The regulation of common interest developments as it relates to political expression: the argument for liberty and economic efficiency.

• Author: Petry, S. Colin G.

INTRODUCTION

Americans of all ages, all conditions, and all dispositions, constantly form associations. They have not only commercial and manufacturing companies, in which all take part, but associations of a thousand other kinds--religious, moral, serious, futile, extensive or restricted, enormous or diminutive.

--Alexis de Tocqueville (1)

In 1962 there were five hundred homeowners associations ("HOAs") in the United States. (2) Thirty years later there were 150,000 HOAs with over 32 million residents. (3) In 2008 there were 300,800 HOAs, containing 24.1 million housing units and 59.5 million residents. (4) It is quite evident that a large portion of American citizens, approximately 20 percent, live in common interest developments ("CIDs") governed by some form of HOA. (5)

The private property controlled by HOAs is subject to many different types of rules and regulations that are typically written into the deeds of the property in the form of equitable servitudes, real covenants that run with the land, and other contractual restrictions. (6) These restrictions, which are various limitations on private land use, generally are referred to in the real estate industry as "covenants, contracts, and deed restrictions," or "CC&Rs." (7) These restrictions do not simply prescribe the color of one's front door, or even the shade of the underside of the drapes visible from the street, but quite often regulate behavior. (8) Some of the more expansive restrictions imposed by HOAs regulate political speech and expression. (9) Such restrictions can take many forms. Some examples include banning political signs, political gatherings in common areas, newspaper dist[section]ribution, and leafleting. (10) In many CIDs the limitations imposed by the CC&Rs could even be viewed as a blanket restriction on the historical forms of political expression.

Many have complained that the severe restriction imposed by CC&Rs on political expression amounts to a severe erosion of expression rights, including First Amendment rights, for millions of Americans. (11) One need only compare the restrictions put on life outside a CID with those sometimes placed on life inside to see the possibility of that conclusion. (12) Political speech is often regarded as the most protected and significant form of free expression. (13) This has led some to the conclusion that HOAs should be treated as municipalities, or the functional equivalent of municipalities, and held to a similar constitutional standard. (14) However, this conclusion seems wholly inappropriate when one takes into account the classically liberal values surrounding the paramount place that private property, and the regulation thereof, has historically held in the development of our republic and jurisprudence. (15) Furthermore, the choices and rational expectations of individuals combined with the benefits and economic efficiency of CIDs point to the continued private ordering of HOAs. (16)

This Note will focus on the restriction on political expression in CIDs in light of the Anglo-American normative notions surrounding private property rights, as well as the economic efficiency and market realities of CIDs. (17) With this understanding, it is my contention that the predominant view of HOAs as private arrangements, governed by private law, should be maintained when considering efforts to have HOAs regulated by public law or treated as the functional equivalents of municipalities through a constitutional framework. (18)

1. THE HOMEOWNERS ASSOCIATION AND THE COMMON INTEREST DEVELOPMENT

   There are four general types of CIDs: condominiums, stock cooperatives, community apartments, and "planned developments," which are most often associated with "gated communities." (19) Stock cooperatives, or "co-ops," are commonly-owned buildings in which owners buy shares that entitle them to possession of one residential unit as well as the use of common areas. (20) In condominiums and planned developments, residents own fee title to their units and have common ownership of their community's common areas. (21) The only general difference between the two is that planned developments often contain single-family homes, and condominiums usually are comprised of multi-family or conjoined homes. (22)

   However, this is only a generalization, as there are many different types of living arrangements, structures, and styles of condominiums and planned developments. The Community Associations Institute provides a tidy general definition of CIDs:

