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Wednesday, July 01, 2009

The Vacuous Private Law of Homeowners' Associations (Below the Fold) After Vacuous Reflections About My Vacuous Life

Here we are, back for the fourth summer stint on PrawfsBlawg.  It's hard to believe, when Dan first invited me to do this, in July, 2006, I was an outsider to the legal academy looking in (per Bob Uecker, "gosh, they're having fun in there.")  Also, Twitter was unknown.  Twitter has done a lot to focus my blogging, because, call me an old whatever, but I can't believe anybody gives two hoots about the mundane details of my life, whether by blog entry or tweet, something I wasn't considering back in 2006 while in a New Orleans carwash watching what looked like melted rainbow sherbet ooze all over my carSteve Bainbridge seems to be able to get away with food and wine, but he seems to know what he's talking about.  I try to maintain a connection to something legal (or, if not legal, funny). 

If I were inclined to vacuous reflections about life, however, I would extol the pleasures of not of litigating, but of home brewing beer, a subject touched upon in these parts recently.  My son, Matthew, and I are on our  third batch of the summer, having invested $100 in the basic tools of the trade.  Our first 43 bottles were an Irish stout recipe, which we named "Max and Annie's Jewish Stout," after our two dogs.  We've since moved on to "Max and Annie's Michigan Porcupine Pale Ale" (a Sierra Nevada Pale Ale recipe), and "Charlevoix Steam Beer," which is presently fermenting in the crawl space where it is cool.  Our plan is to lay down a carboy full of mead for a full year in a few weeks.  This is a stretch but the legal connection is that I can't post the labels, because I am positive at least the second two violate a whole raft of copyright and trademark rights.

But enough of me.  Let's go below the fold where YOU can hear me whine about the governance of homeowner's associations.

We spend the summers in Charlevoix, Michigan, where we bought a lot sixteen years ago, and built a house twelve years ago.  In Michigan, there is something called a "site condominium," which is basically another way of imposing regulations in a subdivision of free-standing homes, and that's what we have.  There are thirty-six lots, and common elements, which consist of two roads and landscaping, and a beach lot with a removable "Brock Dock" through which residents not on the lakeshore itself have access to the lake.  You own your own lot and house in fee simple absolute, but the lot is established pursuant to a master condominium deed, which contains the property rules, and which incorporates a set of recorded bylaws, which establish the five-person Board of Directors (classified board - two and three seat classes, elected for two years) and the architectual review board, empower the collection of assessments for the maintenance of the common elements, and set use restrictions such as no short-term leasing, no open garage doors, and no boats, trailers, RVs, etc. left in the driveways.

If you want to experience the thrills of corporate governance in a microcosm, do as I have done and be a member of the condominium association Board of Directors for going on fifteen years.  I would have resigned long ago, except that nobody is as anal about the record-keeping as I am, and so I've been the secretary (and now webmaster) for all these years.  The lesson I take from the experience, as a legal theorist, is the tenuous (vacuous?) relationship among (a) the actual private law of the association as reflected in its governing documents, (b) what people think their actual rights are, and (c) how, when it comes to asserting and defending one's interests as between the law and the lore (or custom), a foolish consistency is the hobgoblin of little minds (see Prawfs guest blogger Brian Tamanaha on Law as a Means to an End).   Take, for example, a matter of no small interest:  the ability to see the lake from your living room if you have a house that is not on the lakeshore.  There are local zoning rules that define setbacks, as well as an architectural review board within the condominium association, but it has been almost impossible to restrain the lakeshore residents from building setback to setback (i.e., very large homes on relatively small lots), so that the space between the houses is a mere sixty feet, filled with fast growing (and kind of ugly) white pines that the original developer planted at the lot lines to keep the place from looking like a landing strip.  But there is no legal right anywhere in the documentation that says you have a property right in your view of the lake.  The only way to control this is through community controls on landscaping (which doesn't help with the stuff that was here before) or an appreciation of the Prisoner's Dilemma we find ourselves living in, and the ensuing need to cooperate.  Nevertheless, I find myself educating a neighbor every year on the fact that there is no legal right to a "view corridor" as it has come to be known.  If there were, I would have already done something about the forest of scrubby white pines that block my view.

