Living in close proximity to birth family

I have heard of a few situations where a child was placed with a family who lived just down the street from the birth mother. I am wondering how one would go about a situation like this. Even in the most open adoptions, visits are most often regulated or on some type of schedule. I can see issues with it being hard for both families, since they would likely run into each other all the time. Has anyone had a situation like this? How do you handle it?