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Social capital has pervaded property law, with scholars and policymakers advocating laws and property arrangements to promote social capital and relying on social capital to devolve property governance from legal institutions to resident groups. This Article challenges the prevailing view of social capital’s salutary effects with a more skeptical account that examines the dark side of residential social capital — its capacity to effectuate local factions and promote restraints and inegalitarianism that close off property. I introduce a set of claims about social capital’s dark side in residential property and explore these points through the examples of local racial purging, land cartels, and residential self-governance. First, contrary to the assumption of a social capital deficit, residential racial segregation and land cartelization, perhaps the deepest imprints on the American property landscape today, suggest an abundance of local social capital and possible unintended consequences of interventions to build social capital. Second, “governing by social capital,” or relying on social capital for property self-governance, may empower factions, breed conflict, and increase the demand for residential homogeneity as a proxy for cooperation. In light of the mixed evidence for social capital’s benefits and its sizable dark side, the more pressing and productive role for property law is not to promote social capital, but to address its negative spillovers and illiberal effects.

The Dark Side of Town: The Social Capital Revolution in Residential Property