
actors capture the benefits of homogeneity, stability, and more appropriate
levels of service, homeowners associations might still be superfluous. The
covenant, not the governing body, gives expression to a common perspective of
the good life. The terms of the covenant make violations of this perspective
apparent to, and enforceable by, individual residents. Individual enforcement
of covenants, however, is costly both in terms of the effort (including
financial effort) that must be expended to remedy an alleged violation, and in
terms of the injury
[*1400] to neighborly relations that one must risk by
"snitching" on the defector. For any one resident, each of these costs can be avoided if
some other resident undertakes the enforcement action. The expected result is
that individual residents, even those who object to a violation, will
underenforce the community's norm.
There will be cases in which some residents suffer greater harms from a
violation than others, and hence have greater enforcement incentives. For
instance, the neighbor whose view is directly impaired by the offending fence
or color scheme may be more likely to seek redress than the down-the-street
resident who primarily fears the inroads that the offense makes on general
neighborhood conformity. But because these more noxious harms are likely to
result from physical proximity to the violator, the offended neighbor is also
more likely to value sociable relations with the violator, and may forgo
enforcement to preserve them. Conversely, where violators are distant from
those offended, and neighborly relations are thus less important, the noxious
activity is likely to have subtler or more diffuse effects, so that any
offended neighbor will again have little incentive to enforce.
The same problem hampers the enforcement of community norms against the
outside world. Members of a community will typically believe that they should
be able to enforce their norms, even where those norms conflict with those of
the larger locality. They may, for instance, claim that zoning regulations do
not apply within the association's boundaries, or that restrictions that apply
to local governments do not apply to private communities.
n83 Yet because all members would enjoy the benefits of testing the proposition,
none has an incentive to incur the costs related to asserting the claimed
In all cases that affect the collective rights of association members, whether
those members have grievances against the initial developer, against other
association members, or against external activity that threatens the autonomy
of the group,
n84 the association, as the members' representative, is capable of over
[*1401] coming the obstacles to collective action.
n85 In fact, at least one court has found that a homeowners association could be
liable to its members for failure to enforce its covenants.
n86 The presence of the association reduces enforcement costs by creating a repeat
player who is charged with monitoring compliance and designating the
association as the party who must seek redress. The association's interests may
even coincide with those of its nonmember neighbors, each of whom similarly
suffers from inducements to free riding, but none of whom has a surrogate
similar to the association. In such a case--for example, where an association
seeks to enforce a zoning ordinance that applies both within and without the
association's boundaries--the association's activity may produce spillover
benefits for nonmembers.
The enforcement role of the association also highlights a function that I have
sketched above. I indicated in that discussion that covenants can embody
proxies for activities and uses that association members wish to avoid. One way
to think about such covenants is in terms of private lawmaking among
individuals who wish to define nuisance more precisely or durably than
definitions proffered by public bodies, for example, legislatures or courts.
Covenants thus allow private zoning by those who, for instance, consider living
next to a ostentatious house or a multistory dwelling to be an undesirable
externality. Individuals who wish to opt out of public lawmaking because they
find it too imprecise or--with respect to nuisances--underinclusive, may also
desire to opt out of public enforcement mechanisms for fear that
[*1402] those arbiters (courts) would bring to any dispute the perceptions created in
litigation borne of the very public law principles that the residents are
attempting to elude.
The association, as the initial interpreter of covenants, thus becomes the
private arbiter of whether the events that give rise to the dispute before it
in fact constitute a nuisance as that term is defined by those who have opted
out of the more generally applicable legal standard. This does not necessarily
require courts that review decisions by associations to defer to them (although
I will shortly argue that they should). But it does suggest that one role of
covenants, and of associations, is to permit those who find insufficient
protection in the legal system to augment public law with private arrangements
that are more responsive to their needs.
2. The civic community model.
To this point, I have suggested that associations may facilitate the formation
of homogeneous communities by encouraging those with similar tastes to
gravitate to a hospitable area in which they can pursue their vision of the
good life. I have also suggested that associations may improve the allocation
of goods within the broader society by allowing those who desire a particular
package of local public goods to obtain them without either subsidizing or
being subsidized by others with different tastes. Defenses of community,
however, often rely on loftier virtues than mere preferences for homogeneity of
tastes or lifestyles. For many, these preferences are related to participatory
values that render associations susceptible to treatment as little democracies
and potential fountainheads of civic virtue.
n88 By providing a forum for deliberation among interested parties and a means for
resolution of public matters, residential associations, at least in theory,
satisfy something akin to the Jeffersonian hope that participation by the
electorate would be enhanced by turning the
"counties into wards."
[*1403] Attractive as this model may be, its practical applications are dubious. If
disputes involving homeowners associations centered on issues that indicated
robust debate or civic virtue, we might infer that associations foster these
values. For the most part, however, these disputes, at least as reflected in
the reported cases, center on more mundane issues: satellite dishes, trailer
homes, or architectural styles.
n90 Many, concerning efforts to collect assessments for financing collective goods
after residents refused to make payments, reflect the failure of civic virtue.
n91 It is, of course, arguable that even these disputes may create a sense of
community in that they involve residents in public processes, and that these
initial measures may beget subsequent involvement in weightier issues.
Nevertheless, I think that such byproducts are too far removed from the concept
of civic virtue that liberal community purports to engender to admit these
disputes as evidence of participatory movements within associations.
If we believed that litigation about such issues as fences followed from an
internal debate about the kind of community that the residents were trying to
create, then such litigation might well reflect the development of civic
virtue. Yet no evidence of such interactions exists; in fact, there is some
evidence that few residents participate in internal association politics.
n92 Attendance at association meetings is low (though not clearly lower than
attendance at other collective decision-making bodies), and interactions among
the association and neighbors may be adversarial rather than cooperative.
n93 Thus, those who enter associations are less likely to be seeking to enhance
their capacity for participatory self-governance, or their identity as active
members, than to be seeking the solitude and protection that (given my claims
about homogeneity) the associational lifestyle affords.
Nor should one expect otherwise given the governance structure of
associations. Civic virtue is typically advanced by enfranchising those
affected by the decision-making process. Association governance does not
necessarily proceed in this fashion. Association voting schemes are typically
based on property ownership rather than on the principle of one person, one
n94 For in
[*1404] stance, renters are disenfranchised (although voting owners who wish to
continue renting should be effective surrogates for their tenants' interests),
and even those who have a vote may find themselves easily outvoted by those
with more significant shares.
Furthermore, to the extent that civic virtue, at least as embraced in some
forms of communitarianism, affects shared understandings among different, but
mutually respectful communities,
n96 it is noteworthy that much of the criticism of associations has been directed
at their isolation from those outside the association. The exclusionary
tendencies of associations does not necessarily mean that their values should
be ignored or subordinated by courts. It does suggest, however, that it is
difficult to defend associations as
"minidemocracies" that are likely to inculcate political values that will spill over as robust
citizenry in the larger society.
Even if we reject this application of the civic communitarian model, however,
pieces of that model may explain much of the appeal of at least some
associations. For instance, consider that legal doctrines that facilitate
condominium conversions, urban
gentrification, or economic development have been claimed to disturb longstanding
neighborhoods in which established groups form homogeneous communities.
n97 These claims rest on an assumption that neighborhood stability is a positive
good that fosters useful relationships among individuals. The Supreme Court has
invoked similar claims about the desirability of neighborhood stability to
uphold property tax schemes that discriminate in favor of longstanding
n98 The stability of neighborhoods is vulnerable both to political processes,
because zoning or changes in political boundaries may alter the scope of local
activities, and to market processes, because demand for particular land
[*1405] uses may dictate the character of a neighborhood. Covenants, which have a
permanence less susceptible to the vicissitudes of politics or markets, permit
those who are particularly averse to neighborhood instability to contract with
neighbors for an additional level of assurance. Thus, those drawn to
associations may be those least confident that they will succeed in political
disputes that affect the character of their neighborhood, a factor that, I will
argue, may influence the extent to which we are willing to permit associations
to impose on outsiders.
To this point, I have tried to suggest the variety of explanations for
associations and the covenants by which those institutions bind themselves.
This discussion shows that associations do not perform a monolithic function,
but offer different residents different advantages, ranging from service
provision more consistent with resident preferences, to private lawmaking that
embodies a lifestyle defined by residents, to community stability. Each of
these objectives permits those who speak for the association to restrict the
activities of members or the activities of outsiders that affect members. Thus,
enforcement of association covenants creates the potential for conflict, and
some of those conflicts are likely to require final resolution outside of the
decision-making structures created by the association. When this happens,
courts must address the issue of how much deference to grant to actions taken
by the association. I next address the extent to which the functions and
structure of association decision making affect this issue.
II. Implications for Judicial Construction of Covenants
A. Some False Starts--Voluntariness and the Analogy to Local Governments
The previous Section indicates that associations can satisfy certain socially
useful objectives in a manner superior to that of traditional local
governments. In achieving these goals, however, associations may be more
successful at performing the allocative functions of government than the
redistributive or educative ones. In addition, the exclusionary policies of
associations will inevitably cause frictions both within the association and
between the association and the larger society. We cannot readily conclude,
therefore, that associations provide an untarnished opportunity to realize the
blessings of decentralization.
The extent to which associations provide benefits could, in theory, be
advanced by allowing external review of their regulations. There is no a
fortiori reason to suggest that associations should be able to escape a level
of scrutiny that applies to local governments providing similar services.
Nevertheless, associations are not governments, and the analysis above suggests
that some of their benefits emerge from the very fact that they are not
governments. Hence, it remains unclear whether associations should share the
level of deference that is granted to local governments when associations
purport to interpret and enforce the regulations that I have suggested define
A common argument in favor of granting autonomy to associations is that
relationships among members are voluntary, or at least more so than
relationships among neighbors in municipalities.
n99 On this theory, the covenants of an association constitute a volitional
contract, the terms of which are entitled to all the consideration that courts
traditionally afford to contracting parties. Ambiguity in the meaning of
covenants, on this view, should be resolved only by reference to the intent of
n100 rather than to the reasonableness of their agreement. Decisions in which
courts find explicit prohibitions on above-ground swimming pools
n101 or satellite dishes
n102 to be unreasonable independent of what the parties intended by inclusion of
those prohibitions would, on this view, constitute unwarranted judicial
interference with contract.
While the decision to live in an association can certainly be understood as a
"voluntary" one, buyers' initial ignorance of the attendant covenants and their legal
effects may give pause to any effort to rest too much on the parties'
n103 James Winokur contends that
"most prospective owners do not
[*1407] intelligently review the restrictions to which they subject themselves upon
acceptance of a deed to land burdened by servitudes."
n104 But ignorance does not translate into allowing purchasers to escape the
effects of covenants. Especially in a legal regime that requires disclosure of
covenants before the buyer enters a binding purchase contract,
n105 when the buyer could reasonably have investigated their terms, alone or with
legal advice, it does not follow that we should reward those who fail to make
more inquiries. In ordinary contract law, the absence of perfect information
does not, of itself, render a decision
"involuntary," if we mean by that conclusory term that courts need not enforce the agreement.
I do not assert the converse claim that all covenants are voluntary. Rather,
my claim is that, even where homeowners lack knowledge or understanding of
their covenants, little is to be gained by reducing the debate about
association autonomy to one about
"choice and choicelessness" for residents.
n106 Similarly, analysis of the scope of association autonomy is not much advanced
by recognizing that even those who are aware of covenants may prefer only some
of them, but are locked into a
"coercive," all-or-nothing regime.
n107 As Glen Robinson has suggested, the dichotomy between fully free choice and
coercion obscures the complicated question of when market failures become so
severe that the buyers of bundled goods are acting under duress.
Instead of seeking a single factor to separate coerced choices (subject to
judicial rescission) from voluntary, binding choices, it may be more fruitful
to consider whether purchasers can limit the enforcement of covenant restraints
or obtain concessions in exchange for accepting them. Our reaction to
constraints on choice may be very different if homeowners are exposed to
arbitrary sanctions that they can neither control nor escape than if those same
homeowners could reduce their exposure by exercising control over the
conditions that might lead them to regret their decision.
Consider residents of municipalities, who similarly must purchase bundled
municipal services; they cannot, for example, decrease their property taxes by
choosing private schools or contracting for private garbage collection. They
presumably are able to use the political marketplace, augmented by judicial
review of political decisions, to compensate for the
"involuntary" choices to which they are subject. If associations that serve the same
functions as municipalities provide similar opportunities for resident
participation in decisions about what goods to provide and what characteristics
to enforce, then one would imagine that we could afford private covenants the
same deference that we grant to local officials without invoking the quandary
of voluntariness. Thus, it may be worthwhile to explore the degree of latitude
that courts grant to municipal decision makers.
Before turning to that question, however, one point about voluntariness is
relevant to the discussion that follows. One might claim that if I am correct
in my assumption that covenants serve as signals or proxies for the lifestyle
of an association, then disclosure requirements that purport to increase
information to potential residents should be superfluous since purchasers would
already be fully informed about covenants. If I am correct, one might contend,
covenants should be foremost in the minds of potential purchasers (which is
unlikely the case) because covenants serve as the focal point of the purchase
decision. Moreover, sellers should make the covenants conspicuous as selling
points, and developers should market their properties on the basis of their
covenants. Yet there is no evidence that any of these practices exists in the
market for residents.
The signal of a covenant, however, can be sent implicitly rather than
explicitly. The very homogeneity of the association may indicate the nature of
the underlying covenants to observers, such as prospective purchasers. Thus,
the absence of requests or advertisements based on those covenants does not
necessarily imply their irrelevance to potential association members. Different
covenants may be salient to different purchasers, and disclosure requirements
ensure that prospective purchasers can learn of restrictions that would be
important to them. But the fact that sellers initially tell a more sanitized
story may simply reflect a desire to widen the market for their product.
[*1409] B. Association Politics
1. The relational setting.
I suggested above that judicial deference to associations might follow the
scope of judicial review of municipal regulation. Unfortunately, any effort to
discover that scope must confront the doctrinal fact that no single standard of
judicial review governs all local regulations. In the absence of some
constitutional or statutory provision to the contrary, the traditional rule of
local government powers, Dillon's Rule, provides that local governments possess
only those powers that have been explicitly delegated to them, or that are
necessarily implied from express legislative grants.
n110 Doubts about the exercise of a power are to be resolved against the locality.
n111 Courts, therefore, play a substantial role in defining the scope of municipal
autonomy and construing the meaning of state enabling statutes without
necessarily acceding to the interpretations of municipal officials. Any analogy
from ordinances to covenants based on Dillon's Rule similarly suggests that
associations should have limited autonomy from judges.
