By: Kathy K. Dorough, Esq. and Lisa A. Crawford, Esq.

One of the newest trends in real estate development is the “new urbanism” often involving the creation of mixed use communities.  The concept is not new at all of course.  At least since the Roman Empire, shopkeepers have lived above or behind their stores, craftsman lived above their workshops.  But after World War II, with the advent of automobiles and then multi-car families, suburban subdivisions were built farther and farther away from the city center.  Residential and commercial functions were no longer integrated into a community.  But now, environmental and life-style concerns have brought back the concept, and hopefully we can do it better this time.

There are endless variations of these multi-use, or mixed use communities:  condominiums with hotels, offices and residential units all in one building; master planned communities with country clubs and their own schools, communities with apartments, townhomes, retail and commercial areas.  You name it, it’s on the market now.  Politicians and local governments have embraced the concept of live, work, shop communities in an effort to get people out of their cars and off of the roadways.  The concept harkens back to an easier, friendlier time when people knew the shopkeepers, children walked to school and everyone went home for lunch.  While it sounds idyllic, creating and maintaining a community in which owners of differing types of property which have competing interests and priorities can be a challenge both for the developer and for the members.  Failure of any part of the project will negatively impact on the community as a whole.  Therefore it is critical that owners involved in the administration of these communities be sensitive to the unique concerns and needs of their mixed use neighbors.

How these developments are organized and administered impacts directly on the success or failure of the community.  If the interests of the commercial owners are unchecked, certain commercial functions may interfere with residential owners’ quiet enjoyment of their homes.  For example if controls on types of businesses allowed, signage, hours of operation, traffic and parking are weak or unenforceable, your neighborhood may become the victim of its own success, with endless congestion and noise.  Conversely, if commercial enterprises do not have sufficient parking and customers cannot find businesses because of restrictions on signs, they will fail, resulting in empty shops.  If these competing interests are well considered in the development of the project and a structure established within which both the commercial and residential owners continue to co-operate with each other in the administration of the community, both interests will be protected.  This article will review different systems of organization of these communities, pointing out the advantages and disadvantages of each.

The Unplanned Mixed Use Community

Although many counties, especially in the metropolitan Atlanta community now require, at a minimum, that a subdivision have a mandatory homeowners association (from the county’s perspective, to maintain the detention/retention facilities) some do not.  In the unplanned project, a developer, with the new market trends in mind will plat a traditional subdivision with several lots along the main road for commercial use.  The developer puts no covenants containing use restrictions or mandatory assessments on the property.  The developer builds a stacked stone entry feature with lights and a waterfall pursuant to an easement over the two commercial lots leading into the swim-tennis residential area.  There is a beautiful sign on the wall identifying the community as “Here Today – A Live Work Community”

The community sells out quickly and the developer is on the next project.  The owners are surprised when no one comes to clean the pool and the electricity no longer lights the entry feature and the waterfall is still.  They have no means for raising money.  The dry cleaners at the corner gets cited by the Environmental Protection Agency for pouring used cleaning fluid down the drain and decides to move out in the night.  A store selling products you do not want your children to know exist opens in its place.  They are open 24 hours a day and have the flashing sign letting everyone know, as if you could forget.

Short of getting the city or county to help enforce zoning and ordinance issues with regard to use and signage, the owners in this community are looking at bake sales to raise money for the pool and tennis courts and large legal bills to fix the mess.

The Poorly Planned Community 

In “Slap-Dash – A Mixed Use Community” the developer has created a residential swim-tennis neighborhood.  All of the residential lots were subjected to a Declaration, which was copied from the county land records.  (Never mind that the name of the community wasn’t changed all the way through the Declaration!)   The Declaration contemplates a mandatory membership association, which can raise dues and enforce use restrictions.  In the center of the community, the developer also built a cluster of commercial office buildings.  His concept was that these buildings would house doctors and lawyers and accountants which the residents of the community, and others, would use.  These buildings were developed as a commercial condominium and are subject to a Declaration of Condominium.

The developer built extensive greenspaces along central roadway leading from the main highway, through the residential community to the commercial condominium.  The greenspace areas are owned jointly by the two Associations.  There are no provisions in either Declaration regarding who will maintain, or pay taxes on, the greenspace.  The commercial owners say that they are only there five days a week and make up a small percentage of the total community.  The homeowners feel that the commercial owners should pay to plant the area because they are in business and need to impress their clients.

As the weeds grow taller, the communities realize they have a problem.  Sick of looking at the weeds, representatives from each Association agree to negotiate a cost-sharing agreement which provides for an equitable contribution from each Association to cover the costs of maintaining the greenspace.  A carefully drafted agreement should also provide for representatives from each Association to come together on an annual basis to re-evaluate the scope and costs of greenspace maintenance and provide a dispute resolution mechanism in the event of a dispute between those representatives.

The Master-Planned Community

In “Concordia Centre” the well planned Master-Planned Community there is a Master Association and an umbrella Master Declaration which creates a framework for the administration of the common interests of all members of the community.  There is a master budget which pays for common entry features, shared drainage and detention and water retention facilities and community parks and greenspace.  The Master Declaration also contains provisions which give the Master Association the authority to collect assessments either from the “sub” associations or directly from individual owners an all phases of the development to fund these functions.  The Master Declaration also contains easements, use restrictions and architectural controls which apply to the entire community.

Beneath the Master Association and Master Declaration are Associations, each of which has its own Declaration which protects the interests of that particular phase of the development.   The single family residential phase has a traditional Declaration of Covenants, Conditions and Restrictions.  The residential and office condominiums at “Concordia Centre” have their own Declarations of Condominium.  Owners are bound by the provisions of both the Master Declaration and any other Declaration for their neighborhood.

While it sounds like this would be difficult to administer, the By-Laws of the

Associations determine how many representatives or “voting delegates” each Association has on the Board of Directors of the Master Association.  Likewise, the Master and Association Declarations detail how the budgets of the individual Associations and the Master Association will dovetail.  They also identify how the various Associations are to be managed.

It is imperative that mixed-use communities generally be well thought out from the outset and that the controlling Declarations make provisions for any contingency.   Owners need to respect the diversity of use in the community and the various interests of their neighbors.

As is always the case in community association life, the better the owners know the documents and the more they know before they purchase in such a community, the more likely the ultimate success of the community as a whole.  Owners in Mixed-Use Communities face unique and sometimes very complicated issues which affect the community as a whole and should be prepared to face these challenges in creative and flexible ways.