INTRODUCTION
This paper provides an overview of the history of common
interest developments ("CIDs") in the United States. It
tracks the growth of CIDs and highlights trends affecting them.1 During the 1800's and early 1900's
common interest developments and their corresponding homeowner
associations were relatively uncommon, but from the 1960s to the
present their popularity has grown tremendously. It is estimated
that one out of every eight Americans now lives in some form of
common interest development, and federal projections show that
this number will increase to one out of three by the year 2000.2 In order to focus on more specific
historical phases, some researchers have divided the history of
common interest developments in the United States into five
general historical periods: "Origins,"
"Emergence," "Popularization,"
"Expansion," and "Restructuring."3 This paper will follow the same
format.
OVERVIEW OF
CID HISTORY
I. Period One:
"Origins" (1830-1910)4
The history of the homeowner association stretches back to the
1830's when the idea was imported from London and used to protect
developments with covenants restricting the use of land and
proclaiming, for example, the acceptable race, religion, and
drinking habits of the residents.5
St. Francis Wood in San Francisco was one of the "successful
early associations."6 Designed
by Fredrick Law Olmstead, St. Francis Wood incorporated 500 homes
and was "equipped with private streets, parks and tennis
courts, and covenants establishing detailed architectural and use
controls, racial restrictions, and a mandatory homeowner
association."7 Typically,
however, these earlier homeowner associations did not have such a
strong central organization, and membership was voluntary.
Circa 1900, the greatly expanded upper
middle-class market enabled developers to plan larger
neighborhood areas. Developers used homeowner associations to
enforce restrictions and manage the common areas. Appealing to
the affluent, these restrictions were eagerly accepted in order
to secure stable and exclusive neighborhoods. Since the
association would enforce deed restrictions, maintain common
facilities and provide services even after the developer left the
scene, property values and neighborhood aesthetics were
protected.8
II. Period Two:
"Emergence" (1910-1935)9
During the early 1900's associations were still relatively few in
number and those that existed were not standardized, but there
was increased demand on developers to provide for the
establishment of homeowner associations. In the 1920's,
associations gained the legal authority to enforce payment of
association dues with the threat of a property lien. The lien
mechanism provided the association with a stable source of funds
with which to become more professionalized and effective in
exercising its responsibilities.10
Also, art juries and design controls became more popular as
residents and developers tended to favor uniformity.
III. Period
Three: "Popularization" (1935-1963)11
The taste for architectural uniformity combined with increasingly
important economic factors, such as easily developed land
becoming more scarce and rising home construction costs, led to a
phase of rapid growth in the number of common interest
developments. In addition, between 1935 and 1963 the involvement
of the Urban Land Institute ("ULI"), the National
Association of Home Builders ("NAHB"), and the Federal
Housing Authority ("FHA"), further encouraged
large-scale residential development. In the early 1960's the
federal mortgage insurance system rules were revised to include
cooperatives and condominiums.
IV. Period Four:
"Expansion" (1963-1973)12
The rapid growth of common interest developments during the
Popularization period led to some growth pains during the 1970's.
Common interest developments were faced with issues and concerns,
including complaints of shoddy construction, assessment fees
which could not cover costs, consumer misunderstanding, and lack
of clear management responsibilities.13
In response to these problems, the ULI and the NAHB formed the
Community Associations Institute ("CAI") in 1973 in
order to promote the use of homeowner associations by providing
builders, managers and residents with educational materials.
V. Period Five:
"Restructuring" (1973-1990)14
As the CAI helped to standardize the establishment of common
interest developments, other social and economic trends also
influenced their popularity and proliferation. While inexpensive,
undeveloped land within reasonable proximity to metropolitan
areas diminished, populations exploded, creating a growing need
for affordable housing. Also, in California this need was
particularly acute as Proposition 1315
reduced public financial resources for infrastructure. As a
result, developers and local government officials sought more
economic and efficient ways to provide affordable housing. Home
buyers seeking affordable residences with both low maintenance
requirements and a desire for recreational amenities turned to
common interest developments in greater numbers. Thus, although
common interest developments were initially associated with an
affluent living style, they eventually have become "an adaptation to the
declining proportion of the population that [could] afford
conventional housing."16 This
same affinity for the potential cost-effectiveness of CIDs is
reflected in the smaller size of the more recent projects, since
smaller projects are less capital-intensive and provide quicker
movement to market.
