Friday, January 1, 2010

Anarchists and HOAs

A number of broadly libertarian thinkers, including Gordon Tullock and Spencer Heath McCallum, have suggested that private owners—condominium owners linked by interlocking agreements (Tullock) or developers leasing property to residential or commercial tenants—could regulate land-use and related matters in the absence of the state’s heavy hand.

I found myself thinking about these issues again in connection with a conversation that erupted on my Facebook page today. The focus was this article, brought to my attention by Radley Balko. One very thoughtful friend raised the question of crafting a specifically libertarian response to the problem posed by the ongoing conflict described by the article.

For me, the story serves as a very pointed reminder of why I don’t think HOAs and similar arrangements as optimal ways of organizing social relations without the state’s intervention. I wouldn’t wish the stresses associated with dealing with an HOA on anyone else. Surely anarchists can come up with more creative ways of structuring our lives together.

In any event, it strikes me that a libertarian response might include one or more of the following elements:

1. Non-Enforcement Under the Title-Transfer Theory? I’m not a particular fan of Rothbard’s title transfer theory of contract, but it occurs to me that there is perhaps an argument to be made that, on this theory (depending on whether one judges that there is any sort of title transfer in an HOA), the relevant sort of contract wouldn’t be enforceable at all (on the part of a court committed to Rothbardian principles, at any rate).

2. Money Damages Rather than Specific Performance as the Appropriate Remedy? Even if one does think the contract ought to be enforceable, I think it’s worth asking what sort of remedy ought to be available. It’s not obvious, at any rate, that the right remedy here is specific performance—perhaps it’s money damages. Certainly, I’d vote for this option over specific performance.

3. Non-Enforcement Per a Protective Agency’s Contract? It seems to me to be perfectly consistent with even a strictly Rothbardian anarchism (one different, therefore, from my own variety in a number of ways) for my own protective agency to decide in a situation like this that it wouldn’t provide enforcement services—provided its contract with users specified that its court system reserved the right to engage in the development of rules in common law fashion in the service of equity (no doubt the situation would be different if its contract specified that would it provide enforcement services in any and all cases, but [a] it seems unlikely that any credible agency would bind itself in this way and [b] “enforcement” still needn’t mean requiring specific performance, but might instead mean securing money damages).

4. Non-Violent Protest? A further libertarian response here might obviously involve non-aggressive protest, boycotting, shunning, etc. Someone engaging in this sort of response wouldn’t be arguing for a change in general legal rules related to the enforcement of contracts, but would be asking that the HOA reconsider its own rules, something any non-violent objector presumably has the right to do.

I’d be interested in readers’ reactions both to this specific story and to the broader questions it raises about the organization of social life and the resolution of conflict in a stateless society.


Isaiah said...

Is eviction one of the things you're referring to when you say "specific performance" in #2?

Gary Chartier said...

Yes—“specific performance” means insisting that someone do what she says she'll do in a contract. In many contexts, courts simply won't mandate specific performance as a remedy (if a singer backs out of an agreement to croon at a concert, a court won't issue an injunction requiring that she not go anywhere but the concert venue at the specified time). I'd argue that, in a case like this, too, a court ought to prefer money damages. If the HOA can demonstrate real economic loss, then the damages might be high enough to prompt the grandparents to leave. But my instinct is that the real-world economic damages the HOA could demonstrate would be pretty low.

Isaiah said...

I asked because from the perspective of the HOA (or landlord, etc.), having to continue accomodating someone could look like a specific performance. Of course, in an arrangement where residents "own" their houses, the service rendered by the HOA is not the particular space of the residence, but other services which can conceivably be denied without eviction...Is this why having to move out of an HOA is a specific performance and not merely an end of service?

Gary Chartier said...

Good observation, Isaiah. It seems to me that the issue of specific performance arises when the residents own their homes, as in an HOA; things would doubtless work differently in other cases.

Forget the issue of a child's presence in a “retirement community.” Suppose instead that the issue is whether an owner can make a visible modification to a structure (say, by painting it an unapproved color or putting an unapproved pink flamingo in front). It's pretty clear here that enforcing specific performance would mean requiring that the house be repainted (perhaps doing so forcibly and then charging the owner?), the flamingo removed, etc. There is no corresponding performance that's being required on the part of the HOA. To the extent that common areas are being used by the homeowner, it would be the payment of her HOA dues (funding the upkeep of these common areas) that would entitle her to access them. A court's declining to facilitate an HOA's active interference with a homeowner's property wouldn't count as its requiring specific performance.

nfactor13 said...

I'm wondering how this fits into the larger question of community formation in an anarchic society generally. It seems to me that there's something very understandable about the HOA idea, despite the numerous abuses that have occurred. How would/should people with common values and preferences establish their environment as they wish (and keep others from interfering with it)?

To the points you made:

1 & 2. In some sense you could view this as a trespass dispute since what the residents are really asking for is to exclude children from common areas. So it seems that specific performance might be the only solution, depending how you framed the question. If I tell someone to get off my lawn, can he just offer me a dollar instead of complying?

3. I think in a situation like this, you could certainly restrict specific benefits, like pool or clubhouse access, or a variety of other things. With security, though, I would think it's difficult to really exclude someone from the benefits since there's no way for a potential burglar to know that my particular residence is exempt. The free rider problem would be particularly bad in an HOA, I'm guessing.

nfactor13 said...

4. I've been thinking a lot about the kinds of soft enforcement that might be preferable in an anarchic legal system. Perhaps it's the influence of my time with religious studies, but I keep coming back to the idea of reconciliation, personal, communal, and extending to the entire society.

Specifically, I've still not found a good rationalization for the idea of punishment for a crime. Restitution, yes, very much.. and that's something so lacking from our current justice system.

It seems to me that reputation would be an extremely important element of an anarchic society. Reputation is a risk mitigator. It provides a way for strangers to assess the risk of interacting with you. Based on that assessment, you would receive differential treatment economically and socially.

It also provides a means for people to form associations that have less chance of friction.

In this case, I would think there are multiple ways that reputation concerns would put pressure on both parties to resolve things more quickly. If others perceive that these grandparents violated the terms of a contract, they'll have a reputational hurdle every time they deal with someone else. Likewise, the HOA can't guarantee the environment that they're selling to new customers.

TGGP said...

Relevant paper on vertically integrated proprietary communities:

johanna said...

As for this particular situation, I have to wonder what the HOA would do if there was no tax-payer funded sheriff to perform the eviction who can be convinced to do so with nothing but the letter of the HOA agreement to go by. Also, what if there was no tax-payer supplied social services provider to take the girl in? Would they just throw her out on the street then?
I can’t think of any way to prevent people from making these kinds of agreements so I’m inclined to choose your fourth point as the remedy (or the closest thing to a remedy that there is). If people come to understand that the implications of signing on to these sorts of things can be devastating, maybe they will eventually just fall out of favor. It’s interesting how a simple promise like saying you’ll never allow someone under the age of 18 to live in your home can turn into a life-or-death matter. I suppose that’s bound to happen when you’ve implicitly agreed to let any commitment to the restrictive community (in this case, the HOA), no matter how trivial, trump any commitment you may have, no matter how serious, to any other community that you figure in (e.g., your family), with a potentially huge penalty (homelessness) if you attend to those other commitments. The appeal of the restricted community is rooted in a very understandable desire for safety and security (stability, maybe?), but it seems like in practice these kinds of communities end up being fair-weather friends at best.