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Privatopia: Homeowner Associations and the Rise of Residential Private Government

Since it was first published in 1994, Privatopia remains the most comprehensive scholarly work on the subject of homeowners associations. The author, Evan McKenzie, was a HOA attorney and is now a professor of political science at Albright University.

Below are some interesting excerpts arraigned by chapter; anyone truly interested in this subject will find the book at Amazon, Barnes & Noble, or Borders. It's quite possible that the population of Common Interest developments throughout the country would be greatly reduced if homebuyers were required to read this book before they purchased their homes.


Chapter 1

As CIDs spread, consumer choice is increasingly restricted. Americans who wish to purchase new housing are going to be living in CIDs, and under the rule of private governments, regardless of their preferences. 

To many residents, association boards often seem to operate as though wearing blinders, rigidly enforcing technical rules against people’s use of their own homes and ignoring the consequences of such intrusive behavior. The CID resident must choose between conformity and conflict. 

The CC&Rs are a system of deed restrictions that are written into the deeds of all homes. Deed restrictions date back to medieval England. They permit a seller of land to retain control of how the land is used after it is sold. 

In a variety of ways, these private governments are illiberal and undemocratic. Boards of directors operate outside constitutional restrictions because the law views them as business entities rather than governments. The courts accept the legal fiction that all residents have voluntarily agreed to be bound by the covenants by virtue of having bought a unit in the development. 

Over the past two decades, the professionals who build and service CIDs have become a significant force in interest group politics in many states. To a large extent, they have been able to shape legislative and judicial policy making, prevent meaningful regulation of CID activity, and keep the discourse on such matters largely private. 

Chapter 2

Instead of communities evolving through decisions made by the people who live there, the look and feel of communities is predetermined by developers who plan, build, and restrict from the outset. 

Restrictive covenants confine the activities and the discretion of the private governments to a narrow range set by the developer. 

Deed restrictions are intended to protect property values¾a rational that remains the most common justification for the loss of freedom inherent in a development run under a regime of restrictive covenants. 

Homeowner’s associations are privatized versions of the council-manager system of government. 

Chapter 4

Due to the serious problems of developer and homeowner association mismanagement and fraud that developed in the early 70s, the National Association of Homebuilders and the Urban Land Institute established the Community Associations Institute (CAI). The mission of the CAI was to professionalize the governance and management of homeowner’s associations and to convince the public that this was a better way to live. 

The twin devices of restrictive covenants and homeowner’s associations favor the developer in almost every way. 

Because a developer generally doesn’t see a profit until the last 20% of the homes in a subdivision are sold, they want to maintain complete control of the development. 

Chapter 5

In 1973, the press was beginning to focus on disturbing events that tended to undermine the public image of CID housing. 

CIDs existed because it made enormous economic sense to builders, not because buyers were aching for smaller lots, shared swimming pools, and neighborhood governments. The developers’ agenda of land-use economics needed to be translated into another language so that consumers would embrace the idea of CID housing; buyers had to be sold on the concept. 

The CAI is a private government; it's a sort of private legislature for a nation of private governmental regimes. 

The CAI has no intention of abandoning its public image as something more than a trade organization and it clearly wishes to retain the credibility resulting from that perception. The organization also wishes to maintain as much control as possible over the public discourse concerning CID housing. 

In 1992, the CAI was restructured and largely taken over by property managers. 

This new structure shifted emphasis toward legislative advocacy and other forms of political action including grassroots mobilization of its thousands of members at the national, state, and local levels. 

The ideal was that of self-governing local communities living the fantasy of the New England town meeting. The reality, too often, was an undemocratic oligarchy in which an apathetic body of residents was governed by a few dedicated or overly zealous neighbors who were for the most part told what to do by property managers and lawyers. 

Chapter 6

The term condominium refers not to a kind of building but to a kind of ownership. The property can be apartment like or single-family detached homes. Condominium ownership means that each buyer purchases an undivided fractional ownership interest in the common area as well as their individual unit. 

Neighbors eventually will be running one another’s lives, without any minimum requirements of education, experience, or professional competence. 

Charges of violations are made and heard by the Board. Their are no policies that separate the roles of accuser and trier of fact or that call for the empanelling of an independent, impartial jury. 

Board members are routinely advised to be extremely aggressive and inflexible in the enforcement of the CC&Rs, a practice that produces enormous hostility against boards on the part of those who are censured and fined. 

People who willingly volunteer to undertake such tasks often are motivated by a strong sense of community responsibility. But these positions also offer obvious benefits to those who may wish to be on a board or architectural committee to enjoy the perceived pleasure of wielding power over others. Those of an authoritarian bent have strong support from CAI and attorneys and managers who advise boards to behave in a harsh and even threatening manner in rule enforcement. 

Covenant enforcement litigation has become a profitable legal specialization for attorneys in states with many CIDs. In many cases, the attorney who advises the board on whether to file suit will handle the litigation and receive substantial hourly fees, raising the question of whether legal advice in these matters is always as disinterested as it should be. 

It is a peculiarly American form of private government in which the property rights of the developer, and later the board of directors, swallow up the rights of the people, and public government is left as a bystander. 

HOAs and Children

Children raised in HOA housing may be undergoing a form of differential political socialization. There will be a difference between being raised in a real city or town and growing up in the artificial environment of a typical common interest development. What’s being forgotten is that it is our culture that is being shaped, not just housing. We have a generation in this country that doesn’t know you should be able to paint your house any color you want.

Chapter 8

To offer green open spaces and other facilities while keeping population density high, developers created common ownership arraignments. These arrangements required ongoing management and maintenance. Cities and counties expressed no desire to undertake that responsibility, and developers had no interest in subjecting themselves to a greater degree of involvement with government regulation, so residential private governments evolved as the standard approach. 

Although millions of Americans have purchased units of CID housing, they have done so without realizing that they were to become part of a collective decision to privatize local government, and without knowing the implications of that decision. 

The individual CID resident is exposed to treatment that would be unconstitutional had these government functions not been privatized. The deregulation of governmental powers to private entities was done without adequate provisions for accountability. Nowhere is this more apparent than in the reliance CID housing has on untrained, unregulated, volunteer directors. 

The way the CID directors perform their role is perhaps the most critical variable in the success or failure of CID housing. It is a unique form of privatization that places the fate of the experiment in the hands of untrained, uncompensated amateurs; establishing no qualifications for their participation; creating no public institutional support structure for on-the-job training; and leaving the directors essentially free from public regulation, increasingly with immunity from private regulation through lawsuit. 

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