The practical force of Dillon's Rule, however, has been reduced by state
constitutional home rule provisions that explicitly abrogate narrow
construction of local government powers and that permit local governments to
initiate legislation without prior authority from the state.
n112 To make matters still more complex, some grants of home rule apply only to the
most populous municipalities; few associations would satisfy the threshold
n113 Thus, even if we wish to grant equal autonomy to associations and local
governments, there seems as much reason to apply the background rule of strict
construction to association
[*1410] covenants as there is to assume that associations possess significant
The better way to resolve the issue of the judicial role is to ask why we
might want substantial review of local decisions, and whether those same
concerns affect decision making by associations. I have previously argued that
Dillon's Rule is best understood as a mechanism for controlling interest group
domination of parochial activity.
n115 The Rule allows courts to monitor decisions that appear to have been made at
the behest of an influential local minority, or without representation of a
disadvantaged minority. Hence, the Rule addresses the Madisonian concern for
dominant factions, which are more likely to triumph at a decentralized level
since centralized decision making provides greater opportunities for competing
factions to organize and engage in a deliberative debate.
n116 The negative implication of this proposition is that where all those affected
by local decision making are represented, discrete interest groups presumably
will be unable to exploit the unrepresented or to capture the decision-making
process. Under these conditions, the need for judicial intervention to
safeguard the unrepresented (or underrepresented) is reduced.
Political processes in municipal decision making, therefore, are not important
solely for their own sake (although I do not want to trivialize the value of
n117 ), but rather because they help to accommodate the diverse and competing
interests that exist in a municipality. Under these conditions, politics are
necessary to decide the service package that will be available for any
locality. Those with different tastes will be expected to become involved in
the political process, to make their preferences known, and to compromise in
order to ensure that residents with different preferences obtain a fair share
of the municipal budget and that none are systematically disadvan
[*1411] taged by municipal regulation. At the same time, because representatives of
some interests will better be able to organize or to influence decision makers
in ways that do not reflect the merits of their case, we do not want to depend
entirely on political processes to allocate scarce resources among competitors.
Hence, some external intervention, typically in the form of judicial
interpretation of municipal authority, will be necessary to approximate optimal
Judicial intervention, however, is not always beneficial. Courts are not
necessarily adept at distinguishing process failures from situations in which
the minority was simply outvoted by a sympathetic but unpersuaded majority.
Thus, courts may decide cases based more on a personal view of the proper
substantive result than on the actual failure of a process.
n118 Similarly, courts cannot readily assess the regulatory needs of localities
when deciding whether particular regulations were authorized, so that failure
to consider the peculiar features of localities will lead to invalidation of
desirable local activity. Thus, more judicial intervention is not necessarily
better, even where the potential advantages of a privileged interest group
threaten to skew local decision making.
But if judicial intervention is necessary primarily to referee the process by
which diverse groups compete for the resources and regulatory apparatus of the
locality, then the need for it dissipates as the locality becomes more
homogeneous and the threat of one group dominating others diminishes. With this
possibility in mind, consider again the characteristics of associations. As
with residents of localities generally, residents of associations will not have
achieved the conditions required by the perfect Tiebout model.
n119 They will not have perfect mobility, or
[*1412] perfect information, or an unlimited number of associations from which to
choose when they make decisions about residence. Hence, when conflict arises
among association members as a result of ambiguities in covenants, changes in
peoples' preferences about the desirability of particular covenants, or the
occasional refusal of individual members to abide by the norms implicit in
those covenants, we cannot rely on the Tiebout solution of mobility to reduce
friction. Judicial intervention may be feasible in such cases, just as in
disputes about municipal regulatory authority.
As in those cases, however, judicial intervention is not an unqualified
benefit. Courts that err when construing ambiguities, or that restrict
associations from enforcing covenants, impose on associations the very
activities that a majority of the association had agreed to avoid. Indeed, the
desire to avoid the externalities from such activity may have been the primary
motivating factor for joining the association to begin with. Judicial
misconstruction thus distorts the signals sent by covenants about the nature of
the association. Judicial scrutiny of the meaning or reasonableness of
covenants, therefore, is desirable only if the risk of judicial error is
outweighed by the possibility that the association will enforce covenants in a
manner inconsistent with the common vision of association members.
The costs of judicial intervention may be worth incurring, for instance, if we
believe that residents would otherwise be vulnerable to strategic behavior by
the association or by a nonrepresentative subgroup of residents that had
captured association decision making. These defects in the political process, I
have suggested above, are just the factors that validate judicial scrutiny of
municipal decision making. On the other hand, we would take more comfort in
relying on associations to construe and administer covenants free from judicial
intervention if we were confident that association decisions systematically
represented the consensus of members' views rather than a failed political
process within the association.
I think that there are reasons to believe that these latter conditions will
hold, so that association autonomy should be favored over strict construction
and scrutiny of covenants. The basis for my conclusion lies in the very
homogeneity of associations that frequently serves as a basis for their being
[*1413] Homogeneity implies that, within the association, the sources of friction
within municipalities--selection of goods or services that are to be provided,
the definition of permissible activities, and the avoidance of
externalities--have already been resolved. The existence of homogeneity
suggests that minority interests are less likely to arise, since residents
presumably share a common vision embodied in the covenants. While factions do
arise in small groups, such as families or religious sects, the voluntary
nature of associations suggests that individuals have selected for the
characteristics of the neighborhood, and the substantial investment that they
make in home purchases implies comfort with the character of the area.
n120 This common vision does not mean a frictionless subsociety, and the difficulty
of exit suggests that association members are likely to be vulnerable to
strategic behavior in the interpretation of covenants. Nevertheless, the
homogeneity of associations suggests that internal friction is less likely to
be caused by unsympathetic interests dominating the decision-making process.
Hence, the need for external constraints in the form of judicial intervention
The conditions necessary to this conclusion should be familiar to students of
relational contract. Principles of relational contract suggest that
self-policing may be superior to judicial policing against chiseling on the
relationship in settings characterized by continuous interactions among parties
who are bound to each other either voluntarily (for example, through contract)
or by circumstance (for example, by virtue of being neighbors), who cannot exit
the relationship easily (primarily because of investment in
n121 ), and who depend on reputation for benefits from others (a function of being
members of the same decentralized community).
n122 This proposition holds in contractual settings, because the terms of the
agreement that generate disputes are likely to revolve around vague principles
not readily susceptible to judicial measurement. Hence, even though we might
be able to articulate a general
[*1414] standard, such as
"best efforts," to which relational parties should aspire,
n123 judicial attempts to determine when that standard has been satisfied are
vulnerable to significant error. Those who participate in the practice defined
by such standards, however, are likely to be capable both of defining them and
of detecting defections from the cooperative norm.
Relationalism explains how neighbors may evolve a set of mutually beneficial
norms that govern their unique circumstances, even when those norms contravene
positive law that applies to the broader society.
n124 Norms have the feature of being sustained by the approval or disapproval of
those who share them.
n125 Becoming a party to a relationship governed by norms indicates that membership
is important to the actor and that the actor wants to associate with others who
define themselves as governed by similar norms. Therefore, where there exists a
shared understanding of the ways in which parties in the relationship are to
conduct themselves, failure to comply can damage one's reputation within the
group. The high exit costs associated with relational settings indicate that
those who violate the norms will have difficulty avoiding punishment, since the
only escape lies in departure from the relationship. Since each party to the
relationship stands in a position both to impose reputational harms on others
and to suffer reputational harms at the hands of others, reciprocal compliance
with the norms is likely to evolve and endure.
n126 Thus, norms that evolve within a relational setting may become self-enforcing
within the group. From these characteristics of relationalism there flows a
legal conclusion: The combination of vague terms that can only roughly specify
the nature of the relationship combined with extralegal enforcement mechanisms
by those who can fill in the details of the relationship may create a situation
in which legal (judicial) enforcement
[*1415] is inferior to reliance on the parties themselves to keep the common
The purchase of a residence within an association bears the characteristics of
a classic relational contract. The transaction constitutes an investment in
specialized resources, as the residence will likely be inappropriate for other
uses, and even transformation of the property into a rental property may be
difficult. Exit from the transaction (selling and moving to a different home)
is difficult given the costs (fiscal and emotional) of uprooting. This
difficulty of exit suggests that the purchaser expects to remain in the
property for a substantial period of time. Since other purchasers within the
association face similar constraints, each resident expects repetitive
interactions with neighbors.
"Misbehavior" by violation of the association's norms, therefore, is open to substantial
opportunities for punishment through informal mechanisms of gossip, shunning,
or infliction of other reputational injury.
Thus, the transaction by which a homeowner becomes subject to covenants is a
contractual one, regardless of whether one wishes to append the additional
"voluntary." But it is a contract of a particular type, and a type that has been
misunderstood by those who criticize the contractual approach to the question
of covenants. For instance, Gregory Alexander contends that economic
perspectives on associations are insufficient because they rely on formal
contractual structures rather than social relations. Alexander writes that a
contractarian model of relations among homeowners:
leads it to ignore the character of social relations within residential
groups. As a result, it fails to distinguish between residential groups that
are held together only by mutual collaboration and convenience, and those in
which individuals choose to live together because of more deeply shared values.
Alexander's vision presents an overly constrained image of what is entailed in
the contract among homeowners. Far from the discrete, rule-bound transaction
that Alexander assumes is implicit in economic explanations of contract,
n129 the quintessentially relational structure of the transaction necessarily means
[*1416] that attention must be paid to the
"social relations" within the group in order to determine, from an
"contractarian" perspective, the proper interaction between association practices and legal
intervention. These social relations compensate for covenants' inability to
detail the relationship completely at the outset, and constrain the subsequent
efforts of any party to maximize self-interest in the interpretation of the
Indeed, Alexander implies that the very processes that create incentives for
cooperation among association members are invidious. The fact that exit costs
are nontrivial for each party transforms the relationship into something like a
multilateral monopoly (or bilateral monopoly, if we describe the relevant
parties as the landowner who seeks to engage in a prohibited land use and, as a
group, all other homeowners within the association). Alexander, writing in the
somewhat different context of the capacity of covenantors to escape their
promises after conditions have changed, concludes that bilateral monopoly
prevents each party from experiencing
"the liberation of an unconstrained market; both sides feel themselves in
servitude to each other."
n130 Intervention from some
"external source," presumably the law or--more specifically--the judiciary, is necessary to
"enable the parties to do what they lack the power to do themselves."
n131 Since Alexander's concern is with the inability of the parties to exit, rather
than with the context of obsolete covenants, his criticism seems to be directed
at the bilateral monopoly inherent in the construction of association covenants
Stewart Sterk, while less optimistic about the law's capacity to resolve
issues for the parties, also raises the likelihood that bilateral monopoly
induces the type of strategic behavior that will impede bargaining.
n132 Professor Sterk, however, recognizes the point implicit in the existence of
relationalism: relations that form as a result of a bilateral monopoly from
which neither party can easily exit may generate norms that actually reduce
n133 Where repeat play is inevitable because exit costs are high, as in relations
between neighbors, bilateral monopolies may force individuals into cooperation
because these same condi
[*1417] tions enhance opportunities for revenge or retaliation. For each homeowner,
the investment in residence entails a relationship in which each is solicitous
of the other's needs and interprets contractual ambiguities in light of their
n134 Hence, if one focuses on the nature of the relationship, the
"contract" between the parties takes on a much richer texture than Alexander's image
Nevertheless, as I have suggested above, the informal processes of relational
norms will not make cooperation perfect.
n135 Should association members fail to obtain satisfaction for an alleged
violation of a norm embodied in a covenant, they possess an additional form of
redress: enforcement of the covenant by the association. It is at this point
that the question of association autonomy arises. The capacity of the
association to satisfy the functions for which it is created
n136 depends substantially on the latitude granted by courts reviewing its
construction of covenants.
2. Courts and associations as interpreters of covenants.
An association's covenants may be thought to vary in one important respect
from the relational theory that I have described above. One indicium of a
relational contract is the unwillingness or inability of the parties to reduce
the nature of their relationship to precise terms. The fact that the
relationship will unfold over a substantial period of uncertainty means that
parties will not want to allocate contractual risks based on current
circumstances. Instead, relational parties may wish to deal with uncertainty by
defining standards for performance in
"unusually general terms."
n137 These terms signal to both the parties and a court attempting to resolve any
dispute between them that the contract involved an effort to share
unanticipated and unallocated risks that materialize as the relationship
evolves. Given the risks that might emerge with the passage of time, general
terms indicate only an intention to cooperate. Where no alternative explicit
bargain appears on the face of the contract, it is rational to assume that the
parties intended to maximize their
[*1418] joint interest rather than to allocate losses resulting from unanticipated
risks in some other manner.
n138 Similarly, where an ambiguity appears as a result of vague terms, it makes
sense to resolve the ambiguity against the background signal of joint
maximization embodied in the contract.
Unlike traditional relational contracts, however, covenants tend to be quite
specific. Relationalism is inherent in a contractual clause that requires
"best efforts." But
"no dogs" means
"no dogs" simpliciter; relationalism, one might claim, is irrelevant to a proper
construction of the term. It would be possible to draft covenants that speak in
broad, general terms, or that specifically reference an intent that community
practices be interpreted in a manner consistent with the mutual interests of
the residents as expressed by the homeowners association. This would be the
functional equivalent of a
"renegotiation clause" that might signal a risk-sharing obligation in a commercial context. Indeed,
some covenants contain what may be considered the equivalent of such a clause,
which might inform the proper interpretation of more specific covenants.
n140 Thus, one might conclude that fail
[*1419] ure to include such a provision constitutes an implicit indication that
covenants do not evince any cooperative intent. The judiciary, on this reading,
suffers no disadvantage in determining whether the conditions of compliance
with precise covenants have been satisfied.
Specificity of covenants, however, does not necessarily mean that the parties
do not recognize their relational situation or do not rely on norms of
reciprocity to enforce it. Other explanations may suffice. First, it may be
that property regimes historically require greater specificity than commercial
regimes. The relaxation of requirements of definiteness in commercial
contracts, such as the ability to have an enforceable contract with an open
n141 does not appear to have spilled over into the traditional insistence in real
property contracts on specificity and detail. Thus, specific clauses standing
alone do not betoken a lack of cooperative intent.
