PropertyProf Blog

Editor: Stephen Clowney
Univ. of Arkansas, Fayetteville

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Saturday, March 13, 2010

Davidson on Values and Value Creation in Public-Private Transactions

Nestor M. Davidson (Colorado) has posted Values and Value Creation in Public-Private Transactions on SSRN.  Here's the abstract:

Scholars have developed a significant body of literature exploring the work of deal lawyers with the essential insight that attorneys acting as transaction-cost engineers have unique potential to add to the overall value of deals. This value-creation literature has traditionally made two foundational assumptions about the role of the state in transactional law. First, scholars have assumed that regulation is essentially irrelevant to transacting - that from the deal lawyer’s perspective, the government is a factor only to the extent that the state will enforce private agreements. Second, scholars have assumed that private parties uniformly view public policy as a constraint in the realm of compliance - that from the deal lawyer’s perspective, clients are indifferent, if not hostile, to regulatory goals. The first assumption is the subject of recent scholarship convincingly arguing that regulatory arbitrage should be added to the picture of deal lawyers as transaction-cost engineers. The second assumption, however, has gone unchallenged and is the focus of this Article.

Although the value-creation literature envisions a monolithic orientation toward the state, in practice, partnerships that engage the private sector in advancing a variety of public goals represent both a significant sector of the economy and one of the central contemporary approaches to policy by federal, state, and local governments. Deal lawyers are thus increasingly called upon not only to reduce transaction costs and leverage regulatory constraints, but also to manage a complex alignment of interests between private means and public ends. In short, lawyers in public-private transactions perform what this Article calls regulatory translation - transmogrifying the often abstract goals of public policy into the concrete mechanisms of private ordering.

This Article makes two primary contributions to the literature. First, it identifies an increasingly important transactional context largely ignored by scholars investigating the work of deal lawyers. Second, the Article gives a normative, theoretical grounding for that work, providing a framework that has the potential to enhance the advantages and mute the problems associated with public-private partnerships. Ultimately, lawyers in this context can create value in the broadest sense of the word, and there are lessons in this for deal lawyers in all transactions.

Ben Barros

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March 13, 2010 in Land Use, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Friday, March 12, 2010

Brinig and Garnett on Catholic Schools and Broken Windows

Margaret F. Brinig and Nicole Stelle Garnett (Notre Dame) have posted Catholic Schools and Broken Windows on SSRN.  Here's the abstract:

This paper represents the second stage of an effort to test previously unstudied implications of a dramatic shift in the American educational landscape, namely, the rapid disappearance of Catholic schools from urban neighborhoods. In a previous study, we used data from the Project on Human Development in Chicago Neighborhoods to measure how Catholic school closures affected perceived levels of disorder and social cohesion in Chicago neighborhoods. In this paper, we use data provided by the Chicago Police Department to test two related hypotheses about the effects of Catholic school closures on violent crime rates. The first is that Catholic school closures will lead, in relatively short order, to increased crime in a neighborhood. The second is that that crime will increase most dramatically in those police beats where previous school closures led to elevated levels of physical and social disorder and suppressed levels of social cohesion in 1995. We find that Catholic school closures are linked to increase in violent crimes, and that the most significant increases occur in police beats with the highest levels of school-closure-related disorder and -suppressed social cohesion in 1995.

Our study contributes in unique ways to two critical legal-policy debates about policing and education policy. First, and most significantly, our data provides a novel means of testing the broken windows hypothesis. We know, from our previous investigation, where school closures have elevated disorder and suppressed social cohesion, and, using a 3SLS analysis to solve simultaneous equations, we are able to link these findings with subsequent elevated levels of serious crimes. These findings suggest a connection between disorder and serious crime, even if not the direct one posited by Wilson and Kelling. Second, the study contributes new and important evidence to debates about school choice, especially in light of the very real possibility that urban Catholic schools will continue to disappear unless new sources of tuition assistance become available to the students that they serve.

