Cities and Homeowners Associations

Abstract

In his recent article, The City as a Legal Concept, Professor Gerald Frug compared the city and the business corporation as possible vehicles for the exercise of decentralized power. In the course of his analysis, Frug asserted that American law is deeply biased against the emergence of powerful cities and, by implication, is less restrictive on corporate power. Joining the circle of critical legal scholars who want to "rethink" and "restructure" American society, Frug suggested as a modest first step that cities be empowered to engage in banking and insurance operations. Frug believes that if cities were to manage enterprises of this sort, individuals would be better able to influence the decisions that affect their lives. According to Frug, citizen control through participatory democracy leads to "public freedom," a form of human fulfillment that the critical legal scholars think an impersonal market economy suppresses. Despite his prodigious research, Frug never directed his attention at a third candidate for the exercise of decentralized power: the private homeowners association. The association, not the business corporation, is the obvious private alternative to the city. Like a city, an association enables households that have clustered their activities in a territorially defined area to enforce rules of conduct, to provide "public goods" (such as open space), and to pursue other common goals they could not achieve without some form of potentially coercive central authority. Although they were relatively exotic as recently as twenty years ago, homeowners associations now outnumber cities. Developers create thousands of new associations each year to govern their subdivisions, condominiums, and planned communities.