As affordability concerns came
to better characterize the changed market for CID Home buyers,
the purpose of the common interest development and the group
whose interests are represented by associations have also
changed. In many small projects, common interest developments
have been created primarily for the maintenance of common
property, and less emphasis has been placed on the provision of
extensive recreational services and/or enforcing deed
restrictions.17 Also, because of
economic pressures, developers are responding less to home buyers' tastes, and focusing their
concerns instead on local governments= subdivision regulations.18 Since most of the problems of the
1970s concerning formation and transition periods of HOAs have
been solved, there is greater emphasis on solving still existing
problems, particularly those problems involving the ongoing
management of the common interest development after the developer
has left the scene.19
VI. Current
Statutory Law
The laws pertaining to common interest developments in
California were consolidated in a single area of the California
statutes, the Civil Code, with the passing of the Davis-Stirling
Common Interest Development Act in 1985.20
The Davis-Stirling Act also imposed new requirements for the
governance of common interest developments.
CONCLUSION
Clearly, common interest developments have not only an
important role in the history of housing in the United States,
but also, if we believe the federal projections, a prominent
future, particularly in California. In response to the continued
development and increasing use of common interest developments,
the California state legislature continues to play an active role
in defining the relationship between the common interest
development homeowners association, its members, and third
parties.21
Footnotes
1. See Appendix A for a list of definitions,
including "common interest development." back to text
2. Karen E. Klein, Living on Common Ground Bringing Both
Pleasure and Perils, Los Angeles Times, Feb. 26, 1995, at k. back to text
3. Marc A. Weiss & John W. Watts, Community Builders
and Community Association, at 8 (Massachusetts Institute of
Technology, Center for Real Estate Development, 1989). back to text
4. Id.
at 10. back to text
5. Stephen E. Barton & Carol J. Silverman, Common
Interest Communities, at 7 (citing Urban Land Institute 1964;
Weiss & Watts 1989; Shumate 1988)(1994). New York’s
Gramercy Park (1831), Boston’s Louisburg Square (1844) and
San Francisco’s South Park (1852) utilized this type of
covenant. back
to text
6. Id.
at 8. back to text
7. Id. back
to text
8. Robert J. Dilger, Neighborhood Politics 47
(1992). back
to text
9. Weiss & Watts, supra, note 3, at 12. back to text
10. Id.
at 13. back to text
11. Id.
at 15. back to text
12. Id.
at 18. back to text
13. Dilger, supra note 8, at 52-59. back to text
14. Weiss & Watts, supra note 3, at 21. back to text
15. Proposition 13 (Cal. Const. Art. XIIIA §4) limits ad
valorem taxes on real property to a maximum of one percent of
its full cash value and requires that any "special
taxes" imposed by cities, counties and special districts
must be ratified by a two-thirds vote of the local electorate. back to text
16. Barton & Silverman, supra note 5, at 3. back to text
17. Weiss & Watts, supra note 3, at 22. back to text
18. Id. back to text
19. Dilger, supra note 8, at 58-59. back to text
20. Cal. Civ. Code §§ 1350-1367. back to text
21. Common Interest Development Issues After
"Nahrstedt": Hearing Before the California State Senate
Committee on Housing and Land Use, Nov. 12, 1996. back to text
Appendix A
Definitions of Terms Pertinent to Common Interest Developments
Association:
Legal definition
California Civil Code '
1351 defines "association" as "a nonprofit
corporation or unincorporated association created for the purpose
of managing a common interest development."
Common area:
Legal definition
California Civil Code §1351 defines "common
area" as "the entire common interest development except
the separate interests therein. The estate in the common area may
be a fee, a life estate, an estate for years, or any combination
of the foregoing. However, the common area for a planned
development specified in paragraph (2) of subdivision (k) may
consist of mutual or reciprocal easement rights appurtenant to
the separate interests."
Common Interest Development (CID):
Legal definition
California Civil Code §1351
(c) defines "common interest development" as any of
"(1) A community apartment project. (2) A condominium
project. (3) A planned development. (4) A stock
cooperative."