Ben Barros

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March 12, 2010 in Land Use, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Garnett on Unbundling Homeownership

Nicole Stelle Garnett (Notre Dame) has posted Unbundling Homeownership: Regional Reforms from the Inside Out on SSRN.  Here's the abstract:

Two vexing puzzles plague American land use regulators. The first puzzle is how to protect property owners from harmful spillovers without unduly stifling land use diversity. The dominant forms of land use regulation in the United States - zoning and private covenants - rely on ex ante prohibitions. Yet, since local governments and private developers rarely can calibrate the level of regulation to residents’ true preferences, the costs imposed by these regulations tend to exceed the benefits of actual harm prevention. The result is the over-protection of property owners and, and, many would argue, a monotonous, sterile, inefficient, and inconvenient suburban landscape. The second puzzle is how to address the intrametropolitan inequalities resulting from the fragmented distribution of regulatory authority without undercutting the beneficial effects of inter-jurisdictional competition. While this puzzle extends beyond property law, land use regulations are particularly problematic because they empower local jurisdictions to exclude unwanted residents. The difficulty is, however, that most proposed strategies to address this second puzzle threaten to undermine the efficiency gains that are produced when, as Charles Tiebout influentially predicted, local governments compete with one another for residents. By treating these two land use puzzles as property-entitlement problems, rather than regulatory-design problems, The Unbounded Home breaks free from standard land-use and local-government debates and offers novel solutions to address seemingly intractable difficulties. This review focuses on the two of Fennell’s proposals that, in my view, hold the most promise: First, the use of “entitlements subject to self-made options” or “ESSMOs”, to address local land use spillovers; and second, the reconfiguration of home-ownership to minimize owners’ incentives to demand that exclusionary land use policies.

Ben Barros

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March 12, 2010 in Property Theory, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Thursday, March 11, 2010

Davidson on Housing and Community Development Policy

Nestor M. Davidson (Colorado) has posted Reconciling People and Place in Housing and Community Development Policy on SSRN.  Here's the abstract:

In housing and community development theory, scholars have long debated tensions between place-based policies and those that focus on fostering mobility. In practice, this is a false dichotomy and this essay explores ways in which place-based policies change the calculus of mobility, while mobility policies deeply shape both the communities people seek and those they leave behind.

Ben Barros

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March 11, 2010 in Real Estate Transactions, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Owen on Urbanization, Water Quality, and the Regulated Landscape

Dave Owen (Maine) has posted Urbanization, Water Quality, and the Regulated Landscape on SSRN.  Here's the abstract:

Watershed scientists frequently describe urbanization as a primary cause of water quality degradation, and recent studies conclude that even in lightly-developed watersheds, urbanization often precludes attainment of water quality standards. This article considers legal responses to this pervasive problem. It explains why traditional legal measures have been ineffective, and it evaluates several recent innovations piloted in the northeastern United States and potentially applicable across the nation. Specifically, the innovations involve using impervious cover TMDLs, residual designation authority, and collective permitting. More generally, the innovations involve transferring regulatory focus from end-of-the-pipe to landscape-based controls. I conclude that the innovations, while raising some new problems, represent a promising shift, and it discuss additional reforms and research needed to better reconcile legal water quality standards and traditional land development patterns.

Ben Barros

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March 11, 2010 in Land Use, Natural Resources, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Fennell Lecture at Florida

On March 17, Lee Fennell (Chicago) will give the Third Annual Wolf Family Lecture in the American Law of Real Property.  The lecture will take place at 11:00 a.m. in the University of Florida's Levin College of Law Chesterfield Smith Ceremonial Classroom.  Professor Fennell's talk will be titled "Possession Puzzles", and according to the flyer, (Download Wolf Lecture Flyer 2010[1]) she will "use the housing crisis and waves of foreclosures and abandonments it has generated — in Florida and elsewhere — as a springboard for examining the surprisingly complex relationship between property rights and continuity of possession."

Ben Barros

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March 11, 2010 in Property Theory, Real Estate Transactions, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Gaba on Locke and the Takings Clause

Jeffrey M. Gaba (SMU) has posted John Locke and the Meaning of the Takings Clause on SSRN.  Here's the abstract:

John Locke, political philosopher and all around polymath, stands as a central figure in the development of Western conceptions of property rights and democratic institutions. If not the sole voice that is echoed in the American revolution and the Constitutional Convention, he clearly influenced the founders, particularly James Madison, and he thus represents an intellectual force that is a legitimate part of the current debate over the relationship between government power and individual property rights.

The purpose of this article is to provide both a detailed analysis of Locke to aid the Takings debate and a particular reading of the Two Treatises that provides a coherent picture of the limits of government authority over private property. Part I is an introduction to John Locke and the Two Treatises of Government. Part II addresses Locke's justifications for acquisition of private property in a pre-government “State of Nature” and the constraints on property reflected in a series of Lockean “provisos.” Robert Nozick in Anarchy, State and Utopia, has suggested that the “historical shadow” of Locke's provisos can have contemporary significance. Nozick is correct to suggest the continuing significance of the Lockean provisos, but incorrect in his assessment of application of the provisos. This article argues that only a Lockean “sustenance” proviso forms the basis of contemporary limitations on private property.