Then there is the question of the separation of ownership and management.  We just issued a rule to the effect that there were to be no permanent firepits built on the beach.  You can have fires, but you have to use a portable firepit (they exist), which means that you clean up after yourself, and there's no lingering hot embers for a kid to fall into.  My publication of this rule prompted the following "Berle and Means" response from a neighbor (otherwise, a very nice person - beware the pitfalls of the inference one draws from e-mail):  "Does the board act and make rules based on the good of the people that live here?"  

Well, I could go on, but there is shameless self-promotion yet to be written.

Posted by Jeff Lipshaw on July 1, 2009 at 11:19 AM in Corporate, Legal Theory, Lipshaw, Property | Permalink

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Comments

I've always thought homeowners association rules were the symbol and symptom of the most shameful busybody aspects of the human character -- them and meter maids, two institutions that have no purpose except to impose frivolous and annoying regulation on other people of a kind that would make John Stuart Mill break down into enraged sobs about rules like "no open garage doors" and the evident inability of people to live with one another's quirks. How do you stand it?

Posted by: Paul Gowder | Jul 1, 2009 11:55:46 AM

If you combine the three branches of governance and add faulty assumptions concerning the nature of community, don't complain about the results.

I'd never buy a home in a neighborhood controlled by such suburban despots. The reason you don't give a virtuous king absolute power is because doing so is necessarily an assault on his arete.

Posted by: David | Jul 1, 2009 2:35:16 PM

Corporate governance is much more straightforward. The Board does whatever the CEO wants, the shareholders do whatever the Board wants, and once in a blue moon, the Board either ousts CEOs who have gone insane or killed someone, or replaces a CEO who have precipitiously resigned or died. These rules apply except in cases of ownership takeover, where the leader of the takeover takes charge. The rest of corporate governance law is mostly fluff to give associate attorneys in big law firms something to do.

HOAs are instead what municipal governments were before Warren era constitutional law made the distinction between public entities and private entities mean something, and HOA governance is municipal governance, which is much more colorful and absurd than corporate governance, and also much more tedious, because people believe that what they are doing actually matters, no matter how picayune it may be.

Remnants of HOA style governing remain in old municipalities that are stuck with no other alternative. My own city just created a "Dog Park Master Plan Taskforce" with twenty members, several times the total number of elected officials in most municipalities for an issue so trivial that even libertarians and conspiracy theorists would probably be willing to entrust it to a single, apolitically appointed government official.

When I used to defend local governments against tort lawsuits, our rule of thumb was that the smaller (and hence, "closer to the people" it was) the more likely it was to have less competent officials who acted tyranically. HOAs just extend that trend.

Posted by: ohwilleke | Jul 1, 2009 2:44:22 PM

Now that the all holy and life-giving property values these HOAs were trusted with maintaining is sliding into the toilets (because people invest in homes instead of live in them these days) whether the gilding will finally slide off the gates of some of these communities and their petty despots.

I've been surprised at the number of times I've seen the draconian policies defended in the name of a vapid hope we would all be able to retire someday and buy 40' RVs and take cruises in the Aegean because we kept our garage doors closed.

Posted by: David | Jul 1, 2009 3:08:23 PM

I am growing hops in the backyard garden - they may not yield much this year, but I expect great things next year. So far, the cascades are growing like mad, with greater or lesser results with other varieties. I developed an ESB recipe - link posted below - with great success.

Much more relaxing than litigating...

http://www.homebrewtalk.com/f37/esb-comments-113223/

Posted by: Jonathan | Jul 2, 2009 9:27:26 AM

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