Enforceability of Community Benefits Agreements

Community Benefits Agreements (CBAs) have become a powerful tool by community groups in land-use planning, racial equity, and environmental justice, notes author Hannah P. Stephan in Minnesota Journal of Law & Inequality. These contracts between community members and developers can address concerns about displacement and allow community members to engage with developers productively. Although not a panacea for equitable development, they're widely recognized as one among many critical legal tools that are generally enforceable in court or legally binding.

But the fine details of contract language matter. CBAs are only as powerful as their capacity to hold developers accountable in reaching goals over time and when challenged in court or other legal contexts that might not be foreseen when everybody signs on the dotted line. This article delves into 3 areas in which vague or missing contract language and related structure can weaken enforceability.

Consideration

Whether CBAs are enforceable in court depends on several factors, from the perspective of the community organizations. First, experts have raised consideration as a potential issue. Consideration generally refers to the idea that, for a contract to be valid, the promises must be “bargained for”: both parties must exchange promises of performance.

Where the consideration provided by the developer includes “substantive terms,” the consideration provided by the community organizations is typically an agreement to not bring a lawsuit preventing the development or disparage the development. In a court of law, the community organization may b required to prove. that they are “giving something up.”

Successors and Delegation of Duty

What happens when the original developer sells or leases part of the development property? Without specific contractual language, the courts decide whether the agreements within the contract will carry with the land or if the original language was specific to the original developer party to the agreement and therefore no longer enforceable.

Third-Party Beneficiaries

The direct parties to the agreement — the developer and signing community organizations — should have clear standing. But does the entire community — an identified beneficiary — have standing to sue to enforce a CBA?