Second, specific covenants may establish the parameters of the relationship
without exhausting the details. Just as covenants provide strong signals about
the lifestyle of association members, so do they provide a basis from which to
extrapolate when the association attempts to advance that lifestyle in ways
that are not explicit in the covenants themselves. The specificity of the
covenants, however, provides limitations that frame the relationship. Thus,
specific restrictions on activities and uses play much the same role that has
been attributed to binary, winnertake-all legal rules in long-term relational
contracts. Given the incentives for cooperation in such transactions, one might
imagine that binary rules that apply to discrete contracts would be superfluous
or would give way to an exhaustive litany of rules drafted by the parties to
resolve all contingencies. As Robert Scott indicates, however, binary rules
play an important role even in situations dominated by relational norms:
The cooperative model resolves the apparent paradox of legal enforcement.
Under this conception, the many binary contract rules serve as effective
complements to the more flexible extralegal mechanisms that regulate
adjustment. More complex, multifactored rules may thus be undesirable to most
contracting parties because they sacrifice clarity in
return for only marginally reinforcing existing patterns of cooperation.
Similarly, developers and associations are unlikely to find it worthwhile to
invest in drafting a complete contingent list of covenants that define the
lifestyle preferred by residents. Instead, representative clauses may serve as
signalling devices by indicating those activities and uses of greatest concern,
while implying that potential residents to whom those clauses would be salient
will share other preferences of lesser concern. The presence of specific
clauses, therefore, neither abrogates cooperative intent nor denies the need to
work out future disputes through relational norms.
Once we recognize the force of relationalism, judicial intervention may still
be useful to enforce the implicit norms of cooperation when inevitable disputes
n143 Legal review of the enforcement of covenants may avoid spiteful actions
against an outlier within the community
n144 or may clarify ambiguities where the meaning of a covenant is substantially in
doubt even among members.
n145 External checks on the interpretation of relational contracts, however, make
the most sense where the adjudicating body has substantial expertise in the
area at issue, or is otherwise sufficiently familiar with the use of language
by the disputants.
n146 Llewellyn's endorsement of merchant juries in commercial cases, for instance,
was largely motivated by his sense that merchants alone would be sufficiently
familiar with the specialized use of language and practice in commercial
contracts to render verdicts that accurately reflected the intentions of the
As a general matter, the setting in which disputes over covenants arise does
not inspire confidence that courts have an ad
[*1421] vantage over the informal interpretive processes of associations. The
relational nature of the community provides a reason for believing that when
cooperation breaks down sufficiently to require a lawsuit, the association's
interpretation of the covenant is likely to represent the common understanding
of its members. Courts, on the other hand, are likely to miss any gap between
the association's understanding and the understanding outside the association.
While ambiguous signals may be misunderstood by some members, where a critical
mass (critical enough to persuade the association to undertake a lawsuit) of
those who respond to these signals and who live within the community governed
by them have a common view of their meaning, that interpretation is more likely
to be accurate than the interpretation of a court sitting outside the
community. Development of and within the community may give a covenant subtly,
but importantly, different meanings than those outside the relationship would
attribute to it. Indeed, although he was writing of groups more defined by
ethnicity than geography, Robert Cover's description of the evolution of
normative narratives within a private community seems to have substantial fit
with the lawmaking efforts by those within an association.
n148 Thus, the occasional court that recognizes how homeowners develop a context in
which covenants are to be understood, and that the wording of those covenants
may take on meaning different from the same words as understood outside the
community, are acting most consistently with the purposes that underlie the
development of associations.
From this perspective, it is important that it is the association that is
enforcing the covenants. Consider, for instance, the situation in which one
resident of the association brings an ac
[*1422] tion against another for violation of a covenant.
n150 After entering into the association, it may be in the interest of each member
to retain maximum individual autonomy for himself or herself while restricting
the autonomy of others. In this manner, residents who seek the refuge of
covenants to prevent others from imposing externalities on them may still
attempt to impose externalities on those others; the fact that I do not want to
look at your ranch-style home in our federalist-style neighborhood does not
mean that I do not want to require you to look at the commercial vehicle that I
park in my driveway.
As noted above, the enforcement of covenants constitutes a contractual
solution to this dilemma. Given the free-rider nature of redressing violations
of community norms, however, one would expect that enforcement actions would be
brought by cocovenantors only when they have idiosyncratically high interests
in the violation. Typically this will occur between immediate neighbors or
others in close geographical proximity to the subject of the complaint.
n151 The fact that one party resorted to litigation, moreover, indicates that the
relational and reputational constraints that normally prevent the public
eruption of neighborly disputes have failed. The very breakdown of these norms,
however, makes it difficult to tell, ex ante, whether the failure occurred
because the homeowner against whom the complaint has been filed is chiseling on
the common understanding or because the complaining neighbor is trying to
maximize restrictions on others. The particular violation may impose on the
neighbor costs sufficiently great to outweigh the benefits of neighborly
relations. Alternatively, the neighbor may have idiosyncratically little taste
for neighborly relations. Indeed, if neighborly relations have already
disintegrated, institution of a lawsuit may be a matter of spite. In short,
where litigation about a covenant materializes between two neighbors,
n152 it is unclear whether the alleged violator or the complainant has
misunderstood the community's sense of the covenant or whether one of the
parties is attempting to capture some idiosyncratic gain. In neighbor/neighbor
disputes, therefore, the arguments about relationalism do not compel judi
[*1423] cial deference to one party's interpretation of the covenant rather than the
other's. Hence, judicial intervention to interpret the covenant may be
appropriate or necessary, notwithstanding the relationship.
Consider the analogous situation in which courts intervene to determine
whether a party to a contract has complied with the kind of
"best efforts" clause that characterizes some relational contracts.
n153 Even if there is agreement that the clause requires each party to the dispute
to maximize the joint product rather than personal profit,
n154 each party has reason to favor a particular interpretation of what action
would satisfy that vague criterion. Given the interests of the claimants, there
is no inherent reason for the court to entertain a presumption that either
party's interpretation more accurately reflects the initial understanding of
An action by the association, however, is more likely to involve a complaint
against an actual defector from the relationship. A board of directors is
unlikely to bring a costly and timeconsuming action in the association's name
until it has heard multiple complaints against a neighbor, made an independent
investigation, and attempted informal resolution of the matter. Where the
association decides to proceed, therefore, it is unlikely that the complainers
have been idiosyncratic. Since the association acts on behalf of all members
(while the individual complainant speaks only for himself or herself ), its
interpretation is more likely to reflect the common understanding of members
than an interpretation of any one party. Given the relationship among members,
it is unclear why a court, left to its own devices, should attempt to do
anything more than comprehend that same understanding.
This analysis implies that presentation of the same issue--interpretation of a
covenant--in two different judicial proceedings, one initiated by the
association and one initiated by an individual member of the association, may
properly carry different presumptions. The action by the association can be
presumed to reflect the current understanding of its members as to the meaning
of the contested covenant. The same action, initiated by an individual member,
carries no such cachet. Courts that treat interpretation of all covenants the
same, regardless of the identities of the disputing parties, fail to make this
Indeed, there is a colorable argument for an additional presumption based on
the identities of the parties, although I find it unpersuasive. Given the costs
(both financial and reputational) inherent in bringing lawsuits, one would
imagine that even the idiosyncratic neighbor would prefer to have the
association bring the lawsuit alleging a covenant violation. One might
therefore infer that the individual action was brought only because the
association refused an initial request. Arguably, this refusal indicates that
the association believed that there was no violation of the current
understanding of the covenant; hence, the existence of the individual lawsuit
might justify a presumption against the plaintiff 's interpretation in the
I am unwilling to endorse this conclusion only because there might exist
alternative explanations for association inaction, even where the plaintiff 's
interpretation of the covenant is correct. The association, which must act in
the interests of all the members, not just the complainant, may believe that
the harm caused by the violation does not justify the expense of a lawsuit.
n155 Alternatively, the association may be willing to bring a lawsuit, but only
after a period of negotiation with the violator that the individual neighbor is
unwilling to tolerate. Hence, I reject the strong conclusion in favor of a
weaker one that provides only that an individual plaintiff is not entitled to
the same presumption of a violation that should exist when the association
brings the action.
Finally, note that, when based on the cooperative relationship among
association members, judicial deference to the association's construction of
its covenants is actually more consistent with the policies that disfavor
restrictions on land uses than is the traditional doctrine of strict judicial
construction of covenants.
n156 The doctrine of strict construction emerges from antipathy to restraints on
the alienation of land and a fear that future productive uses of property will
be prohibited by outdated limitations. Reliance on relationalism, however,
serves the very goal of retaining flexibility of land use by permitting the
association to interpret covenants dynamically to reflect the changing
preferences of the community. Courts that stand outside the community will have
a more difficult time discerning shifts in those
[*1425] preferences, and failure to accede to the interpretation of the association
may bind courts to a more rigid interpretation of covenants than the
association itself would endorse. Assume, for instance, that a covenant bars
"fences" higher than six feet during a period when wooden fencing is a primary
mechanism for marking boundaries on lots within the association. A homeowner
now plants a row of saplings on her boundary and allows them to grow in excess
of six feet. A court applying the traditional rule would have difficulty
enjoining the maintenance of the
"fence," notwithstanding that the function of the covenant was to ensure unimpeded
views for all residents at a time when traditional fencing posed the primary
There is, however, a dark side to this justification. Dynamic interpretation
may permit the association to enforce covenants in a manner consistent with the
understanding of a majority of homeowners at a given time. That same dynamism,
however, may mean that residents who joined the association under one set of
signals will be frustrated by subsequent developments. Extreme changes that
would substantially frustrate expectations might be rare for the same reasons
of relationalism that make interpretation by the association useful.
Nevertheless, there may be occasions in which developing interpretations do
substantially shift away from the original understanding of some homeowners.
These shifts impose real costs on homeowners, who at some point may decide that
the community is no longer compatible with their preferences. That result does
not mean that the community has acted improperly. Instead it suggests that,
notwithstanding the increased stability that one receives through covenants,
communities--like municipalities or other voluntary organizations--may alter
identities over time and the result may adversely affect those who relied on
earlier personalities. As when localities decide to provide new services or to
cease providing existing services, however, that result does not necessarily
translate into opportunities for legal redress.
One additional constraint on association autonomy should be apparent from the
relational justification for judicial deference. Some intra-association
disputes do not arise in situations that promise the repeat play that underlies
my claim for association autonomy. Assume, for instance, that a covenant
prohibits the installation of
"trailers" within the association, and that a resident places on her property a structure
that is prefabricated and
[*1426] that is blocked on a lot without a permanent foundation.
n158 Should a conflict arise about whether the structure constitutes a
"trailer," victory for the complainant essentially requires removal of the structure and,
most likely, of the violator as well. In this situation, the parties face an
endgame strategy in which cooperation is not compelled. Thus, there is little
reason to believe that the reputational constraints that apply when neighbors
anticipate a prolonged relationship will ensure that the association is
interpreting the covenants in a manner consistent with the common
understanding. Nevertheless, the fact that the association can only assume an
endgame when it is relatively certain of victory will itself be a constraint on
its ability to offer idiosyncratic constructions of the covenant.
C. Agency Costs in Residential Associations
To this point, my argument has been that judicial deference to association
interpretation of covenants is appropriate because the very commencement or
defense of a lawsuit signals courts that a violation of the community norm has
occurred. This conclusion, however, is predicated on an assumption that those
who make decisions that bind associations, typically the board of directors,
are representative of the association's members. To the extent that this is not
true, the relationship between the parties provides little reason for the court
to favor one interpretation of the covenant over another. Hence, competing
policies, such as the traditional policy of construing servitudes narrowly, may
trump any appeal to association autonomy. It is necessary, therefore, to
examine whether there are reasons to believe that governors of an association
will tend to reflect or not to reflect the common understanding of its members.
As in the context of business corporations
n159 and local governments, the greater the divergence between the interests of
decision makers and their constituents, the stronger the argument for judicial
intervention in reviewing decisions.
[*1427] are some reasons to believe that agency costs would be less substantial for
associations than in the cases of corporations or governments. For a variety of
reasons, association decision makers may internalize the consequences of their
decisions in ways that officials of localities and corporations do not. As
indicated above, the homogeneity of the association means that it is less
likely that divergent rent-seeking groups will arise in the first place.
Other inducements should reinforce the identity of officials' interests with
those of members. The homes of association officials will likely represent a
significant percentage of their wealth, so that their interests in maximizing
property values by providing proper services and maintaining covenants that
define the nature of the association (each of which should be capitalized into
property prices) will reflect the interests of other residents. This
commonality of interest suggests that there will be fewer competing claims for
the votes of decision makers and fewer opportunities for decision makers to
seek rents by favoring one group of constituents over another. When those
occasions do arise, the fact that decision makers are members of the
association means that they are subject to all the extralegal, reputational,
and retaliatory consequences that lead all residents of the association, as
neighbors, to be attentive to communal rather than personal concerns. Given the
relatively small size of the group, deviations from communal interest are
likely to be more detectable and more vulnerable to publicity. Since covenants
typically affect physical activities, their interpretation by association
officials is subject to more rigorous and frequent monitoring than the conduct
of either local officials or corporate officers, which may be more concerned
with financial or other intangible information that is difficult to obtain. The
proximity of neighbors also means that, even though association officers face
only occasional elections, their constituents have more constant opportunities
between elections to register complaints at low cost. Since constituents face
high exit costs (at least as compared to shareholders of firms),
n162 they have substantial incentives to take advantage of
[*1428] opportunities to monitor and complain in order to protect their investment.
Additionally, again assuming the relative clarity of the signal sent by
covenants, the existence of official misbehavior will be more obvious. For both
local and corporate officials, the criteria of a
"good" job, or of deviation from constituent interest, are rather opaque. Local
officials will face multiple, vague, and sometimes competing objectives, such
as fiscal responsibility or fair distribution of local resources, so that
measuring the quality of an official's performance is quite difficult.
n163 Corporate officials can be monitored by a single output measure, namely profit
maximization. Nevertheless, the level of their success is somewhat beclouded by
questions of trade-offs between long-term and shortterm profits, at least to
the extent that we reject the achievement of perfect markets in which expected
long-term performance is reflected in current share prices.
n164 Violations of covenants should be relatively clear since they deal with
physical arrangements. The presence of a prohibited use, a trailer home for
example, is evident.
Finally, the rents that officials of associations might seek appear less
attractive than rents sought by corporate or government officials. Service as a
member of an association board of directors does not return the kinds of
benefits that might lead those who occupy management positions in other
contexts to maximize objectives other than their constituents' welfare. These
are unpaid positions, so, unlike officer or director positions in private
corporations, they are likely to have little consequence for financial wealth.
