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A COMMON INTEREST DEVELOPMENT (CID) is a type of housing which combines the individual ownership of private dwellings with the shared ownership of common facilities. The common facilities can range from roads and water systems to clubhouses, swimming pools and even 18-hole golf courses. CIDs provide a system of self-governance through a community association, sometimes called a homeowner association. The association has the authority to enforce special rules called CC&Rs (covenants, conditions and restrictions) and to raise money through regular and special assessments.
Types of CIDs
Common interest developments come in all shapes and sizes. The most common and well-known type of CID is the condominium or townhouse, which could be described as a vertical subdivision. Individual residents own the airspace and inside wall surfaces of their housing units. The community association owns all other parts of the buildings, the land and any special facilities such as landscaping and recreation centers. Other lesser-known types of CIDs include stock cooperatives and community apartments. Condos have a number of special characteristics that would require a separate article to discuss.
In suburban and rural areas the most common type of CID is the planned development (PD), which used to be called a planned unit development (PUD). PD residents retain private ownership of their individual homes and lots but share the ownership of other common features. These shared facilities can include private roadways, water systems, septic systems, parks and open space, ponds and lakes, airport landing strips, trails and ocean access. Some planned developments even share the ownership of forests and agricultural lands which produce income for the community.
History and Trends
The first common interest developments in the US began in the late 1800s. These started out as enclaves for the rich with restricted covenants barring unwanted ethnic groups. By 1970, there were an estimated 10,000 CIDs in the US, inspired by new urban planning concepts and increased environmental awareness.
In California, common interest developments surged in popularity following the 1978 passage of Proposition 13, which severely limited the power of local governments to raise revenues through property taxes. Critics claim that CIDs represent an alarming trend in the privatization of local government. Parks, open space, recreation facilities, roads and water systems – formerly enjoyed as a right of the general population – are now becoming the privilege of private communities. CIDs save local governments billions of dollars every year. It’s no wonder that local land use and fiscal policies increasingly encourage CIDs rather than address the needs of the general public.
The Community Associations Institute, a nonprofit alliance in Alexandria, Virginia, estimates there are now (in 2001) over 200,000 residential common interest developments nationwide with over 40 million residents, growing at the rate of 10,000 new CIDs per year. Recent estimates based on a California Senate Housing and Land Use Committee survey claim that seven million Californians now reside in 35,000 CIDs, with 1,000 CIDs being formed annually. These figures show that nearly 20 percent of Californians and almost 15 percent of all US residents live in CIDs. Common interest developments are now the fastest-growing form of housing in the nation.
In California, CIDs are regulated by the Davis-Stirling Common Interest Development Act of 1985, which was co-authored by former Assemblyman and current Governor Gray Davis. This code, with subsequent amendments and case law, provides homeowners with a system of self-governance and dispute resolution.
CC&Rs
Each CID is governed by a set of bylaws and CC&Rs. The bylaws specify the number of directors on the community association board, how they are elected and their terms of office. The CC&Rs are much like a private zoning ordinance, addressing such things as minimum house size, property line setbacks, design control, fences, trees, domestic animals, RV and boat storage and home occupations. CC&Rs usually take precedence over local zoning because they are more restrictive.
Home owners automatically become members of the community association when they buy a house and relinquish membership when they sell. The CC&Rs are recorded as restrictions on the deeds of individual home owners and run with the land. The community association has the power to enforce the CC&Rs, collect regular and special assessments, levy fines for violations, record liens and even initiate non-judicial foreclosure proceedings to collect unpaid assessments. Most associations attempt to resolve disputes privately or through mediation and arbitration. However, either the association or individual homeowners can file lawsuits to enforce the regulations.
CC&Rs cannot include any provisions which violate existing laws barring housing discrimination based on race, color, religion, sex, familial status, marital status, disability, national origin or ancestry. As of January 1, 2001, CIDs cannot completely outlaw pets. The Federal Housing Act of 1995 allows “adults only” communities which meet specific requirements. CIDs cannot ban manufactured homes as long as the homes conform to community design standards.
Advantages and Disadvantages
There are some distinct advantages and disadvantages to living in a common interest development. Because of the shared ownership feature, CID residents enjoy such things as dependable water systems, well-maintained roadways, open space and even ocean access that they may not be able to afford otherwise. CIDs often provide a sense of community and security as well. Gated communities prevent crime and unwanted solicitations. Innovative subdivision designs such as clustering can increase residential densities, protect environmental resources and lower housing costs. Some CIDs have regular social events and hold “work parties” to help maintain the common areas.
The disadvantages of common interest developments include lack of homeowner participation, conflicts among residents, overzealous enforcement of CC&Rs and deferred maintenance of common facilities. Residents must pay association fees in addition to local property taxes, which some consider to be a form of double taxation. In many associations, a few residents do all the work, usually volunteering their services. Only the largest common interest developments can afford professional management.
Before You Buy
- Make sure you request a complete information packet from the community association.
- Talk to your future neighbors, if possible, and find out if the association is running smoothly or if there are on-going feuds and petty disputes which may indicate a dysfunctional community association.
- Note the quality and condition of the common elements. If you hire a home inspector (which you should always do), they will not usually inspect any commonly-owned facilities.
- Find out if there are adequate reserve funds for the continued maintenance and/or replacement of common facilities.
- Note the number of full time residents, how many homes are occupied by renters, how many are vacation rentals and how many homes are vacant most of the time. Communities with fewer full-time residents may have lower levels of maintenance and owner participation.
- If there is a community water system, ask to see a recent water system report (annual water reports are required in California).
- If you’re applying for a loan, make sure the appraiser considers the value added by the common elements. Comparable sales should be selected from other CIDs if possible.
- Read the CC&Rs and make sure you would feel comfortable abiding by the rules.
- Plan to be an active participant in the community association. Don’t expect your neighbors to do all the work or tolerate your criticism and complaints.
- Note how well the CC&Rs are enforced by the association. Lack of enforcement or overzealous enforcement can lead to future disputes and lawsuits.
- Determine what the regular and special assessments have been over the last few years. High assessments will increase your housing costs. Low assessments may indicate deferred maintenance.
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- For more information, visit the Community Associations Institute (www.caionline.org) and the Common Interest Consumer Project (www.cicproject.org)
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