Part III deals with the central question of Locke's views on the scope of government authority over private property. Although Locke advocated a broad scope of government authority, he can be seen to have recognized a series of limitations on the exercise of this government power. One set of constraints arose from his view that government could not adopt “arbitrary” laws that did not serve the public good. Of equal significance is a constraint that rises from Locke's conception of the social contract. He can be read to argue that government can not regulate private property in ways that would place people in a worse condition than they would be in a pre-government State of Nature. Contract and game theory suggest some implications of this view, and the result is a weak set of “Lockean rights.” Government interference with those Lockean rights would require compensation under the Takings Clause. Beyond that, Locke suggested that democratic institutions are the proper check on interference with property rights. Part IV considers the implications of Locke's views for the contemporary Takings debate. In surprising ways, Locke's views mirror, in important ways, the outcome of the ad hoc approach to the Takings Clause employed by the Supreme Court.

Ben Barros

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March 11, 2010 in Property Theory, Recent Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Kent & McMillian on Deadwood and Property Rights

Lance McMillian and I have posted our latest paper, "The World of Deadwood:  Property Rights and the Search for Human Identity," on SSRN.  Here's the abstract:

The year is 1876. Gold has been discovered in the fledgling camp of Deadwood, bringing hordes of new arrivals each day seeking to strike it rich. The allure of wealth is coupled with the allure of complete autonomy. There is no law. Although part of the United States, Deadwood is unaffiliated with any existing territorial government. It is free. Or is it? From this backdrop, HBO’s highly-acclaimed drama Deadwood springs forth. Series creator David Milch is frank about his mission behind the story: to explore how order arises from chaos. The assignment and protection of property rights play central roles in this journey from anarchy to law. In the world of Deadwood, where ownership of land can be worth millions, law’s promise and law’s pitfalls are both on full display. The stakes are high; the lessons are many.

Stories are powerful teaching tools because they marry information and context. Film and television also supply a picture of law in action, marshalling the power of the visual to make law more real, less abstract. Because of its rich complexity and invocation of ancient debates over what property is and who rightly can be deemed to own it, the three-season run of Deadwood provides fertile ground for this type of interdisciplinary study. Deadwood demonstrates that the interrelationship between property and law is complex, with many moving pieces and many valid points and counterpoints. Property has both naturalist and positivist attributes, it both pre-exists and coexists with the state, it is about economic power and personal identity, it supports both an individualist and communitarian mindset. Accounting for all of these strands in a balanced way is a lot to ask of legal institutions, especially inasmuch as the strands often are in competition with one another. Deadwood suggests that, while law is certainly a component piece in the puzzle of human relations, it alone cannot do all that we ask of it. And therein may lie the ultimate lesson: Law can be a blessing, but the human condition requires more.

Mike Kent

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March 11, 2010 in Property Theory, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

HOAs Consider "Reverse Foreclosure"

We just wrapped up our unit on promissory servitudes in my Property course.  As is the case every year, the discussion of Neponsit Property Owners' Ass'n v. Emigrant Industrial Savings Bank produced a lot of questions from the students.  Given that Neponsit concerns what are essentially homeowners' association dues, this time around I received a few questions about what HOAs might do to collect such dues on homes where the homeowners are in default with the bank.  (I have a pretty unique group this year, which includes a real estate developer, an HOA board member, a realtor, and a member of a local historic preservation commission, among many other interesting students.  A propertyprof's dream class!)

The problem, it seems, is that the bank will file a notice of foreclosure against the homeowner but will delay completing foreclosure because it doesn't want unmarketable, upside-down assets in its portfolio.  The defaulting homeowner usually stops paying her HOA dues, as well, and the indeterminate state of the foreclosure proceedings keeps the property in limbo.  HOAs are then stuck with unpaid dues, which affects community maintenance, etc.

A potential solution for the HOA was highlighted in this past Sunday's Miami Herald.  Apparently, several HOAs in Florida have started using a process called "reverse foreclosure" to force the bank's hand.  Under this procedure, the HOA forecloses on its lien resulting from the unpaid dues, takes title, and then renounces its claim, leaving the bank as the only player left to receive title.  Once the bank owns the property, it has to pay HOA dues (up to a certain capped amount).

I am always trying to teach students to be creative in their lawyering, and this provides a nice example of "outside-the-box" thinking to advance a client's interests.  But I also try to teach students that there are sometimes larger costs to pursuing legal remedies.  I wonder whether the HOA's long-term interests are ultimately served by this strategy, which promises to result in a higher number of displaced homeowners and an increased number of listed properties in an already saturated market.