Similarly, unlike political or corporate offices, holding such a position does
not create much personal publicity or fit within a hierarchy of decision
makers, so that nonmonetized rewards such as fame or advancing to a higher
position does not hold much attraction.
But if there are no benefits that can be obtained by participation in
association governance, why would anyone engage in the activity? While altruism
may explain some level of participation, the fact that management does not
generate other rewards may suggest that only those with highly idiosyncratic
[*1429] would accept such a position. Since participating in association governance
will create public goods in which we would expect participants to underinvest,
we would anticipate that association officials become involved in order to
direct decision making, particularly expenditure decisions, toward their own
unique interests. Since boards tend to be small in size, a single vote may be
important to any outcome, so that participation on a board is likely to
increase substantially the chances of advancing idiosyncratic preferences.
Assume, for instance, that a neighbor believes that a covenant should be
interpreted in a particular, if unconventional, way. It may be that the best
way to obtain a sympathetic vote of the association is to become a member of
the board of directors and either trade votes with other members or rely on the
small number of votes to attract the few allies necessary to the desired
outcome. Alternatively, individuals may become association officials in order
to maximize personal interests unrelated to future objectives or to public
service, such as the opportunity to be a
"busybody" or to enforce rules for the sake of exercising personal authority rather than
to ensure the success of a community ethos.
At the same time, resident monitoring of board members may be less intense
than the above argument suggests. While constituents in all organizations face
incentives against monitoring, most shareholders can often avoid the
implications of free riding because other shareholders have sufficiently high
stakes to warrant their monitoring regardless of the inactivity of others.
Whether association members can similarly rely on a neighbor with an intense
interest in a covenant violation depends on how much more significantly that
neighbor is affected than others. One would anticipate that association
officials' attention to violations of covenants that restrict loud noises, for
instance, would be monitored more closely than violations of covenants that are
directed at limiting traffic, such as conducting a commercial enterprise in a
One additional point worth considering about agency costs relates to the
changes in the governance structure of a community during its life cycle. When
a subdivision is first created, the developer will typically retain substantial
discretion over its governance. Only after a certain number of units within the
subdivision are sold will the developer cede control to the association or its
board of directors. The coincidence of the developer's and residents' interests
may be as complicated as the incentive structure I have suggested exists
between the association and its res
[*1430] idents. The developer desires to market homes within the association, and
compliance with the covenants, by defining the nature of the community, serves
as a marketing tool to attract residents whose interests are reflected in those
covenants. Hence, one would imagine that market-based incentives would induce
the developer to interpret the covenants in a manner consistent with the norms
of the community.
n165 During the period that the developer believes that its marketing strategy will
be successful, there seems little reason for it to deviate from this common
The problem arises when the developer believes that its initial strategy was
mistaken. At this point, the developer may desire to change the terms of the
n166 Assume, for instance, that the covenants of an association declare that no
property shall be used for commercial purposes. After slower-thananticipated
sales, the developer, who retains the capacity to interpret the covenants,
permits new purchasers to open offices within their homes. Association members
who have purchased their homes to this point might object that the restriction
on commercial use applies to offices within residences as well as to buildings
intended solely for commercial purposes. They might contend that the very
concerns about increased traffic and difficulty of policing transients that
would apply to a commercial building also apply to a commercial use of a
residential building. Given that the developer's interest in maximizing income
no longer coincides with existing residents' interest in maintaining a
particular type of community, there seems little reason to believe that the
developer's unchecked interpretation of covenants will be consistent with
existing residents' understanding of those covenants.
[*1431] I cannot readily conclude, therefore, that either the association or the
developer will necessarily interpret covenants in a manner consistent with the
consensus of association members. Divergence in the views of association
officials, however, does not necessarily invite more intrusive judicial
scrutiny of covenants. If we believed that courts were adept at identifying
those cases in which decision makers had interests that deviated from those of
association members, we might direct courts to intervene more readily in those
cases. But if courts have no greater ability than association members to
discern rent-seeking activity by association officials, there seems little
reason to rely on those outside the community to define the scope of community
norms as embodied in covenants.
III. Associations and Nonresidents
The assertion that cooperative norms will emerge within the association and
are more readily identifiable and enforceable by members than by courts does
not entail that these norms will serve the welfare of those outside the
n167 Thus, one negative implication of my argument to this point is that judges
should be far more interventionist where associations impose costs on
nonresidents. The problem is that this principle, without more, swallows up the
argument for judicial restraint. All covenants affect those outside the
association, in that they restrict access to prospective home purchasers who
prefer the same lifestyle as association residents, except for one (or more) of
the covenants. At the same time, there are few situations in which decisions of
associations are specifically aimed at nonresidents.
n168 We return, then, to the problem with which we began: determining the latitude
that we are willing to confer on groups that seek
[*1432] some degree of isolation, notwithstanding that their private arrangements
The polar case for judicial intervention exists where the association seeks to
engage in conduct that could not constitutionally be enforced with the
participation of state actors.
n169 Here, the externality may take the rather intangible form of affecting even
those who are not directly excluded, because the basis of exclusion makes them
uncomfortable about living in a society where such exclusions are practiced.
n170 Less clear is which outcome is preferable when the association seeks to
enforce a covenant that does not offend constitutional principles, but that is
inconsistent with other social norms. In these cases, our willingness to allow
the association to set itself up against the broader society reflects our
reaction to the kind of diversity that I suggested at the outset underlies
Chief Justice Burger's opinion in Schad.
n171 The desire for heterogeneity implicit in those remarks finds resonance in the
sociological literature that urges the development of community by allowing
greater autonomy for localities:
The legal tendency is to assume that there is a unitary national community
rather than a national community composed of thousands of communities. Thus,
the people of Kokomo, Indiana, must accept public promotions of pornography,
for instance, because such promotions are protected by precedents established
in Berkeley, California, or in Times Square. It is just barely arguable that
the person who wants to see a live sex show in downtown Kokomo would be denied
a constitutional right were such shows locally prohibited. It is a great deal
clearer that the people of Kokomo are now denied the right to determine
democratically the character of the community in which they live. More careful
distinctions are required if we are to stay the rush toward a situation in
which civil liberties are viewed as the enemy of communal values and law itself
is pitted against the power of people to shape their own lives.
[*1433] Some courts that have rejected intrusive interpretations of covenants,
notwithstanding that enforcement creates adverse effects for nonresidents,
appear at least implicitly to endorse the same view. Other courts, however,
appear to seize on the conflict between covenants and conflicting social
policies either explicitly to abrogate the private covenants or to entertain
narrow constructions of them.
Analysis of these cases may provide some hints toward a theory of when
association activity generates sufficient effects on nonresidents as to require
intervention. Consider, for instance, the issue of whether prohibitions in
covenants on the operation of businesses within the association or limitations
of occupancy to
"single-family" residences can be enforced to prohibit group homes.
n174 Several courts have recognized that a restrictive definition of residence or
family that requires blood or marital relationships between the occupants is
inconsistent with state policies in favor of the creation of group homes, where
individuals live together and either care for each other or are cared for by a
n175 Other courts have upheld the association's restrictive definition of residence
or family to more traditional forms.
The highwater mark for the latter position appears to have been reached in
Clem v Christole, Inc.
n177 In that case, residen
[*1434] tial subdivision property owners sought to prevent the creation of a group
home for developmentally disabled individuals within the subdivision. Covenants
that governed the subdivision prohibited the use of buildings
"for business or commercial purposes of any kind" and restricted the use of lots within the subdivision to
"single-family or two family dwellings."
n178 The fact that the association's preferences were inconsistent with those of
the larger society were arguably evident from the fact that the state
legislature had enacted a statute (subsequently repealed) that invalidated such
n179 The court declared that the statute violated the contracts clause of the state
constitution, insofar as it applied to preexisting restrictive covenants. The
court considered such covenants to be issues of private concern, rather than of
n180 While disruption of private contractual expectations might be warranted to
satisfy an important social problem, and while prospective application of the
prohibition might be appropriate, the problems of housing the developmentally
disabled did not offset the substantial costs that would materialize should
restrictive covenants be negated:
Restrictive covenants permit property owners to collectively provide or obtain
protections significantly contributing to the peace, safety, and well-being of
themselves and their
families. These purposes are consistent with values identified in our Indiana
Constitution. Article 1, Section 1 expressly recognizes that government is
instituted for the peace, safety, and well-being of the people. Article 1,
Section 31 protects the right of citizens to assemble together in a peaceable
manner to consult for their common good.
At first glance, the decision appears to elevate private agreements above what
would be required by the analysis that I have suggested, that is, judicial
deference to the relational process that incorporates the views of all those
affected by the decision. There is certainly no reason to believe that the
developmentally disabled were represented in the creation or interpretation of
the restrictive covenant at issue. Nor is it easy to find a surrogate for them
within the association, at least not in a case like Clem where the purchaser of
the home had not previously been an association member.
n182 Perhaps sellers who wish to maximize their sale price and who (as a result of
the fact that they are selling) no longer bear a reputational burden within the
community can serve as surrogates for group home operators. But my prior
analysis suggests that sellers who act in this manner, as well as residents who
transform their homes into group residences, may simply be rejecting the ethos
of the community as reflected in the covenants; they have changed their minds
about the initial deal. Thus, Clem directly asks the question of how to resolve
our ambivalence about conflicts between the preferences of those within and
without the association.
One way to sort out when the adverse effects are sufficiently substantial to
warrant intervention is to ask whether we are confident that the conflicting
social policy actually reflects a consensus of the broader society. Principles
that reach constitutional proportions do so in large part because they reflect
the deeply held views of a substantial segment of the population. Thus, when we
reject private arrangements that conflict with constitutional principles, we
may feel comfortable that we are properly imposing a majoritarian conception of
what is necessary to pursue the good life for society as a whole. Statutory
embodiments of public policy may be more suspect. For instance, I suggested
above that the presence of a statute in Clem prohibiting restrictions evinced a
state-wide view in favor of integrating group
[*1436] homes into traditional neighborhoods. It is possible, however, to tell a
somewhat convincing public-choice story about the same legislation. According
to this story, activists for the mentally ill were able to capture the state
legislature, notwithstanding that their views did not reflect those of the
state as a whole. State legislation would generate less resistance than local
ordinances, since the state-wide effect of the prohibition would be too diffuse
to make it worthwhile for local opponents to coalesce. At the same time,
associations that may have significant influence at the local level are
unlikely to have comparable access to state legislative processes. Thus, they
would be unable to counterbalance interest-group politics at the state level.
If we believe this story, then the enforcement of covenants, far from
countering majoritarian influences, serves as an anticapture device for those
who are less prone to protect themselves against interest-group politics. In
Clem, for instance, if we believe that the interestgroup story offers a more
compelling explanation for the legislation, then we might consider the decision
to uphold preexisting covenants as an effective weapon to blunt the effects of
This anticapture rationale makes the most sense when the association seeks an
exemption from a generally applicable requirement, as in Clem. Yet even within
this subset of cases, the anticapture justification perhaps grants too much
autonomy insofar as it suggests that associations can receive an exemption from
ordinances or statutes simply by adopting contradictory covenants. Thus,
exemptions might make sense only in those cases where judges detect a
reasonable likelihood that the conflicting legislation resulted from capture.
It should not be surprising, therefore, if courts reject claims that
associations are exempt from municipality-wide zoning plans, because such an
exemption cannot easily be explained by capture.
More commonly, however, covenants involve efforts by an association to create
restrictions that are not directly addressed one way or the other by the
locality or the state. We would expect this type of case to arise frequently if
I am correct that a primary function of associations is to allow privatized
regulatory schemes that are more tailored to residents' preferences than
[*1437] regulation. Even if we are willing to recognize some value in this objective,
we would expect some nonconstitutional limits on its pursuit, given the
consequences for nonresidents and the fact that even municipal corporations
have only limited ability to impose adverse effects on nonresidents.
n184 While the permissible level of these externalities is hard to define, one
might infer from judicial reaction to the group-home cases that the limitations
on association autonomy depend on whether enforcement of the covenant at issue
excludes in a manner that substantially impairs the mobility of those excluded.
Under this analysis, the question of whether to trump covenants can be viewed
in traditional prisoner's dilemma terms. These consequences may best be seen
by considering the policies of cities rather than associations. Group homes,
for instance, may be considered undesirable by most municipalities.
n185 Hence, if we allow a municipality to reject siting of such land uses, most
municipalities will prohibit them. Under these circumstances, municipalities
that might accept a
"fair share" of such homes would fear that they will end up accepting all of them if other
localities proscribe such uses. Thus, even municipalities otherwise willing to
"fair share" have incentives to join in the ban. Universal prohibition on such bans may
therefore be necessary in order to locate group homes anywhere. This logic does
not necessarily mean that private arrangements among multiple parties should be
abrogated. If localities are required to accept such land uses, they can
fulfill that obligation by locating the uses outside of associations. Within
the locality, however, the effects of this conclusion would lead to the same
perverse results that govern interlocal relationships. In the absence of a
requirement that all parts of the locality accept group homes, any
neighborhood, including those willing to accept a
"fair share" of the homes, will seek to prohibit them for fear that others will do so. The
fact that communities with covenant regimes will have an easier time avoiding
such uses than other parts of the locality
[*1438] may mean that associations suffer fewer undesirable land uses. Remaining
residents of the locality will presumably attempt either to create their own
contractual arrangements to bar such uses or to seek a locality-wide ban.
Judicial refusal to enforce covenants that have such effects serves as a
mechanism for breaking out of the prisoner's dilemma that exists where numerous
localities or areas of the same locality would, if left to their own devices,
reject the same individuals. Conversely, judicial enforcement of covenants that
affect nonresidents may be appropriate where there remain
"enough" areas to which those excluded by the covenant can migrate.
Focus on the extent of the exclusion may be seen as a corollary to the Lockean
proviso that permits individuals to retain the fruits of their labor as long as
"enough and as good left in common for others."
n187 Exclusion from an idiosyncratic community permits the members of that
community to realize their interests without significantly penalizing those who
are excluded. As the number of communities who endorse the same exclusion
multiplies, however, the mobility of the excluded may become so constrained as
to trump the interests in upholding the exclusion. This explanation may help us
to understand why we might have different reactions to the same exclusion,
depending on its source. If private individuals enter into a contract to
exclude those with certain characteristics from their homes, we might have
little concern for its effects on the excluded, since the scope of the contract
is limited in space and time. While the same contract could theoretically be
entered into by an infinite number of people, that event seems unlikely (as
evidenced by the transaction-cost explanation for covenants). Once covenants
cure that collective-action problem, however, the likelihood that substantial
numbers of people will join such a covenant and will commit future generations
to the same proposition causes more concern. Should we elevate the scope of
the covenant further by allowing state entities to cure the collective-action
problem (by passing laws embodying the exclusion, thus increasing the
geographical scope of the exclusion and giving it the force of legal sanction),
we would make the effects of the exclusion even more difficult to avoid.
