Common Interest Development

The term common interest development (CID) designates a category of real estate development in which all the owners have some form of shared property ownership in addition to an individual interest. Most CIDs are residential developments, but some residential CIDs include commercial components, and there are also commercial CIDs. Related terms that are used to describe them include common interest communities (CICs), residential community associations (RCAs), and community associations. CIDs are the predominant form of new housing construction in the United States, and they are also becoming popular in many other nations.

All forms of CID involve shared ownership of property, a set of governing documents that organize the project, and an authority structure, usually in the form of a not-for-profit corporation, for collecting revenue and maintaining the property. The individual owner's interest is referred to as a “unit,” and the shared ownership interests are referred to as the common areas.

Beyond those commonalities, there are a number of ways to structure a common interest development, with each type employing a different form of common and individual ownership. The three most popular forms of CIDs are planned developments of detached single-family homes with a homeowners’ association, condominiums, and housing cooperatives.

In the planned residential development with a homeowners’ association, the individual owners have title to their own home with a yard. The association owns, manages, and maintains private infrastructure and amenities for the exclusive use of the owners, who also control the association through their membership and voting rights. The shared property often includes streets, sewer and drainage systems, and recreational amenities, such as parks, lakes, and golf courses. The legal principles used to create these association-run CIDs are found in centuries of Anglo-American common law of real estate, including the laws of contract and equitable servitudes. Early homeowners’ associations can be found in the United States as early as in the mid-19th century.

A second popular form of CID is the condominium, a form of ownership that did not exist in the United States until the early 1960s and one that requires specific state statutory authorization. In this arrangement, the owners have exclusive title to a legally recognized but essentially fictional “airspace” that consists of the area inside their walls, bounded on the outside by the painted or finished surface of those walls. The common area is the entire building, apart from the airspace units, and it is owned by all the unit owners as tenants in common. Each of them owns a percentage of the project, and the [Page 63]condominium association manages the building but does not own it.

The third major form of CID is the housing cooperative, which is typically organized as a corporation that owns the entire project. The individual interest is a share of stock in the project that each cooperator owns, along with a proprietary lease that guarantees the cooperator the exclusive right to occupy his or her unit. In effect, the cooperators become their own landlord. Housing cooperatives are concentrated in certain older cities, such as New York City and Chicago.

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