Mike Kent

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P.S.  Thanks to Stetson law student Quincy Bird for bringing the article to my attention.

March 11, 2010 in Real Estate Transactions | Permalink | Comments (0) | TrackBack (0)

Anderson on Race, Poverty, and Exclusion at the Urban Fringe

Michelle Wilde Anderson (UC Berkeley) has posted Cities Inside Out: Race, Poverty, and Exclusion at the Urban Fringe on SSRN.  Here's the abstract:

Across the country, from Aberdeen, North Carolina to Modesto, California, city growth has bypassed hundreds of low-income neighborhoods founded under conditions of racial segregation in the early to mid-twentieth century. Denied annexation to neighboring municipalities, these urban pockets remain unincorporated, covered only by county governance and, in some cases, rural service standards. This article represents the first comprehensive academic treatment of such communities, which I call unincorporated urban areas. Challenging popular assumptions regarding an inner-city of racialized poverty in contrast to a white, suburban privatopia, unincorporated urban areas turn our attention to suburbs where the gravitational pull of the urban economy, affordability constraints, and the desire for homeownership have led to the settlement of low-income communities of color at the unregulated fringe, just beyond city limits.

The article analyzes the adequacy of local government structures serving unincorporated urban areas and the flexibility for reform within those structures. It asks, for the first time, whether two tiers of general purpose local government - a city and a county - offer urbanized areas greater participatory voice, stronger protection from undesirable land uses, improved collective services, and greater household mobility than county rule alone. In so doing, it raises the question of what adequacy in the context of local government might mean, revealing unquestioned assumptions about the allocation of power among cities, counties, and states. New legal issues concerning municipal services, extraterritorial eminent domain, and the risk of land loss come into focus in this investigation of cities inside out - urban life placed outside the reach of municipal government.

Ben Barros

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March 11, 2010 in Land Use, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 10, 2010

Preservation Law Digest

Folks interested in issues related to historic preservation and land conservation should check out the Preservation Law Digest.  Interesting stuff.

Ben Barros

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March 10, 2010 in Land Use | Permalink | Comments (0) | TrackBack (0)

Stahl on Local Growth Politics

Kenneth Stahl (Chapman) has posted The Artifice of Local Growth Politics: At-Large Elections, Ballot-Box Zoning and Judicial Review on SSRN.  Here's the abstract:

Municipalities throughout the nation are plagued by a seemingly unresolvable conflict between development interests and homeowners’ groups who oppose growth near their neighborhoods. This paper uses southern California as a case study to examine the problem of local growth politics and the judicial response to it. As I argue, local politics in southern California are structured in such a way that fosters an artificial dichotomy between pro-growth and anti-growth positions, subverting the possibility of compromise and suppressing a wide range of views about growth and other issues. On one hand, the prevalence of at-large voting systems in southern California municipalities favors growth interests by facilitating citywide growth while muting neighborhood opposition. On the other hand, neighborhood groups liberally rely on the initiative and referendum to halt unwanted growth. Ironically, the apparent conflict between pro-growth and anti-growth agendas generated by this political structure conceals a fundamental continuity. Both at-large voting and the initiative process function to dilute the influence of minorities and other geographically concentrated groups, entrench the political power of the professional middle classes, prevent disparate interest groups from negotiating toward terms in the contested terrain of municipal politics, and cloak this ideologically loaded process in the rhetoric of a unitary public interest set against parochial selfishness.

This distorted political system has been the subject of many judicial challenges, most of which have focused on the local initiative process. The courts, however, have taken pains to uphold the right of the people to enact land use laws by initiative or referendum. Rejecting arguments that ballot-box zoning entails an excess of politics without necessary apolitical counterweights, the courts have expressed confidence in the judiciary’s own ability to temper the evils of unchecked politics through judicial review. I assert, however, that this faith in judicial review is misplaced, as the judiciary has proven incapable of balancing the complex array of competing interests involved in land use regulation. Thus, I argue that the judiciary should instead focus on correcting defects in the political process so that the balancing of competing interests can occur, as it should, in the legislative arena.