California Civil Code §1351 (k) defines
"planned development" as "a development (other
than a community apartment project, a condominium project, or a
stock cooperative) having either or both of the following
features: (1) the common area is owned either by the association
or in common by the owners of the separate interests who possess
appurtenant rights to the beneficial use and enjoyment of the
common area. (2) A power exists in the association to enforce an
obligation of an owner of a separate interest with respect to the
beneficial use and enjoyment of the common area by means of an
assessment which may become a lien upon the separate interests in
accordance with Section 1367."
Common usage
By common usage a CID is a development involving a combination of
individually owned lots or units coupled with common area parcels
or spaces. The common areas or spaces are either owned by an
association whose members are the individual lot/unit owners, or
by the owners as tenants in common.1
CID is typically used interchangeably with Planned Urban
Development (PUD), and Property Owner Association (POA), and it
may also be referred to as a common interest community (CIC).
Common Interests:
Legal definition
California Code of Regulations Title 10, Chapter 6, Article
1, §2705 (m) defines
common interests as "property owned or controlled by, and/or
services furnished to, owners, lessees or persons having the
exclusive right to the use of subdivision interests, by an
association comprising the separate owners of said interests in
those subdivisions enumerated in § 11004.5 of the Code."
Community Apartment Project:
Legal definition
California Civil Code §1351
defines "community apartment project" as "a
development in which an undivided interest in land is coupled
with the right of exclusive occupancy of any apartment located
thereon."
Condominium Plan:
Legal definition
California Civil Code §1351
defines "condominium plan" as "a plan consisting
of (1) a description or survey map of a condominium project,
which shall refer to or show monumentation on the ground, (2) a
three-dimensional description of a condominium project, one or
more dimensions of which may extend for an indefinite distance
upwards or downwards, in sufficient detail to identify the common
areas and each separate interest, and (3) a certificate
consenting to the recordation of the condominium plan pursuant to
this title signed and acknowledged by the record owner of fee
title to that property included in the condominium project. In
the case of a condominium project which will terminate upon the
termination of an estate for years, the certificate shall be
signed and acknowledged by all lessors and lessees of the estate
for years and, in the case of a condominium project subject to a
life estate, the certificate shall be signed and acknowledged by
all life tenants and remainder interests. The certificate shall
also be signed and acknowledged by either the trustee or the
beneficiary of each recorded deed of trust, and the mortgagee of
each recorded mortgage encumbering the property. Owners of
mineral rights, easements, rights-of-way, and other nonpossessory
interests do not need to sign the condominium plan. A condominium
plan may be amended or revoked by a subsequently acknowledged
recorded instrument executed by all the persons whose signatures
would be required to record a condominium plan pursuant to this
subdivision."
Condominium/ Condominium Association
(COA):
Legal definition
California Civil Code §1351
(f) defines "condominium" as "an undivided
interest in common in a portion of real property coupled with a
separate interest in space called a unit, the boundaries of which
are described on a recorded final map, parcel plan, or
condominium plan in sufficient detail to locate all boundaries
thereof."
Common usage
According to common usage a condominium association is usually
located in a multi-story buildings with multiple families. The
condominium owners hold title to their respective interior
residence spaces and hold the remaining property, (dividing
walls, hallways, stairways, elevators, exterior walls, and land),
in common. The COA does not own any property, it manages the
common property areas.2
Condominium Project:
Legal definition
California Civil Code §1351
(f) defines "condominium project" as "a
development consisting of condominiums."
Declarant:
Legal definition
California Civil Code §1351
(g) defines "declarant" as "the person or group of
persons designated in the declaration as declarant, or if no
declarant is designated, the person or group of persons who sign
the original declaration or who succeed to special rights,
preferences, or privileges designated in the declaration as
belonging to the signator of the original declaration."
Declaration:
Legal Definition
California Civil Code §1351
(h) defines "declaration" as "the document,
however denominated, which contains the information required by
Section 1353."
Exclusive use common area:
Legal definition
California Civil Code §1351
(I) defines "exclusive use common area" as "a
portion of the common areas designated by the declaration for the
exclusive use of one or more, but fewer than all, of the owners
of the separate interests and which is or will be appurtenant to
the separate interest or interests."