[*1439] This distinction between permissible and impermissible exclusions provides a
justification for allowing a community to impose its preferences on outsiders
where the basis for exclusion does not substantially constrain the mobility of
those excluded. In reasoning to this conclusion, I have also indicated that
local political forces to exclude a particular group or land use might be so
prevalent throughout society as to justify universally invalidating the effects
of those forces--both in associations and in more traditional governmental
units. Once we focus on political action, however, there may follow a stronger
justification for allowing affirmative exclusions by associations, a
justification that follows from a claim of political equality between those who
live within and without associations.
I assumed above that those who live in neighborhoods not governed by covenants
will nevertheless be able to influence local officials and thus will be able to
procure locality-wide bans on undesirable activities. This assumption suggests
that the absence of covenants does not necessarily place these individuals at a
political disadvantage. Rather, they may achieve their community norms by
participating in political processes on an ad hoc basis. The decision not to
live within an association may therefore indicate a preference for ad hoc
political activity rather than for ex ante regulation.
For instance, one might expect that in any locality, resolution of
controversial issues such as siting of group homes will necessitate some form
of bargaining between the locality and the areas potentially available for the
disfavored use. Neighborhoods in which coalitions can form to oppose the siting
or to bargain with the locality may do better in avoiding these uses or in
obtaining compensation for accepting them than neighborhoods in which
coalitions have more difficulty forming.
n188 If those who live in associations have an entitlement to enforce covenants
that prohibit uses available elsewhere in the locality, local officials who
wish to site those uses in the association will bear the burden of beginning
the bargaining process, while residents of neighborhoods outside of
associations will bear the burden of beginning the bargaining process with
local officials. This ostensible disparity becomes more appropriate if we
believe that those who live in associations are systematically less effective
at creating coalitions to oppose or influence municipal action.
[*1440] At first, this conclusion seems counterintuitive. Indeed, the very existence
of the association suggests that a collective body exists, so coalition costs
are lower. In addition, some instances of association action against municipal
conduct do exist, such as where associations seek to enjoin the application of
n189 The fact that an association is effective at regulating relations among
members, however, does not indicate similar success in dealing with outsiders.
Although there is some evidence that associations maintain contact with local
n190 that same evidence suggests that members are not systematically involved in
local public affairs. Because association voting schemes do little to foster
participation even in association affairs,
n191 migration to an association may indicate a relative inability or unwillingness
to participate in the politics of the diverse world outside association
boundaries. After all, it seems somewhat anomalous to assume that association
members migrate to a common area in order to seek isolation within homogeneity
and to live by highly tailored, privatized regulations, and simultaneously to
assume that they seek the robust debate of a diverse political marketplace.
Perhaps this distaste for politics outside the association also explains the
otherwise anomalous phenomenon that associations receive little statutory
protection. One would imagine that groups of associations, composed of a
limited number of readily identifiable units with concentrated populations that
can be easily monitored, would make effective lobbying groups for issues of
common concern, such as avoiding double taxation and obtaining reimbursement of
privately provided public services.
n192 While I am reluctant to infer too much from the failure of associations to
organize for legislatively granted benefits, the presence of such legislation
would defeat the hy
[*1441] pothesis that association members have less taste for the political
marketplace than exists outside the association.
This view is also consistent with my prior claim that associations constitute
enforcers of private rules for those who have opted out of governmental
decision making. If association members are relatively poor lobbyists for their
interests in their interactions with local governments, and if we want to
ensure that local governments have no more ability to impose the costs of
social programs on residents within associations as on those without, we might
assign entitlements differently to those two groups. Granting latitude to
covenants might serve as an equalizer that compensates for the relative
unwillingness of association members to bargain for a fair share of undesirable
land uses that must be spread throughout the locality.
Residential associations may be easy targets. Their attraction is frequently
based on mundane aspects of the good life rather than on the creation of robust
communities. They tend to exclude those worst off in the society. They impose
costs on their members who seek to avoid restrictions and on outsiders who may
have to bear a greater level of undesirable activities and land uses that are
excluded from the associations. Nevertheless, I have suggested that they may
fulfill important functions and do so in a manner that entitles their decisions
to substantial deference in a wide range of cases. Whether associations realize
this potential depends on such issues as their ability to signal a common
lifestyle to potential members and the susceptibility of their officials to
interests inconsistent with those of their members. On some of these issues, I
remain agnostic. But the overall picture I have attempted to paint is of a
mechanism for sorting that is no more invidious than we allow through the
creation of more formal jurisdictions (municipal corporations) and that is more
responsive than those institutions to the desires of residents. That these
smaller jurisdictions may engage in activities that set them apart from others
in society is undeniable. But that is a source for further analysis, not a
conclusion that necessarily leads to denigration of these institutions.
n1 By the end of the $ (1980s$ ), there were more than 130,000 $ (residential
associations ("RCAs")$ ) operating in the United States and more than 30 million Americans were
subject to RCA governance. The number of RCAs in the United States is currently
increasing by approximately 9,500 annually and is expected to reach 225,000 by
the year 2000. Assuming that the RCAs created in the next few years are
approximately the same size as those already in existence (approximately 230
residents per RCA), the number of Americans subject to RCA governance will grow
by approximately 2.1 million annually and will exceed 50 million by the year
Robert Jay Dilger, Neighborhood Politics: Residential Community Associations
in American Governance 5 (NYU, 1992) (citations omitted). See also Advisory
Commission on Intergovernmental Relations, Residential Community Associations:
Private Governments in the Intergovernmental System? 1, 3-4 (1989) ("ACIR Report").
452 US 61, 85 (1981).
Id at 85.
Id at 85-86.
Id at 87.
Jerry Frug, Decentering Decentralization,
60 U Chi L Rev 253 (1993). For criticism of Chief Justice Burger's view as centered on conceptions of the
good that can only be pursued by some segment of the population, see Robert
Douglas Chesler, Imagery of Community, Ideology of Authority: The Moral
Reasoning of Chief Justice Burger,
18 Harv CR-CL L Rev 457 (1983).
n7 See Gary J. Miller, Cities by Contract: The Politics of Municipal
Incorporation 3741, 63 (MIT, 1981); Richard Briffault, Our Localism: Part
I--The Structure of Local Government Law,
90 Colum L Rev 1 (1990); Richard Briffault, Our Localism: Part II--Localism and Legal Theory,
90 Colum L Rev 346 (1990); Lawrence Gene Sager, Tight Little Islands: Exclusionary Zoning, Equal
Protection, and the Indigent,
21 Stan L Rev 767 (1969).
n8 These assumptions are consistent with those made in the classic article by
Charles M. Tiebout, A Pure Theory of Local Expenditures, 64 J Pol Econ 416
(1956), which specifies the conditions for an ideal allocation of local public
n9 See, for example, Amy Gutmann, Communitarian Critics of Liberalism, 14 Phil
& Pub Aff 308, 318-320 (1985) ("Communitarian critics want us to live in Salem, but not to believe in witches."); Stephen Holmes, The Permanent Structure of Antiliberal Thought, in Nancy L.
Rosenblum, ed, Liberalism and the Moral Life 227, 230-32 (Harvard, 1989).
60 U Chi L Rev at 291 (cited in note 6).
n11 See, for example,
Church of the Lukumi Babalu Aye, Inc. v City of Hialeah, 113 S Ct 2217 (1993) (invalidating, under the Free Exercise Clause, a city ordinance directed at
religious practice of ritual sacrifice of animals);
Wisconsin v Yoder, 406 US 205 (1972) (exempting the Amish from a state law requiring high school attendance until
the age of sixteen);
Santa Clara Pueblo v Martinez, 436 US 49 (1978) (allowing a Native American tribe to determine its own membership even though
the qualifications discriminate against women);
Village of Belle Terre v Boraas, 416 US 1 (1974) (upholding an ordinance restricting land use to one-family dwellings);
Moore v East Cleveland, 431 US 494 (1977) (invalidating a one-family dwelling ordinance);
State of Oregon v City of Rajneeshpuram, 598 F Supp 1208 (D Or 1984) (invalidating the incorporation of a city dedicated to a religious purpose);
Cleburne v Cleburne Living Center, 473 US 432 (1985) (invalidating an ordinance requiring group homes for the mentally retarded to
obtain special use permits).
n12 See, for example,
Welsh v Boy Scouts of America, 993 F2d 1267 (7th Cir 1993), cert denied,
114 S Ct 602 (1993) (holding that the Boy Scouts are not subject to a public accommodation
statute). This is not to say that we do not sometimes regulate these
associations. See, for example,
Hishon v King & Spalding, 467 US 69 (1984) (requiring the consideration of women for partnership in a law firm);
Ruich v Ruff, Weidenaar & Reidy, 837 F Supp 881 (N D Ill 1993) (holding a law firm partner subject to individual liability under Title VII);
New York State Club Ass'n v City of New York, 69 NY2d 211, 505 NE2d 915 (1987) (upholding an antidiscrimination law applied to
Quinnipiac Council, Boy Scouts of America v Comm'n on Human Rights and Opportunities, 204 Conn 287, 528 A2d 352 (1987) (holding the Boy Scouts subject to a public accommodation statute);
Rotary International v Rotary Club of Duarte, 481 US 537 (1987) (upholding a statute requiring Rotary Clubs to admit women);
United States v Lansdowne Swim Club, 713 F Supp 785 (E D Pa 1989) (prohibiting discriminatory membership policies by a swim club). Nor do I want
to overstate the private nature of private associations, which may often be
used to accomplish public purposes. See Hendrik Hartog, Public Property and
Private Power (Cornell, 1983) (noting the role of officials of New York City,
which was largely a private corporation in the eighteenth century, in the
development of modern municipal law and its accompanying justifications for
local public action); Arthur J. Jacobson, The Private Use of Public Authority:
Sovereignty and Associations in the Common Law,
29 Buff L Rev 599 (1981).
n13 See, for example, Michael J. Sandel, Liberalism and the Limits of Justice
11-13 (Cambridge, 1982); Michael Walzer, Spheres of Justice 312-13 (Basic
Books, 1983); Gregory S. Alexander, Dilemmas of Group Autonomy: Residential
Associations and Community,
75 Cornell L Rev 1, 35-36 (1989); Frug,
60 U Chi L Rev at 260 (cited in note 6). For an application to cities, see Gordon L. Clark, Judges
and the Cities 27-32 (Chicago, 1985).
n14 Of course, this might not be the case. A residential association that appeals
to retirees, for instance, may provide all the social, political, and economic
activities that residents require. See Frances FitzGerald, Cities On a Hill
203-45 (Simon and Schuster, 1986) (describing self-contained life in the
retirement community of Sun City, Florida).
60 U Chi L Rev at 290-91 (cited in note 6).
n16 See, for example, Alexander,
75 Cornell L Rev at 52 (cited in note 13) ("Communities by their very nature exclude.").
n17 I take the phrase from Judith N. Shklar, Ordinary Vices (Belknap, 1984), to
indicate that the bases for exclusion are neither heinous nor exceptional, but
the result of common--if objectionable--conduct.
n18 See Symposium: Preservation of Minority Cultures,
25 U Mich J L Ref 539 (1992).
Board of Education v Grumet, 114 S Ct 2481 (1994) (creation of school district along religious lines violates Establishment
American Civil Liberties Union v Long Branch, 670 F Supp 1293 (D NJ 1987) (construction of an
"eruv" by religious Jews on city property did not violate Establishment Clause);
Smith v Community Board No. 14, 491 NYS2d 584 (NY Sup Ct 1985) (same).
Yoder, 406 US 205.
n21 See Government by the Nice, for the Nice, The Economist 25 (July 25, 1992);
Ann Mariano, Enclosed Communities: Havens, or Worse?, Wash Post E1 (Apr 9,
n22 Mary Anne Case has suggested to me that this phenomenon may be analyzed in
terms of the Freudian notion of the
"narcissism of minor differences." The smallness of the differences may bring into stark relief the possibility
of doing things in a different way or may allow a group to cohere around the
way in which it does things by criticizing those who act differently. See Mary
Anne Case, Couples and Coupling in the Public Sphere: A Comment on the Legal
History of Litigating for Lesbian and Gay Rights,
79 Va L Rev 1643, 1662-63 (1993).
In their contribution to this Special Issue, Christopher Eisgruber and
Lawrence Sager implicitly offer a possible solution to this puzzle. Unpopular
religious minorities, in their view, are entitled to protection but not
privilege. Those closest to the majoritarian norm, however, would presumably
not incur the wrath of unpopularity that is visited on distant minorities.
Thus, those who are closest to the majority do not require protection. This
explanation, while perhaps providing a grounding for constitutional doctrine
concerning the relationship between religion and the state, does not provide a
complete response to my puzzle insofar as constitutional doctrine does not
offer protection to all divergent groups, but only to
"religious" ones. Of course, divergent groups do not, by that feature alone, induce calls
for protection. We might believe that the American Nazi Party deserves less
protection than the Young Republicans, although the former is further from
majoritarian norms than the latter.
n23 See ACIR Report at 3 (cited in note 1).
n24 Condominium associations typically govern single buildings, whose residents
own their residences individually and their common areas (such as hallways and
dividing walls) in common. Cooperative associations own and maintain their
buildings, while residents own shares in the corporation and have a leasehold
interest in their residence. Homeowners associations typically consist of
residents who own separate plats and improvements within a development, while
the association owns and manages common property such as lakes, streets, and
gateways. See, for example, Dilger, Neighborhood Politics at 16-17 (cited in
n25 For the remainder of this Article, any reference to
"association" means homeowners association, unless the context indicates otherwise.
n26 See, for example,
Westwood Homeowners Ass'n v Lane County, 118 Or App 310, 847 P2d 862, 865 (1993);
Board of Directors of Olde Salem Homeowners' Ass'n v Secretary of Veterans Affairs, 216 Ill App 3d 281, 589 NE2d 761, 766 (1992);
Inwood North Homeowners' Ass'n v Harris, 736 SW2d 632, 636-37 (Tex 1987).
n27 See Dilger, Neighborhood Politics at 20-23 (cited in note 1) (listing services
commonly provided by associations).
