Emerging trends in state regulation of private communities in the U.S.

Common interest housing (CIDs), which includes nearly all gated communities as well as non-gated but privately governed neighbourhoods, has become the predominant form of new housing construction in America. Optimistic early assessments that CIDs would prove to be more efficient alternative to municipalities are confronted by the fact of high levels of conflict and litigation, which are proving costly to residents as well as local governments. These conflicts are often highly publicized in the press, leading to concerns in the real estate industry that the demand for such housing could be jeopardized. The conflicts arise from having unpaid, untrained volunteer directors carrying out what were once municipal government functions, and concern financial issues as well as alleged abuses of power by association boards. In response to some of these concerns, across the nation, small but vocal ant-HOA owners groups are organizing, using the internet as their medium and gaining attention from the press. A consensus is emerging that the law governing private communities needs major changes, and different approaches are proposed or being implemented in several states. This paper examines these emerging regulatory trends and offers an assessment of their prospects.