Governing
documents:
Legal definition
California Civil Code §1351
(j) defines "governing documents" as "the
declaration and any other documents, such as bylaws, operating
rules of the association, articles of incorporation, or articles
of association, which govern the operation of the common interest
development or association."3
Home Owner Association (HOA):
Legal definition
California Civil Code §1351
(a) defines "Association" as "a nonprofit
corporation or unincorporated association created for the purpose
of managing a common interest development."
Common usage
According to common usage, it describes detached houses or
townhouses with common areas. The homeowners own both the
interior and exterior of their residences including the land
beneath and around them; the mandatory membership association
owns and manages the common property. Typically used
interchangeably with Residential Community Association.
Planned Unit or Use Development (PUD):
Legal definition
California Civil Code §1351
(k) defines "planned development" as "a
development (other than a community apartment project, a
condominium project, or a stock cooperative) having either or
both of the following features: (1) The common area is owned
either by the association or in common by the owners of the
separate interests who possess appurtenant rights to the
beneficial use and enjoyment of the common area. (2) A power
exists in the association to enforce an obligation of an owner of
a separate interest with respect to the beneficial use and
enjoyment of the common area by means of an assessment which may
become a lien upon the separate interests in accordance with
Section 1367."
Common usage
Often referred to as cluster housing; the term is essentially
synonymous with CID and CIC.
Property
Owner Association (POA):
Common usage
By common usage a POA is "an organization of unit owners
bound together by the governing documents of the development.
Typical POAs are condominiums, stock cooperatives and homeowners
associations."4
Residential Community Association
(RCA):
Common usage
By common usage an RCA includes "nonprofit corporations
created by real estate developers with the approval of local
government officials"; they provide a governing mechanism to
supply services, maintain common areas, create and enforce
CC&Rs and collect assessment fees.5
Separate interest:
Legal definition
California Civil Code §1351
(l) defines "separate interest" as "the following
meanings: (1) In a community apartment project, 'separate interest' means the exclusive right
to occupy an apartment, as specified in subdivision (d). (2) In a
condominium project, 'separate
interest' means an
individual unit, as specified in subdivision (f). (3) In a
planned development, 'separate
interest' means a
separately owned lot, parcel, area, or space. (4) In a stock
cooperative, 'separate
interest' means the
exclusive right to occupy a portion of the real property, as
specified in subdivision (m)."
Stock Cooperative:
Legal definition
California Civil Code §1351 (m) defines
"stock cooperative" as "a development in which a
corporation is formed or availed of primarily for the purpose of
holding title to, either in fee simple or for a term of years,
improved real property, and all or substantially all of the
shareholders of the corporation receive a right of exclusive
occupancy in a portion of the real property, title to which is
held by the corporation. The owners' interest in the
corporation, whether evidenced by a share of stock, a certificate
of membership, or otherwise, shall be deemed to be an interest in
a common interest development and a real estate development for
purposes of subdivision (f) of section 25100 of the Corporations
Code."
Common usage
By common usage, the term "cooperative" is used to
denote high-rise, multi-family buildings in an urban setting.
Association members do not own any real property, but rather
acquire a long-term renewable leasehold interest in their
residence in addition to a share, or proportionate shares, in the
corporation which owns the building and its grounds.6 There are relatively few of these
probably because of the blanket mortgage provision.
Subdivision Interests:
Legal definition
California Code of Regulations, Title 10, Chapter 6, Article
1, §2705 defines
subdivision interest as "[l]ots, parcels, units, undivided
interest shares, time-share estates or time-share uses subject to
regulation under the provisions of Chapter 1, Part 2, Division 4
of the Code."
Footnotes
1. Common Interest Development has also been defined as a
broad term that includes "condominiums, community
apartments, stock cooperatives, and planned single-family
developments." 4 Witkin, Real Property § 307 (9th ed. 1987
& Supp. 1996). back to
text
2. Robert J. Dilger, Neighborhood Politics 16
(1992). back to text
3. See also, California Corporations Code §§ 5033,
5034, 5069 and 5080 for voting definitions such as
"Proxy." back to
text
4. Carl B. Kress, Beyond Nahrstedt: Reviewing
Restrictions Governing Life in a Property Owner Association,
42 UCLA L. Rev. 7, at FN1 (1995). back to text
5. Dilger, supra note 2, at 1. back to text
6. Id.
back to text
