Property Rights & Social Contracts

A number of intentional communities struggle with the concept of a member's rights in relation to the community's rights, and I want to focus on a particular aspect of it that shows up when there's a vacancy.

It's relatively common for forming communities (this is particularly the case with cohousing groups) to promise prospective members that they'll have a free hand if they decide to sell. Understandably, this sweetens the pot for people on the fence about whether to buy a unit—helping the group to cross the finish line in selling out, which helps contain costs for early adopters.

The downside is that it's a questionable practice allowing a departing member to be in charge of selecting their replacement. While I don't want to be alarmist and this often works OK, the seller is generally more concerned with a quick sale at a good price, while the community's priority is a good fit—and those two objectives don't always align.

Worse, what if the seller is departing on less than good terms? Uh oh. They may not be motivated to care that much about how well the new buyer will blend with the community, or be completely forthcoming about the responsibilities and commitments that community members are expected to accept.

Key to sorting this out is understanding that an owner's property rights are distinct from a person's social contract as a member of the community. They are not the same thing. While it's very much in the community's interest to have property owners be members, the two do not automatically coincide.

While the property owner may have legal control over who they sell their property to (it depends on applicable laws and how things have been set up with the community), they do not have the right to unilaterally bless the buyer as a member of the community—which right rests solely with the community.

When these two concepts are conflated, mischief ensues.

The Power of Proactive Marketing

Because you want property ownership and community membership to go together, it is very much in the community's interest to play an active role in recruiting suitable buyers. In the ideal, the community will develop and maintain a waiting list of people you already have screened for suitability (value alignment, adequate financial means, and whatever else is on your wish list—maybe you're looking for a cellist for the chamber music ensemble, or a gourmet cook who can turn out elegant meals for 40), so that the exiting member will have an easy time selling and the community will be happy with the new member.

In one of the more creative versions of this, I know of a group where members have agreed to use the community as the real estate broker. In exchange for lining up a buyer (which the community has already determined it wants as a new member) it earns a commission on the deal, with the earnings going into a community improvement fund, thereby taking pressure off HOA dues. Nice.

However, if the group takes a passive, or hands-off approach in selecting the new buyer (which I don't recommend) it needs to step forward to assert its rights with respect to the social contract—establishing how the rights of membership in the community are tied to social behavior, not to property rights.

Misunderstanding Fair Housing Laws

Since 1968, it is US federal law that property owners cannot discriminate in who they rent or sell housing to on the basis of seven things: race, color, religion, national origin, sex, disability, and familial status. (There are parallel strata laws in Canada, but I am not as cognizant of the details.) Many communities mistakenly interpret this to mean that they are obliged to accept as a member anyone who applies and can meet the financial requirements. Not so! In fact, it's legal to be selective on the basis of any criteria other than the seven protected classes. Of course, it's a nuanced question what qualities you may want to screen for—I'm only making the case that communities are not legally prohibited from doing so.

While communities may be constrained about who buys and rents real property, they have considerable leeway about who is a member of the community—and therefore eligible to enjoy the rights and privileges thereof. 

Make sure your group doesn't miss the boat on this.