Northern Palm Beach County Water Control District v Florida, 604 S2d 440, 444 (Fla 1992) (Shaw dissenting).
n29 See Dilger, Neighborhood Politics at 14 (cited in note 1); Urban Land
Institute and the Community Associations Institute, Creating a Community
Association: The Developer's Role in Condominium and Homeowner Associations
(1977) (on file with the U Chi L Rev).
n30 For discussion of voting rights within associations, see Robert C. Ellickson,
Cities and Homeowners Associations,
130 U Pa L Rev 1519, 1543-44 (1982); Gerald E. Frug, Cities and Homeowners Associations: A Reply,
130 U Pa L Rev 1589, 1592-96 (1982).
n31 See, for example, Robert G. Natelson, Consent, Coercion, and
"Reasonableness" in Private Law: The Special Case of the Property Owners Association,
51 Ohio St L J 41, 47 (1990).
n32 See, for example,
Lookout Mountain Paradise Hills Homeowners' Ass'n v Viewpoint Associates, 867 P2d 70 (Colo App 1993);
Davis v Huey, 620 SW2d 561 (Tex 1981);
Catalina Square Improvement Committee v Metz, 630 SW2d 324 (Tex App 1982).
n33 See, for example,
Black v Fox Hills North Community Ass'n, Inc., 90 Md App 75, 599 A2d 1228 (1992);
Prestwick Landowners' Ass'n v Underhill, 69 Ohio App 2d 45, 429 NE2d 1191 (1980).
n34 See, for example,
Mains Farm Homeowners Ass'n v Worthington, 121 Wash 2d 810, 854 P2d 1072 (1993) (restriction to single-family residence);
Double D Manor, Inc. v Evergreen Meadows Homeowners' Ass'n, 773 P2d 1046 (Colo 1989) (same).
n35 See, for example,
MaJor v Miraverde Homeowners Ass'n, 7 Cal App 4th 618, 9 Cal Rptr 2d 237 (1992) (enjoining enforcement of a rule limiting access to recreational areas by
n36 In condominium association declarations, the association may retain the power
to approve the transfer of any interest in a unit. See, for example,
Aquarian Foundation, Inc. v Sholom House, Inc., 448 S2d 1166 (Fla App 1984).
n37 See, for example,
Murphy v Timber Trace Ass'n, 779 SW2d 603, 607-08 (Mo App 1989) (upholding sign restrictions in covenants although the same restrictions could
not have been imposed by a governmental entity); Ellickson,
130 U Pa L Rev at 1519, 1528 (cited in note 30). Compare
City of Ladue v Gilleo, 114 S Ct 2038 (1994).
n38 Indeed, many covenants currently include express nondiscrimination clauses.
See, for example, Statement of Restrictions Covenants and Conditions for Ivy
Farm, Albemarle County, Virginia, which includes the following provision:
Any person, when he becomes an Owner, agrees that neither he nor any one
authorized to act for him will refuse to sell or rent, after the making up sic
of a bona fide offer, or refuse to negotiate for the sale or rental of, or to
otherwise make unavailable or deny any of the property owned by him in Ivy Farm
to any person because of race, color, religion, sex or national origin.
(on file with the U Chi L Rev).
Shelley v Kraemer, 334 US 1 (1948), the Supreme Court determined that judicial enforcement of a restrictive racial
covenant would constitute state action for purposes of the Fourteenth
Amendment. Courts have been reluctant to extend that logic to other areas. See,
Linn Valley Lakes Property Owners Ass'n v Brockway, 250 Kan 169, 824 P2d 948 (1992) (holding that enforcement of a restrictive covenant prohibiting the placement
of signs on private property is not state action prohibited by the First
McGuire v Bell, 297 Ark 282, 761 SW2d 904, 911 (1988) (refusing to consider an equal protection argument against the enforcement of
a restrictive covenant to prohibit the use of a residence for the mentally
disabled). But see
Park Redlands Covenant Control Committee v Simon, 181 Cal App 3d 87, 226 Cal Rptr 199, 205-06 (1986) (finding state action where city building permits had been conditioned on
certain age and occupancy restrictions).
n39 See, for example,
Miller v First Colony Community Services Ass'n, 1993 Tex App LEXIS 2443.
n40 One covenant for Rosemont, a subdivision within Albemarle County, Virginia,
Section 8.05. Mail Boxes. The $ (Architectural Control Board ("ACB")$ ) shall provide a description and/or sketch of what is permissible for mail
boxes and/or paper delivery boxes. No mail or paper delivery boxes deviating
from that so specified by the ACB shall be erected without the prior written
approval of the ACB as to location, color, size, design, lettering and all
other particulars of such mail or paper delivery boxes, and the standards,
brackets and name signs for such boxes.
(on file with U Chi L Rev).
n41 See, for example,
West Hill Colony, Inc. v Sauerwein, 138 NE2d 403 (Ohio App 1956).
n42 See, for example,
Cottrell v Miskove, 605 S2d 572 (Fla Dist App 1992);
Forest Glen Community Homeowners Ass'n v Nolan, 104 Ill App 3d 108, 432 NE2d 636 (1982).
n43 See Robert D. Brussack, Group Homes, Families, and Meaning in the Law of
16 Ga L Rev 33, 34-40 (1981).
n44 The passage of time may also lead to a problem of obsolescence for some
covenants. See Glen O. Robinson, Explaining Contingent Rights: The Puzzle of
91 Colum L Rev 546 (1991). My concern here is more with ambiguity than with obsolescence, although to the
degree that courts would ultimately determine whether a covenant has become
obsolete, the same analysis about the proper scope of judicial intervention
Mountain Park Homeowners Ass'n v Tydings, 864 P2d 392, 395 (Wash App 1993);
Lookout Mountain Paradise Hills Homeowners' Ass'n v Viewpoint Associates, 867 P2d 70, 74 (Colo App 1993); Natelson,
51 Ohio St L J at 50-51 (cited in note 31); Uriel Reichman, Judicial Supervision of Servitudes,
7 J Legal Stud 139 (1978).
n46 See James L. Winokur, The Mixed Blessings of Promissory Servitudes: Toward
Optimizing Economic Utility, Individual Liberty, and Personal Identity,
1989 Wis L Rev 1, 7-16. Winokur suggests that courts took a still less charitable view of servitudes
before the nineteenth century, when economic development suggested a need for
controls on private land use.
Ritchie v Carriage Oaks Homeowners Ass'n, 592 S2d 361 (Fla Dist App 1992);
Woodcreek Ass'n v Bingle, 73 Ohio App 3d 506, 597 NE2d 1153, 1156 (1991);
Barber v Dixon, 302 SE2d 915, 916-17 (NC App 1983);
Wisneiwski v Starr, 393 S2d 488, 489 (Ala 1980); Wayne S. Hyatt, The Community Association: An Introduction, C500 ALI-ABA 363,
n48 See, for example,
Lathan v Hanover Woods Homeowners Ass'n, 547 S2d 319 (Fla App 1989);
Lake St. Louis Community Ass'n v Leidy, 672 SW2d 381 (Mo App 1984).
n49 See, for example, Richard A. Epstein, Notice and Freedom of Contract in the
Law of Servitudes,
55 S Cal L Rev 1353, 1353 (1982); Uriel Reichman, Residential Private Governments: An Introductory Survey,
43 U Chi L Rev 253, 279-83 (1976); Reichman,
7 J Legal Stud at 154; Ellickson,
130 U Pa L Rev at 1526-30 (cited in note 30).
Arizona Biltmore Estates Ass'n v Tezak, 868 P2d 1030 (Ariz App 1993);
Norwood-Norland Homeowners' Ass'n v Dade County, 511 S2d 1009, 1014 (Fla App 1987);
Gigowski v Russell, 718 SW2d 16, 18 (Tex App 1986).
n51 See, for example,
West Hill Colony, Inc. v Sauerwein, 138 NE2d 403, 405 (Ohio App 1956).
n52 See Dilger, Neighborhood Politics at 35 (cited in note 1); Winokur,
1989 Wis L Rev at 59-60 (cited in note 46). It is difficult to know what to make of the question of
purchaser ignorance, both as a descriptive and a normative matter. Several
states have recently required disclosure of association covenants to
prospective purchasers, so that knowledge may increase with time. See, for
Fla Stat Ann section 718.503 (West 1988
& Supp 1994);
Mont Code Ann section 70-23-613 (1993);
Va Code section 55-511 (Supp 1993);
Wis Stat Ann section 703.33 (West 1981
& Supp 1993). Natelson attributes an increase in condominium-owner knowledge to
the existence of such statutes and to possible causes of action for rescission
where disclosure was not made. Natelson,
51 Ohio St L J at 62 (cited in note 31).
The question of how much information a purchaser must have before he or she
"consented" to the terms of the purchase is much debated in the literature. I believe that
this question, like the question of consent in any other purchase, is best
answered by asking whether we believe that one of the parties is systematically
disadvantaged in a manner that mandates intervention by a third party
(typically a court) to undo the transaction. Traditionally, this would require
more than mere ignorance; it would require that the party claiming disadvantage
did not have the knowledge, and could not reasonably have obtained an
opportunity to secure it.
Frances T. v Village Green Owners Ass'n, 42 Cal 3d 490, 723 P2d 573, 576 (1986).
Cohen v Kite Hill Community Ass'n, 142 Cal App 3d 642, 191 Cal Rptr 209, 214 (1983); Katharine Rosenberry, Condominium and Homeowner Associations: Should They be
"Mini-Governments?", in ACIR Report at 69 (cited in note 1).
Vernon Bowdish Builder, Inc. v Spalding Lake Homeowners' Ass'n, 196 Ga App 370, 396 SE2d 24 (1990);
Beehan v Lido Isle Community Ass'n, 70 Cal App 3d 858, 137 Cal Rptr 528, 531-32 (1977); Jeffrey A. Goldberg, Community Association Use Restrictions: Applying the
Business Judgment Doctrine,
64 Chi Kent L Rev 653, 664-69 (1988).
n56 See, for example, Annis v Turtle Creek Homeowners Ass'n, 1992 Neb App LEXIS, *
Holiday Pines Property Owners Ass'n v Wetherington, 596 S2d 84, 87 (Fla App 1992);
Oakbrook Civic Ass'n v Sonnier, 481 S2d 1008 (La 1986). The
"reasonableness" standard is often embodied in statute. See
Cal Civil Code section 1354(a) (West Supp 1994) ("The covenants and restrictions in the declaration shall be enforceable
equitable servitudes, unless unreasonable . . . ."); Note, Judicial Review of Condominium Rulemaking,
94 Harv L Rev 647, 652 n 29 (1981). Some courts, however, specifically eschew investigation into the
reasonableness of a regulation. In
Hidden Harbour Estates, Inc. v Basso, 393 S2d 637, 640 (Fla App 1981), the court declared that use restrictions in a declaration of a condominium may
"a certain degree of unreasonableness" but still be judicially upheld. Professor Ellickson asserts that
reasonableness review is appropriate with respect to amendments to covenants,
though not with respect to the original covenants. See Ellickson,
130 U Pa L Rev at 1526 (cited in note 30).
n57 See Jesse Dukeminier and James E. Krier, Property 935 (Little, Brown, 3d ed
n58 See, for example, Comment, An Analysis of Authorities: Traditional and
71 Mich L Rev 1376, 1426-27 (1973); Advisory Commission on Intergovernmental Relations, Metropolitan Organization:
The Allegheny County Case 86-88 (1992).
n59 See Tiebout, 64 J Pol Econ at 426 (cited in note 8). In creating his model for
an ideal allocation of public services, Tiebout assumed that under certain
conditions, including perfect mobility, information, the absence of
externalities, and choice among substantial numbers of localities, individuals
with similar preferences would migrate to the same locality, so that those
within a given locality would share the same preferences. Where those
assumptions fail, however, individuals with different preferences will share
the same locality.
n60 See, for example, James M. Buchanan and Gordon Tullock, The Calculus of
Consent 135-45 (Michigan, 1962) (road paving problem); Henry J. Raimondo,
Economics of State and Local Government 77-79 (Praeger, 1992).
Veach v Phoenix, 102 Ariz 195, 427 P2d 335, 337 (1967).
n62 The public purpose doctrine requires that municipal expenditures benefit the
entire locality rather than one segment of it. See
Anderson v Baehr, 217 SE2d 43, 47 (SC 1975); Robert S. Amdursky and Clayton P. Gillette, Municipal Debt Finance Law
sections 3.1, 3.5 (Little, Brown, 1992).
