CIC WHAT?!?

Common interest communities (CICs) are hyperlocal, quasi-governmental constructs that bind a group of homeowners (members) to a set of shared requirements facilitated by specific state statutes and outlined in governing documents (Declaration / CC&Rs, Bylaws, Rules and Regulations (R&Rs), policies, procedures, resolutions, etc.).

As of 2020, the United States was home to an estimated 355,000 CICs with over 74 million residents (22.3% of the population) and $103 billion in annual assessments.

CICs (cooperatives, multi-family residential condominium associations (COAs), and planned developments (homeowner associations (HOAs), master planned communities (MPCs), planned urban developments (PUDS)) have ballooned since getting their start in 18th century London. Read History and Structure of the Common Interest Community for an in-depth understanding or, for a more abbreviated history, check these secondary and tertiary references. You might also like to learn about public interest developments (PIDs).

New York City was one of the first major US cities to develop cooperatives (for the well-heeled). CICs exploded in prominence and quantity starting in the 1960's as they facilitated opportunities for more affordable home ownership (condominiums and co-ops), opportunities to enforce segregation via covenants (a practice that has since been denounced) and as municipalities discovered that they could reduce and/or eliminate their burden of caring for sidewalks, streets, lights, parks, plumbing and more by shifting those responsibilities to private homeowner associations. As of 2021, 82% of new single-family homes sold are part of a CIC / governed by restrictive covenants.

"The existence of HOAs is something that many local governments actually appreciate. Cash-strapped municipalities like HOAs because developers build roads and parks and pass the costs along to the homeowners. In fact, many municipalities mandate the creation of HOAs in new developments."

READ: Critical Assessment: The Financial Role of Community Associations and Quantifying the Cost of Sprawl and Privatopia

COVENANTS: A PROPERTY VALUE DISCREPANCY

Despite years of statements about "maintaining property values" from the CIC industry (via CAI), 2019 research from retired Yale professor Leon S. Robertson concluded that there is an inverse correlation between property value increases for single family homes with covenants (traditionally known as HOAs) vs. those without covenants.

Research summarized here.

CIC-related statutory governance began with a focus on development in the early 1960's, then shifted to regulating developers in the 1970's and has since evolved a more comprehensive statutory framework in many states through adoption of provisions that are both unique to each state government and also through the Uniform Common Interest Ownership Act (UCIOA) and Uniform Condominium Act (UCA) versions adopted over decades across a handful of states starting in the 1980's).

Straddling both government and corporate realms, CICs face many of the same challenges experienced by those constructs: drafting and revising legislation (written governance), contracting, human resources, budgeting and finance, engaging constituents (homeowners) and more. Volunteer homeowner leaders are under immense pressure to plan and orchestrate a long-term balancing act maintaining physical property and quality of life for residents while simultaneously honoring the boundaries of federal, state and local statutes, codes, and governing documents.

READ: Common Interest Communities: An Introduction by David L. Callies

As highlighted by John Oliver, myriad frustrations and misunderstandings related to CIC living continue to fuel the growth of online forums such as the 200,000+ member r/f*ckHOA on Reddit. Homeowners and tenants find themselves mired in a canyon of discontent and uncertainty some call a "One Way Ticket to Hell" created by stark contrasts between owners' needs and a lack of: education (for all), free and frictionless access to resources with answers and examples, communication, transparency, accountability, and cost-effective, time-sensitive statutory protections from poor governance and operational execution.

Service delivery failures are common amidst the powerful industry-focused norms promulgated by the Community Associations Institute (CAI) trade organization. Unlike other industries where customer reviews, evaluation platforms and public ratings are plentiful, the CIC vendor industry (comprised of managers, insurers, reserve study providers, attorneys, and more) remains a closed ecosystem.

READ: Candid CAM interview

Here's a short collection of management company reviews compiled by the Better Business Bureau (BBB). Want to see more here? Contact us.

Homeowners and CICs have been led to believe they should trust the organizations that want their revenue, because, essentially, there is no other choice. The United States lacks a nationwide nonprofit primarily focused on serving the best interests of CICs and their homeowners which means that CICs have no spokesperson and homeowners are their own ombudsperson in all but a few states with their own programs.

READ: Why So Many Common Interest Communities Need Help | Why Homeowners Hate Their HOAs | Let's Get Honest About HOAs

New research busts myth that HOAs protect property values | Homeowners, residents dissatisfied with HOA communities...

Susan F. French muses poignantly while comparing CICs to government entities and businesses in Making Common Interest Communities Work: The Next Step (ABA's The Urban Lawyer, Summer 2005, Vol. 37, No. 3, pp 359-369).

CICs have immense power to affect the quality of residents' lives and the value of their real property investments
CICs are more difficult to leave (i.e. moving away from or selling a home) than exiting a business and/or private investment
CICs have relatively invasive restrictions and the enforcement of violations is more likely
Homeowners have little recourse to unreasonable, even illegal circumstances aside from filing suit

The Urban Lawyer - Making Common Interest Communities Work: The Next Step

"Community associations occupy a space that lies somewhere between public governments and private businesses... As common interest communities have become more prevalent, the legal and social challenges they post have become more apparent."

This is "the rub." It's why you're on this website right now!

"By vesting management responsibilities in an association, the owners overcome most of the collective action problems presented by commonly owned resources."

IF ONLY this were true! Management has its place, but is NOT a panacea.

"In larger communities, management companies are often hired to relieve the Board of day-to-day operational responsibilities."

There's no "easy button." As we discuss in Decision-Making 101, the work product of your association's staff and third-party vendors (law firms, consultants, community association manager, etc.) is only as good as the direction, information (facts and context), conversations and questions you exchange.

"One problem that remains is that associations are run by an elected board of members (directors) who are not paid for their services, which leads to shirking and free-riding on the willingness of others to serve."

View the Volunteer Involvement Survey:

49% of CICs have an estimated 1% to 5% of their owners volunteer on an annual basis
53% of respondents perceive their personal volunteer time commitment as too much
- 74% of respondents volunteer from 11 to over 41 hours every month (!)
- 63% of respondents expect Directors to perform 10 or more hours of service every month
70% characterize volunteer involvement as not enough
48% say that a majority of volunteer work is performed by 1 or 2 Directors in the absence of material contributions by others