Ben Barros

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March 10, 2010 in Land Use, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Salkin on Affordable Housing

Patricia Salkin (Albany) has posted Affordable Housing, Distribution of Powers and Economic Crisis in the United States on SSRN.  Here's the abstract:

This paper considers the history of affordable housing in the Unites States, and discusses the further leadership role that state and local governments can play in meeting the affordable housing needs of communities by using their authority to implement effective and creative land use planning and zoning techniques, especially in the light of the current economic situation. State-level approaches to addressing affordable housing are considered and the paper outlines innovative solutions that may be offered by local governments through the implementation of available land use and community development tools to quickly respond to the immediate affordable housing problems facing America. Although meeting the affordable housing needs of all Americans requires cooperation and collaboration between all levels of government, local governments may be particularly poised to quickly respond to the immediate community-based housing challenges through their ability to engage in community planning and to enact zoning and other land use controls to implement these community-based plans. The paper also shows how existing dynamic land use regulatory techniques can be used to a great extent today by municipalities in the United States to promote affordable housing, even without direct municipal spending.

Ben Barros

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March 10, 2010 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Nelson on Federalization of Mortgage Foreclosure Law

Grant Nelson (Pepperdine) has posted Confronting the Mortgage Meltdown: A Brief for the Federalization of State Mortgage Foreclosure Law on SSRN.  Here's the abstract:

This Article argues for federal preemption of state procedures governing the foreclosure of mortgages and security interests in rents. While it also suggests that federal action limiting or prohibiting state anti-deficiency legislation may be appropriate, it leaves this issue to future consideration. Thus, its major focus is to advocate the congressional adoption of both Uniform Nonjudicial Foreclosure Act (UNFA) and Uniform Assignment of Rents Act (UARA) to make them available to all lenders nationwide. However, the federal government has a special stake in greater uniformity for its own account. This is especially the case as to mortgages on real estate. The fallout of the economic crisis of the past year and a half has made it the owner or guarantor of millions of mortgages. It will be confronted with an overwhelming number of foreclosures that will survive all attempts at modification. Given the fact that Fannie Mae and Freddie Mac are now wards of the federal government, the federal stake in efficient and fair foreclosure procedures has become compelling. Forcing the federal government to foreclose possibly hundreds of thousands of mortgages judicially in many states seems almost surreal. Given the enormous cost of this crisis to the federal taxpayers, the government should not be held hostage to arcane and outmoded foreclosure procedures. Even in nonjudicial foreclosure states, the federalization of Fannie Mae and Freddie Mac probably necessitates changes in some statutes to comply with constitutional due process mandates. At the very minimum, the federal Single Family and Multifamily Acts with minor modifications should be made available to all federal agencies.

Ben Barros

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March 10, 2010 in Real Estate Transactions, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 9, 2010

Davidson and Dyal-Chand on Property in Crisis

Nestor M. Davidson (Colorado) and Rashmi Dyal-Chand (Northeastern) have posted Property in Crisis on SSRN.  Here's the abstract:

Property law generally develops gradually, with doctrine slowly accreting in the interstices of daily conflict and the larger culture of property likewise emerging at a glacial pace. In times of crisis, however, fundamental questions about the nature of ownership and the balance between the individual and the state instantiated in the structure of property rise rapidly to the surface. Our current economic crisis - the deepest since the Great Depression - is no exception.

This economic crisis, more than many in our history, began with property, sparked in no small measure by structural flaws in the residential market and an ownership society that advocated risk-taking with insufficient heed for consequences. Property has likewise played a palpable role in the still-emerging policy response, with concerns about creeping socialism and fears of nationalization shaping regulatory design.

As a result, this crisis has unsettled long-stagnant tensions in property theory. It is providing a vivid reminder of the interconnected nature of property while recalibrating the role of property as a repository for risk and reward. These conceptual shifts have brought the state’s role in shaping property to the fore, starkly - albeit perhaps temporarily - placing great weight on the public, communitarian, and even punitive aspects of the nature of property. This crisis thus provides a powerful window to assess the current state of our property discourse and begin to glean lessons about the directions in which property may evolve in the aftermath.

Although scholars have begun to grapple with the causes and some of the particular consequences of the current crisis, there has been relatively little theoretical engagement with the role of property norms in the origins of, and in the regulatory response to, the crisis. By identifying the intersection of crisis and property theory with greater clarity, this Article lays the groundwork for normative efforts moving forward. It holds broader lessons as well for understanding the contingent nature of legal change and the structure of one of our most foundational social institutions.

Ben Barros

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March 9, 2010 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Save the Date - ALPS 2011

The first-annual Association for Law, Property, and Society conference held last week was fantastic.  If you didn't go, you should strongly consider going next year.  The next annual meeting will be held on Friday, March 4, and Saturday, March 5, 2011, at Georgetown University Law Center.  Block those dates on your calendar now!

Ben Barros

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March 9, 2010 in Conferences | Permalink | Comments (0) | TrackBack (0)