Ammons v Dade City, 783 F2d 982 (11th Cir 1986);
Dowdell v City of Apopka, 698 F2d 1181 (11th Cir 1983).
n64 See Ronald J. Oakerson, Private Street Associations in St. Louis County:
Subdivisions as Service Providers, in ACIR Report at 55, 57-59 (cited in note
n65 For a discussion of the ways in which user fees may coordinate the provision
of public services and the willingness to pay for them, see Clayton P. Gillette
and Thomas D. Hopkins, Federal User Fees: A Legal and Economic Analysis,
67 BU L Rev 795 (1987).
n66 See Todd Sandler and John T. Tschirhart, The Economic Theory of Clubs: An
Evaluative Survey, 18 J Econ Lit 1481, 1482 (1980).
n67 For defense of covenants based on avoidance of holdout problems, see Richard
A. Epstein, Covenants and Constitutions,
73 Cornell L Rev 906, 921-22 (1988).
n68 There is a substantial literature that suggests that redistributional issues
are not well addressed at the local level, because of opportunities for exit by
those who are best off and not altruistic. See, for example, Helen F. Ladd and
Fred C. Doolittle, Which Level of Government Should Assist the Poor?,
35 Natl Tax J 323 (1982); Ellickson,
130 U Pa L Rev at 1554-56 (cited in note 30).
n69 See Albert O. Hirschman, Exit, Voice, and Loyalty 16-17 (Harvard, 1970).
n70 See, for example, ACIR Report at 18 (cited in note 1). The positive
redistributional effects would disappear if residents of associations received
some rebate on their tax payments for the costs of privately provided services;
although, as the text indicates, this is not the typical situation. New Jersey
requires municipalities either to provide certain services to a
"qualified private community," such as a homeowners association, or to reimburse a
"qualified private community" that provides its own services. Services covered by the requirement include
street maintenance, street lighting, and refuse collection. See
NJ Rev Stat sections 40:67-23.2 to 23.8 (1993).
n71 See, for example,
Regency Homes Ass'n v Egermayer, 243 Neb 286, 498 NW2d 783 (1993) (foreclosure of lien for failure to pay dues to maintain recreational
Lake Arrowhead Community Club, Inc. v Looney, 112 Wash 2d 288, 770 P2d 1046 (1989) (enforcement of covenant to pay assessments for neighborhood facilities);
Inwood North Homeowners' Ass'n v Harris, 736 SW2d 632 (Tex 1987) (enforcement of covenant to pay assessments for repair of common areas);
Jeffrey E. Stake, Toward an Economic Understanding of Touch and Concern,
1988 Duke L J 925, 961-64.
n72 See cases cited in notes 32-42.
n73 See Todd Sandler, Collective Action 63-65 (Michigan, 1992).
n74 See Sandler and Tschirhart, 18 J Econ Lit at 1482 (cited in note 66).
n75 Covenants that violate constitutional or statutory provisions will not be
Shelley v Kraemer, 334 US 1 (1948);
Taormina Theosophical Community, Inc. v Silver, 140 Cal App 3d 964, 190 Cal Rptr 38 (1983).
n76 On the frequency and propriety of such motivations, see Thomas C. Schelling,
Micromotives and Macrobehavior 137-90 (Norton, 1978); Thomas C. Schelling,
Models of Segregation,
59 Am Econ Rev 488 (1969).
n77 See Edna Ullmann-Margalit, The Emergence of Norms 104-09 (Oxford, 1977).
n78 See Epstein,
73 Cornell L Rev at 906-07 (cited in note 67).
San Antonio Independent School Dist. v Rodriquez, 411 US 1 (1973) (holding that wealth is not an inherently suspect classification).
n80 Professor Frug argues:
"Those who want to move to a neighborhood should not face community-imposed
obstacles to doing so (the community should have no right to exclude them). But
the ability to maintain a relatively homogeneous community should also not be
forbidden (there should be no right to be included)." Frug,
60 U Chi L Rev at 291 (cited in note 6). Frug suggests that he can reconcile these two views by
forbidding a community to prohibit
"outsiders" from moving in, but refusing to force anyone within the community to sell to
Id at 291 n 182. I am more skeptical of this attempt at reconciliation. If the community
defines itself by reference to exclusion, then it is unclear why the community
cannot enforce its view against its members, especially those (sellers) who are
about to move out and thus will not internalize the consequences their sale to
an outsider has on the community that remains.
75 Cornell L Rev at 52 (cited in note 13).
n82 See, for example, Jan Crawford, Lane Says He Could Back Voluntary CHA
Searches, Chi Trib B1 (Apr 20, 1994).
n83 See, for example,
Mains Farm Homeowners Ass'n v Worthington, 121 Wash 2d 810, 854 P2d 1072, 1078-79 (1993) (holding a state zoning law is not applicable to association members);
Murphy v Timber Trace Ass'n, 779 SW2d 603, 607 (Mo App 1989) (holding an association may ban
"for sale" signs even though cities cannot);
Vienna Bend Subdivision Homeowners Ass'n v Manning, 459 S2d 1345, 1350 (La App 1984) (concluding that zoning ordinances and restrictive covenants are governed by
the same principles).
Shevock v Orchard Homeowners Ass'n, Inc., 621 A2d 346 (Del 1993) (action to enjoin change in zoning ordinance);
Gulfport v Wilson, 603 S2d 295 (Miss 1992) (action to enjoin amendment to restrictive covenant);
Washington Shores Homeowners' Ass'n v Orlando, 602 S2d 1300 (Fla 1992) (action to oppose local bond issue).
Erreca's v Superior Court, 19 Cal App 4th 1475, 24 Cal Rptr 2d 156 (1993) (suit against contractor);
Sunshine Vistas Homeowners Ass'n v Caruana, 623 S2d 490 (Fla 1993) (enforcement of setback provision);
Pleasant Ridge Townhouses Homeowners' Ass'n v T & D Construction Corp., 181 AD2d 871, 581 NYS2d 857 (1992) (action against town for defective construction);
Oak Trail Road Homeowners Ass'n, Inc. v Royal Mile Corp., 246 NJ Super 590, 588 A2d 430 (1991) (action against warranty insurer). See also James L. Winokur, Reforming
Servitude Regimes: Toward Associational Federalism and Community,
1990 Wis L Rev 537, 537-40.
Professor Ellickson has indicated that the same result may be obtained by
municipal enforcement of restrictive covenants. See Robert C. Ellickson,
Alternatives to Zoning: Covenants, Nuisance Rules, and Fines as Land Use
40 U Chi L Rev 681, 717 (1973). The problem with that solution is that municipalities may suffer substantial
budget constraints on their ability to bring claims, and mundane complaints
about violations of restrictive covenants could fall well behind other demands
for municipal expenditures.
Cohen v Kite Hill Community Ass'n, 142 Cal App 3d 652, 191 Cal Rptr 209, 215-16 (1983). See also
Duffey v Superior Court, 3 Cal App 4th 425, 4 Cal Rptr 2d 334, 338 (1992).
n87 See, for example,
Wilson, 603 S2d 295;
Shevock, 621 A2d 346;
Strohm v Board of Zoning Adjustment of Kansas City, 869 SW2d 302 (Mo App 1994).
n88 See, for example, Dilger, Neighborhood Politics at 131-33 (cited in note 1);
Diana Jean Schemo, Escape from Suburbia: Community Associations Thrive Amid
Debate on Freedom, Privacy and Democracy, NY Times B1 (May 3, 1994). For a
statement of this objective, and some skepticism that it will be realized, see
Gregory S. Alexander, The Conditions of
"Voice": Passivity, Disappointment, and Democracy in Homeowner Associations (Berkeley
Institute of Governmental Studies, forthcoming 1994).
n89 See Letter from Thomas Jefferson to John Cartwright (June 5, 1824), in H.A.
Washington, ed, 7 The Writings of Thomas Jefferson 355, 357 (J.C. Riker, 1855).
n90 See text accompanying notes 32-42.
n91 See cases cited in note 71.
n92 See Dilger, Neighborhood Politics at 139-40 (cited in note 1).
n93 See Winokur,
1989 Wis L Rev at 62-66 (cited in note 46).
n94 See Dilger, Neighborhood Politics at 141-44 (cited in note 1); Ellickson,
130 U Pa L Rev at 1543-63 (cited in note 30) (endorsing deviation from voting rules that apply to
governments). For a rebuttal, see Frug,
130 U Pa L Rev at 1592-96 (cited in note 30).
n95 See, for example, Dilger, Neighborhood Politics at 142-43 (cited in note 1).
n96 See Christopher J. Berry, Shared Understanding and the Democratic Way of Life,
in John W. Chapman and Ian Shapiro, eds, 35 NOMOS: Democratic Community 67,
77-78 (NYU, 1993).
n97 See, for example,
Poletown Neighborhood Council v Detroit, 304 NW2d 455 (Mich 1981); Note, Displacement in Gentrifying Neighborhoods: Regulating Condominium
Conversion Through Municipal Land Use Controls,
63 BU L Rev 955 (1983).
Nordlinger v Hahn, 112 S Ct 2326 (1992), the Court upheld a California property tax scheme that was based on the
acquisition value of property rather than the fair market value of the property
at the time the tax was levied. The Court concluded that the state's desire to
preserve neighborhood stability and the reliance interest of purchasers against
significant increases in taxes were sufficient to overcome Equal Protection
Id at 2333.
Cottrell v Miskove, 605 S2d 572, 573 (Fla App 1992) (concluding that a restriction on the parking of commercial vehicles carried a
strong presumption of validity because the resident voluntarily consented to
the restriction when buying property);
Jackson v Williams, 714 P2d 1017, 1025 (Okla 1985) (Wilson concurring and dissenting); Ellickson,
130 U Pa L Rev at 1519-20, 1523-24 (cited in note 30); Reichman,
43 U Chi L Rev at 279 (cited in note 49).
n100 See, for example,
Krein v Smith, 60 Wash App 809, 807 P2d 906, 907 (1991);
Woodvale Condominium Trust v Scheff, 27 Mass App 530, 540 NE2d 206, 209 (1989).
n101 See, for example,
Westfield Homes, Inc. v Herrick, 229 Ill App 3d 445, 593 NE2d 97, 102 (1992).
n102 See, for example,
Portola Hills Community Ass'n v James, 4 Cal App 4th 289, 5 Cal Rptr 2d 580, 583 (1992).
n103 For discussions of condominium owners' or homeowners' awareness of the
covenants by which they are bound, see Natelson,
51 Ohio St L J at 61-65 (cited in note 31); Winokur,
1989 Wis L Rev at 56-62 (cited in note 46).
1989 Wis L Rev at 59 (cited in note 46).
n105 At least some states require sellers of homes in an association to make copies
of covenants available to prospective purchasers. See note 52.
n106 See Gregory S. Alexander, Freedom, Coercion, and the Law of Servitudes,
73 Cornell L Rev 883, 888 (1988).
n107 See id; Winokur,
1989 Wis L Rev at 57 (cited in note 46).
91 Colum L Rev at 577-78 (cited in note 44).
n109 My colleague Saul Levmore has suggested that law schools follow a similar
pattern in creating catalogues that illustrate a rather picturesque learning
environment, even though the underlying ethos of the law school is hard work.
n110 John F. Dillon, 1 Commentaries on the Law of Municipal Corporations section
237 at 448-49 (Little, Brown, 5th ed 1911). See, for example,
Chemical Bank v Washington Public Power Supply System, 99 Wash 2d 772, 666 P2d 329, 334 (1983).
n111 See, for example,
City Council of Alexandria v Potomac Greens Associates Partnership, 429 SE2d 225, 228 (Va 1993).
n112 See, for example, Cal Const, Art XI, section 5; NM Const, Art X, section 6;
Williams v Town of Hilton Head Island, 429 SE2d 802, 805 (SC 1993);
Des Moines v Master Builders of Iowa, 498 NW2d 702, 703-04 (Iowa 1993).
n113 See, for example, Colo Const, Art XX, section 6 (home rule for cities and
towns with population in excess of 2,000). In any case, home rule provisions
"can be nullified through actual usage." See Comment, Give 'Em Enough Rope: States, Subdivisions and the Market
Participant Exception to the Dormant Commerce Clause,
60 U Chi L Rev 615, 637 & n 128 (1993).
n114 Some states require that the regulatory actions of associations be
"reasonable," see text accompanying note 56, a term that requires judicial construction in
each particular setting. One might infer that such requirements authorize
substantial judicial intervention in regulation by associations. Nevertheless,
courts may undertake review for reasonableness with a presumption of validity
or not, and the choice that the court makes along these lines will
substantially affect the outcome of the cases it reviews.
n115 Clayton P. Gillette, In Partial Praise of Dillon's Rule, or, Can Public Choice
Theory Justify Local Government Law?,
67 Chi Kent L Rev 959, 983-85 (1991).
n116 Federalist 10 (Madison), in Clinton Rossiter, ed, The Federalist Papers 77, 83
n117 For an examination of arguments for and against participatory processes in
government, see Clayton P. Gillette, Plebiscites, Participation, and Collective
Action in Local Government Law,
86 Mich L Rev 930 (1988).
n118 See Einer R. Elhauge, Does Interest Group Theory Justify More Intrusive
101 Yale L J 31, 60-61 (1991).
Judicial review of municipal expenditures is especially problematic. Budget
decisions are polycentric, so that funding levels for one activity may depend
on funding levels for other activities. The amounts allocated to police
services may vary with the amounts allocated to schools, since, for instance,
more after-school activities funded through the school budget can reduce the
need for police services during that time. While political legislatures can
attend to all parts of the budget and trade off expenditures in a manner that
reflects all interests, courts can only consider the distinct claims before
them and hence may fail to consider the basis or consequence of budget
allocations on projects that are not represented in the immediate litigation.
See, for example,
Riss v City of New York, 22 NY2d 579, 240 NE2d 860 (1968);
Chandler v District of Columbia, 404 A2d 964, 966 (DC App 1979).
n119 See Tiebout, 64 J Pol Econ at 419 (cited in note 8). Under the Tiebout model,
each individual is able to migrate to a jurisdiction that offers local public
goods that perfectly correspond to his or her preferences. Hence, political
battles are unnecessary to resolve competing claims to goods and services.
n120 Religion and family are less volitional in that exit from one's original
religion or family is difficult, if not impossible. Furthermore, factions
within some groups, such as religions, are likely to arise as a result of the
need of a subset of the group to adapt to new circumstances. The geographical
compactness of associations suggests that such adaptations are likely to be
n121 See Oliver E. Williamson, Transaction-Cost Economics: The Governance of
22 J L & Econ 233, 239 (1979).
n122 Charles J. Goetz and Robert E. Scott, Principles of Relational Contracts,
67 Va L Rev 1089, 1149-50 (1981).
Id at 1111-19.
n124 The classic article for this proposition is Stewart Macaulay, Non-Contractual
Relations in Business: A Preliminary Study, 28 Am Soc Rev 55 (1963). A more
recent and wide-ranging application is found in Robert C. Ellickson, Order
without Law: How Neighbors Settle Disputes 141-44 (Harvard, 1991).
n125 See Jon Elster, The Cement of Society 99-100, 105 (Cambridge, 1989). See also
Robert E. Scott, Conflict and Cooperation in Long-Term Contracts,
75 Cal L Rev 2005, 2040-42 (1987). Note that I am simply attempting to describe the effects and consequences of
norms. I am not making any claim that the norms that evolve will maximize the
welfare of those who share them. For a stronger claim, see Ellickson, Order
without Law at 167-83.
n126 See Ullmann-Margalit, Emergence of Norms at 21-22 (cited in note 77).
n127 See Ellickson, Order without Law at 56-60 (cited in note 124).
