Residential Associations as State Actors: Regulating the Impact of Gated Communities on Nonmembers

Article excerpt

[T]he gated and walled community is a new phenomenon on the

social scene, and, in the spirit of the foregoing pronouncement, the

ingenuity of the law will not be deterred in redressing grievances

which arise, as here, from a needless and exaggerated insistence upon

private property rights . . . [that] results in a pointless discrimination

which causes serious financial detriment to another.(1)

Thirteen years later, the optimism of a California Court of Appeal seems unwarranted. As the number of residential associations has increased, the consequent litigation has arisen largely in the context of disputes between residential associations and their members over the content of frequently intrusive rules and regulations. Legal scholarship has followed this trend. Reading the endless paeans to liberty of contract, one might fail to recognize the serious externalities that accompany residential associations, affecting nonmembers who were party to no contract. Residential associations and gated communities often restrict nonmembers' freedom of speech, limit nonmembers' freedom of movement, and engage in racial discrimination against nonmembers. In identifying some of the social problems created and exacerbated by residential associations, this Note will suggest an appropriate legal framework within which these burdens may be analyzed. Variously known as homeowners' associations, gated communities, and property owners' associations,(2) residential associations are an increasingly popular option for Americans weary of crime, social ills, and the inability of government to address these pressing concerns. In form, residential association agreements are ownership deeds that require membership in the association,(3) assess mandatory dues to fund the services provided by the association, and specify a number of covenants, conditions, and restrictions (CC&Rs) governing the behavior of members.(4) Residential associations have many different structures, including condominium projects, but eighty percent involve the administration of territory such that they resemble communities in the broader sense rather than simply buildings.(5)

While a great deal has been written about residential associations,(6) the literature has largely concentrated on disputes between residential associations and their members. Particularly fertile ground for attention have been the many colorful lawsuits contesting the rules and regulations of residential associations, banning as a threat to community order such things as basketball hoops over garages,(7) heavy dogs,(8) cats of any weight,(9) too many poodles,(10) or smooching grandparents.(11) Yet there is another set of issues that has not received extended consideration. As the number of residential associations increases, conflicts with nonmembers over the use of public space and public resources will arise more frequently. The jurisprudential framework developed to referee disputes between associations and their members cannot apply with equal efficacy to disputes between associations and nonmembers. Courts must move from the domain of the law of contracts and servitudes to grapple with the impact of residential communities on outsiders, whether these outsiders challenge the community by attempting to prevent their establishment,(12) objecting to their authority,(13) or questioning their consumption of public resources.(14)

This Note will argue that the harms imposed on society by residential associations are significant and that courts should consider curtailing their power over nonmembers. Part I will discuss the reasons for the rise of the residential association as a form of semiprivate government. Part II will assess the often significant harms inflicted by residential associations on nonmembers. Finally, Part III will argue that the most appropriate way to limit these undesired effects on outside communities is through the application of the "state action" doctrine. …