   Three features make community association homes different from traditional forms of homeownership. One is that you share ownership of common land and have access to facilities such as swimming pools that often are not affordable any other way. The second is that you automatically become a member of a community association and typically must abide by covenants, conditions and restrictions (CC&Rs). The third feature is that you will pay an "assessment" (a regular fee, often monthly, that is used for upkeep of the common areas and other services and amenities). (23) The definition offered by Evan McKenzie, the author of Privatopia, has a slightly different tone: CIDs share the features of "common ownership of property, mandatory membership in the homeowners association, and the requirement of living under a private regime of restrictive covenants enforced by fellow residents." (24) Nonetheless, the ownership characteristics of CIDs include the common ownership of a CID's common areas and individual possession and ownership of some form of residential unit. (25)

   The common areas of a CID can be quite expansive, including not only those things usually associated with common areas, like pools and community rooms in a "club house," but also structures like the walls and roofs of condominiums and cooperatives, or the streets, sidewalks, and sewers of planned developments. (26) Further, commonly owned property of a CID may also provide services to the residents, such as television stations, security forces, and bus routes. (27) The last general feature of a CID--one that is quite important--is that membership in the HOA is required of all CID residents. (28)

   The HOA, sometimes referred to as a "private government," is the organization that collects fees for the administration and upkeep of the common areas (in some cases holding fee title to the common areas), and maintains and enforces the CC&Rs. (29) HOAs are generally "mutual-benefit corporations" or some other type of non-profit corporation created by a CID's real estate developer. (30) The developer generally has control over the drafting of the certificate of incorporation and by-laws; consequently, the developer has control over the CC&Rs that govern what type of community a CID will be, such as a seniors-only community, or a community that prohibits pets or renters. (31) Essentially, since the CC&Rs are generally equitable servitudes, real covenants that run with the land, and other restrictions that the HOAs maintain, when residential units are sold, the buyer is also bound by the same restrictions as the seller. (32) Originally, these restrictions applied to a somewhat limited realm, such as restricting structures to single-family homes or prohibiting slaughterhouses and noisome factories on the property. (33) Today, however, the CC&Rs in CIDs set specific standards and can restrict anything from the condition of the unit and the number and age of occupants to the lifestyle of the residents, such as forbidding the operation of businesses from units. (34)

   Most relevant to this Note, HOAs enforce and create CC&Rs dealing with political expression. (35) Generally, again, this includes banning political signs, political gatherings in common areas, and newspaper distribution. (36 A specific example of a CID imposing political speech restrictions is the community of Rancho Bernardo (37) north of San Diego, which bans all signs. (38) These restrictions are far from illusory, as many CID residents, as well as HOA board members, "survey the community daily looking for infractions." (39) This way of life, which is already lived by approximately 20 percent of American citizens, will continue to spread in the coming years as roughly 50 percent of the new housing that is currently being built in metropolitan areas will be subject to HOAs. (40)

2. NORMATIVE PRIVATE PROPERTY RIGHTS: "TO HIS HEIRS AND ASSIGNS, TO HAVE AND TO HOLD FOREVER"

   Many commentators have argued that the private ordering of CID governance through HOAs, especially regarding political expression, is undesirable due to the restrictions that CC&Rs often impose on the expression of residents, as well as non-members. (41) Further, many have argued, inter alia, that a possible method available to impose a public, constitutional regulatory apparatus on HOAs is through the state action doctrine. (42) It is my contention that this type of thinking--regulating the private by turning it into a de facto public--is antithetical to the normative values at the root of the Anglo-American system of private property and limited constitutional government. (43) While Anglo-American property rights could be the subject of an entire article, the following is a brief overview of the classically liberal political philosophy that our republic and jurisprudence have at their roots, and which guides much of the legal analysis to follow.

   Property rights have always been at the core of our republic. In fact, the opportunity to own "new land" was one of the principal inducements for Englishmen (and others who followed) to settle on this continent. (44) Further, the new colonists' view of property rights was shaped by English constitutional law and tradition: "Americans associated property rights with the time-honored guarantees of Magna Carta (1215)." (45) Magna Carta, which was originally (forcibly) signed by King John to protect the English nobility's property and privileges, "became...