75 Cornell L Rev at 40 (citation omitted) (cited in note 13).
n130 See Alexander,
73 Cornell L Rev at 899 (cited in note 106).
Id at 899-900.
n132 See Stewart E. Sterk, Neighbors in American Land Law,
87 Colum L Rev 55, 69-88 (1987).
Id at 89 & n 120.
n134 See Gidon Gottlieb, Relationalism: Legal Theory for a Relational Society,
50 U Chi L Rev 567, 569-73 (1983).
n135 See Ellickson, Order without Law at 29-39 (cited in note 124); Scott,
75 Cal L Rev at 2041 (cited in note 125).
n136 See text accompanying notes 76-87.
n137 Goetz and Scott,
67 Va L Rev at 1092 (cited in note 122).
n138 See Robert E. Scott, A Relational Theory of Default Rules for Commercial
19 J Legal Stud 597, 602-04 (1990). I have previously argued that, with respect to some historically remote risks,
parties might be assumed implicitly to have engaged in an alternative
allocation of risks. See Clayton P. Gillette, Commercial Relationships and the
Selection of Default Rules for Remote Risks,
19 J Legal Stud 535 (1990).
n139 In some respects, however, the vagueness of the relationship suggests that
courts stand in an inferior position to comprehend and enforce the details of
the relationship. The fact that the court can recognize that joint
maximization was the objective of the parties does not mean that the court can
also identify what conduct would constitute joint maximization. Any effort to
define the point of joint maximization is prone to error and would undermine
the parties' incentives to specify their contractual obligations as fully as
possible. Instead, the better position for courts may be to allow the
inducements that emerge from the parties' reciprocal capacities to punish any
party perceived to be chiseling at the original understanding.
n140 A covenant in the Declaration of Covenants, Conditions and Restrictions for
Ashcroft, a development in Albemarle County, Virginia reads:
The Developer has deemed it desirable, for the efficient preservation of the
values and amenities in the community, to create an agency to which should be
delegated and assigned the powers of owning, maintaining and administering the
common properties and facilities, administering and enforcing the covenants and
restrictions, collecting and disbursing the assessments, dues and charges
hereinafter created, and promoting the recreation, health, safety, common good
and general welfare of the residents. In this regard, the Developer has
incorporated under the laws of the State of Virginia the Ashcroft Neighborhood
Association as a non-profit corporation for the purpose of exercising such
(on file with U Chi L Rev). For an example of a court that referred to such a
general recital in the Declaration of Covenants, Conditions and Restrictions to
define the meaning of a restriction on
"trailers," and that upheld the association's application of the restriction, see
Arizona Biltmore Estates Ass'n v Tezak, 868 P2d 1030 (Ariz App 1993).
n141 See UCC section 2-305.
75 Cal L Rev at 2050 (cited in note 125).
id at 2042-44.
n144 See, for example,
Portola Hills Community Ass'n v James, 4 Cal App 4th 289, 5 Cal Rptr 2d 580 (1992) (imposing sanctions against a community association for pursuing an action
against a lot owner who installed a satellite dish without receiving the
permission of the association).
n145 See Scott,
75 Cal L Rev at 2042 (cited in note 125).
Id at 2043-44.
n147 See Zipporah Batshaw Wiseman, The Limits of Vision: Karl Llewellyn and the
100 Harv L Rev 465, 512-13 (1987). See also Scott,
75 Cal L Rev at 203738 (cited in note 125) (Parties in relational contracts governed by cooperative
"may have difficulty escaping the standardized arrangements $ (of legal rules$ )
since any interpretive disagreements are likely to be resolved by judicial
recourse to the very same context that contractual innovators seek to escape.").
n148 The point that is relevant here is not only that private lawmaking takes place
through religious authority, contract, property, and corporate law (and of
course through all private associational activity), but also that from time to
time various groups use these universally accepted and well-understood devices
to create an entire nomos--an integrated world of obligation and reality from
which the rest of the world is perceived. At that point of radical
transformation of perspective, the boundary rule--whether it be contract, free
exercise of religion, property, or corporation law--becomes more than a rule:
it becomes constitutive of a world. We witness normative mitosis. A world is
turned inside out; a wall begins to form, and its shape differs depending upon
which side of the wall our narratives place us on.
Robert M. Cover, Foreword: Nomos and Narrative,
97 Harv L Rev 4, 31 (1983).
n149 See, for example,
Lakes at Mercer Island Homeowners Ass'n v Witrak, 61 Wash App 177, 810 P2d 27 (1991) (concluding that tall trees may constitute a
"fence" in violation of a covenant because that interpretation
"protects the homeowners' collective interests" and satisfies the
"objective of the contract," even if it is inconsistent with the
"plain meaning" of the term).
n150 See, for example,
Sargent v Smith, 863 SW2d 242 (Tex App 1993);
Ingram v Wirt, 314 Ark 553, 864 SW2d 237 (1993);
Crabtree v Jones, 435 SE2d 823 (NC App 1983).
n151 See, for example,
Ingram, 864 SW2d at 238 (next-door neighbor);
Crabtree, 435 SE2d at 823 (across the street).
n152 See, for example,
Chicago Title and Trust Co. v Weiss, 238 Ill App 3d 921, 605 NE2d 1092 (1992) (granting standing to an individual resident of a planned unit development to
enforce restrictive covenants against a neighbor).
n153 See, for example,
Bloor v Falstaff Brewing Corp., 601 F2d 609 (2d Cir 1979).
n154 See Goetz and Scott,
67 Va L Rev at 1114 (cited in note 122).
n155 See, for example,
Beehan v Lido Isle Community Ass'n, 70 Cal App 3d 858, 866, 137 Cal Rptr 528, 532 (1977) (holding that an association's failure to take action against construction
arguably in violation of a setback restriction was protected by the business
n156 See text accompanying notes 46-47.
n157 See note 149.
Angel v Truitt, 424 SE2d 660, 661 (NC App 1993);
Forest Oaks Homeowners Ass'n v Isenhour, 401 SE2d 860 (NC App 1991). See also
Gigowski v Russell, 718 SW2d 16 (Tex App 1986) (upholding the application of a restrictive covenant against mobile homes to a
double-wide manufactured home, and holding the complainants entitled to an
injunction requiring the removal of the home).
n159 For treatment of agency costs in business corporation settings, see Michael C.
Jensen and William H. Meckling, Theory of the Firm: Managerial Behavior,
Agency Costs and Ownership Structure, 3 J Fin Econ 305 (1976); Eugene F. Fama
and Michael C. Jensen, Separation of Ownership and Control,
26 J L & Econ 301 (1983).
n160 Ronald A. Cass, Privatization: Politics, Law, and Theory,
71 Marq L Rev 449, 484 (1988). See also Bernard S. Black, Agents Watching Agents: The Promise of
Institutional Investor Voice,
39 UCLA L Rev 811 (1992); William H. Page, Antitrust, Federalism, and the Regulatory Process,
61 BU L Rev 1099 (1981); Cass R. Sunstein, Interest Groups in American Public Law,
38 Stan L Rev 29 (1985).
n161 See text accompanying note 120.
n162 See Cass,
71 Marq L Rev at 482 (cited in note 160).
Id at 483-84.
n164 The current critique of management attention to short-term gain suggests that
long-term performance is not, in fact, reflected in current share prices. See
Robert H. Hayes and William J. Abernathy, Managing Our Way to Economic
Decline, Harv Bus Rev 67 (July/Aug 1980); Glen O. Robinson, Probabilistic
Causation and Compensation for Tortious Risk,
14 J Legal Stud 779, 784-85 (1985).
n165 See Epstein,
73 Cornell L Rev at 917 (cited in note 67). Compare Ellickson,
40 U Chi L Rev at 681 (cited in note 85) (claiming that covenants drafted by developers could
provide more efficient land-use regulations than zoning because developers
provide relatively inexpensive alternatives to bureaucratic drafting, while
market forces will induce the developer to include only provisions that
increase land values in excess of the costs imposed by the constraint). For a
response that individuals who are attracted by these covenants are not very
successful at predicting their future preferences, see Stewart E. Sterk,
Foresight and the Law of Servitudes,
73 Cornell L Rev 956, 957-61 (1988). While Professor Sterk suggests reasons why individuals may not have perfect
foresight, he does not purport to establish the proposition that judges will be
better able to detect when individuals have changed their preferences or when
the law ought to intervene to correct initial decisions made with imperfect
n166 Frances FitzGerald reports that Sun City, Florida, was originally intended to
contain only single-resident housing units, but was changed to include
condominiums when the pace of housing sales slackened. FitzGerald, Cities on a
Hill at 214 (cited in note 14).
n167 See Ellickson, Order without Law at 169 (cited in note 124) (noting that norms
that advance the welfare of a close-knit group may disserve outsiders).
Matthews v Bay Head Improvement Ass'n, 95 NJ 306, 471 A2d 355, 359 (1984), stands as a notable exception. In that case, an association of property owners
sought to exclude nonresidents from a local beach. The court held that the
public trust doctrine required access to beachfront property and applied to
both municipally owned and privately owned property. The court, however, noted
the extraordinary relationship between the association and the borough within
which it had been formed. The borough had contributed to the cost of jetties,
had provided the association free office space, exempted certain association
property from taxation, and had included association activities under borough
Id at 365-68. See also
MaJor v Miraverde Homeowners Ass'n, 7 Cal App 4th 618, 9 Cal Rptr 2d 237, 241-43 (1992) (enjoining a rule that limited access to recreational areas of an association
by nonresident owners).
n169 See Note, Judicial Review of Condominium Rulemaking,
94 Harv L Rev 647, 65658 (1981). See also
Laguna Publishing Co. v Golden Rain Foundation of Laguna Hills, 131 Cal App 3d 816, 182 Cal Rptr 813, 829 (1982).
n170 So, for instance, a racial restriction may adversely affect even those who are
not members of the restricted race because they are not indifferent to living
in a race-neutral society.
n171 See text accompanying notes 2-6.
n172 Peter L. Berger and Richard John Neuhaus, To Empower People: The Role of
Mediating Structures in Public Policy 11-12 (American Enterprise Institute,
Baldwin v Nature's Hideaway, Phase I-B Homeowners Ass'n, 613 S2d 1376 (Fla App 1993), for instance, the court found that an adult foster care home was not
prohibited by a covenant restricting businesses within the association because
no nuisance was shown. A provision of the covenants indicated that no activity
that constituted a nuisance could be carried on within the association. The
court read the prohibition on businesses to be subject to the
"no nuisance" clause rather than reading the prohibition on businesses as an independent
clause. The court recognized, but did not decide the effect of, a state statute
overriding local laws and ordinances restricting residences to single-family
Id at 1377-78. See also
Double D Manor, Inc. v Evergreen Meadows Homeowners' Ass'n, 773 P2d 1046, 1048 (Colo 1989) (interpreting a restrictive covenant on single-family residences as only a
structural, not a use, restriction);
Prien Oaks Homeowners Ass'n v Mocklin, 560 S2d 115, 117 (La App 1990) (interpreting an ambiguous distance requirement between fences and the
"waterfront line" so as to impose the fewest restrictions on the property).
n174 See Brussack,
16 Ga L Rev at 34 (cited in note 43); Thomas F. Guernsey, The Mentally Retarded and Private
25 Wm & Mary L Rev 421 (1984).
n175 See, for example, Baldwin, 613 S2d at 1377;
Double D Manor, Inc., 773 P2d at 1051-52;
Turner v United Cerebral Palsy Ass'n, 772 P2d 628, 630 (Colo App 1988) (group home constitutes a family);
Vienna Bend Subdivision Homeowners Ass'n v Manning, 459 S2d 1345, 1348-50 (La App 1984) (same).
n176 See, for example,
Mains Farm Homeowners Ass'n v Worthington, 121 Wash 2d 810, 854 P2d 1072, 1075-76 (1993).
582 NE2d 780 (Ind 1991). See also
Minder v Martin Luther Home Foundation, 582 NE2d 788 (Ind 1991).
Clem, 582 NE2d at 782.
n179 Id. The statute provided:
(a) This section applies to each restriction, reservation, condition,
exception, or covenant that is created before April 1, 1988, in any subdivision
plat, deed, or other instrument of, or pertaining to, the transfer, sale,
lease, or use of property.
(b) A restriction, reservation, condition, exception, or covenant in a
subdivision plat, deed, or other instrument of, or pertaining to, the transfer,
sale, lease, or use of property that would permit the residential use of
property but prohibit the use of that property as a residential facility for
developmentally disabled or mentally ill persons:
(1) on the ground that the residential facility is a business;
(2) on the ground that the persons residing in the residential facility are
not related; or
(3) for any other reason;
is, to the extent of the prohibition, void as against the public policy of the
Ind Code section 16-13-21-14 (1988), repealed by Ind Pub L No 9-1991 section 98 (May 12, 1991).
n180 The law must not be arbitrary, unreasonable or patently beyond the necessities
the case. The legislature may not under the guise of protecting public
interests arbitrarily interfere with private business or impose unnecessary
restrictions upon lawful occupations.
Clem, 582 NE2d at 783, citing
Dep't of Financial Institutions v Holt, 231 Ind 293, 108 NE2d 629, 634 (1952).
Clem, 582 NE2d at 784-85.
Id at 781-82.
n183 The argument here creates a parallel in the association/local relationship to
Tocqueville's contention that decentralized municipal government would provide
some shelter for liberty even in periods of centralized oppression. Alexis de
Tocqueville, Democracy in America 262-63 (Anchor, 1969) (J.P. Mayer, ed).
Holt Civic Club v Tuscaloosa, 439 US 60, 69-70, 75 (1978), may be cited for the proposition that municipalities can impose costs on
nonresidents. But without express authority, localities do not have
extraterritorial regulatory power. Questions of municipal boundaries typically
require examination into whether the locality is imposing costs on those
outside the suggested boundaries. Finally, municipal decisions that affect
nonresidents are typically subject to market constraints that do not apply as
readily to homeowners associations. For instance, municipalities that seek to
impose commuter taxes must take into account the possibility that commuters can
shop and work elsewhere.
n185 See Vicki Been, What's Fairness Got to Do With It? Environmental Justice and
the Siting of Locally Undesirable Land Uses,
78 Cornell L Rev 1001, 1001-02 (1993).
n186 See, for example,
Mains Farm Homeowners Ass'n, 854 P2d at 1077-78.
n187 John Locke, Second Treatise on Government section 27 at 19 (Hackett, 1980)
(C.B. Macpherson, ed).
n188 See Been,
78 Cornell L Rev at 1002 & n 6 (cited in note 185).
n189 See cases cited in note 83. There is some evidence that association members
believe that they and their associations are more attentive to local political
affairs. See Dilger, Neighborhood Politics at 134-35 (cited in note 1). The
basis for this supposition is unclear.
n190 Id at 135.
n191 See id at 139-141.
n192 Residents face double taxation insofar as the association must pay property
taxes, funded by assessment imposed on individual lots, on common areas that
the association owns. At the same time, individual residents pay property taxes
on the value of their homes, which value also reflects the availability of the
common areas. See ACIR Report at 18 (cited in note 1). As noted above, see note
70, there is little statutory basis for reimbursement to associations for
privately provided services that the locality would otherwise be required to
provide to residents. It is possible that the absence of these protections is
evidence of the relatively new popularity of associations rather than the
systematic unwillingness of residents to participate in the traditional
Prepared: January 24, 2003 - 5:02:29 PM
Edited and Updated, January 25, 2003
Kristen A. Stelljes