Saturday, April 3, 2010

Sterk on Settlement of Land Use Disputes

Stewart E. Sterk (Cardozo) has posted Structural Obstacles to Settlement of Land Use Disputes on SSRN.  Here's the abstract:

In many states, legal doctrine discourages settlement of land use litigation by requiring that any settlement undergo the same review process as the decision that led to the litigation in the first place. The problem is exacerbated by broad standing rules that allow a variety of parties to challenge the settlement. As a result, municipalities and developers often have an incentive to litigate to judgment, even though both parties would prefer a negotiated or mediated solution.

On the other hand, permitting developers and municipalities to settle litigation behind closed doors could impair both the quality and the legitimacy of the ultimate land use decisions. Because broad participation in the decisionmaking process operates both to educate decisionmakers and to increase acceptance of adverse decisions, excluding neighbors from the settlement process threatens significant substantive and process values.

Concerns about closed-door decisionmaking, however, do not justify a doctrinal framework that permits collateral challenges to land use settlements. Instead, permitting neighbors to intervene in proceedings between developers and municipalities, and binding neighbors to settlement when they choose not to intervene, better harmonizes the interest in informed and participatory decisionmaking with the cost-saving advantages of negotiated solutions to land use problems.

Ben Barros

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April 3, 2010 in Land Use, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Friday, April 2, 2010

Avatar: awful but useful

There are some films I eagerly want to watch; there are many I'm completely indifferent to; and there are a few I determinedly avoid.  Avatar was one of the latter.  I'm grumpy about 'blockbusters' and I can't stand tired old cliched plots.  My children will one day tell their therapists about all the cultural references they missed because I wouldn't take them to hit movies. 

So it was very odd to find myself watching it in Omnimax 3D, surrounded by law students.  Reader, I took my entire Comparative Property Rights seminar to see it. 

Here's my review: special effects = impressive; movie = even worse than I feared, and that's saying something.  But . . . as a property rights teaching tool?  Pretty darn good. 

Some of the property issues are obvious: who has rights in the 'unobtanium' (even the name makes me cringe)?

But others are less obvious, more interesting and good teaching tools.  [SPOILER ALERT!]  For example:

  • who owns the avatars?  The company that developed them?  The people 'inhabiting' them?  Or are they human-enough that they are unownable?  Interestingly, my students generally agreed that they were the intellectual property of their creators.  But the implications of that left them uneasy: owners of property, after all, generally have the right to destroy it.  And yet everyone rooted against the company when it attempted to do just that.  And if the avatars are property, can they own property?  The main character seems to.
  • Do the Na'avi have individual property rights, or do they own all property in common?  Do the earthlings view them as 'noble savages' who are too pure for private property?  Does director James Cameron?  In that context, consider the cultural misunderstandings about that very issue that have historically undermined indigenous property rights systems: as Kenneth H. Bobroff explains, the continued misperception that Native American tribes owned all resources in common has had disastrous results for generations of Native Americans. 
  • What if the Na'avi lived in the United States -- could the government have simply taken their land, compensated them, and been done with it?
  • Has James Cameron misappropriated others' creative inventions?  After all, believe me, if you've seen Pocahantas or Dances With Wolves, you've seen Avatar, too at a startling level of detail.
  • Last property question:  Do you get to keep the 3D glasses? 

Did you see Avatar?  Did you think of the property rights issues?  Do your children find you annoying, too?   

Mark Edwards

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April 2, 2010 in Miscellaneous, Property in the Human Body, Teaching | Permalink | Comments (0) | TrackBack (0)

Moringiello on Mortgage Modification

Juliet M. Moringiello (Widener) has posted Mortgage Modification, Equitable Subordination, and the Honest but Unfortunate Creditor on SSRN.  Here's the abstract:

Mortgage foreclosures are at an all-time high and property values in many parts of the country have declined precipitously. Yet bankruptcy, which is often a last resort for individuals in financial distress, provides little relief to a homeowner who finds that her mortgage debt exceeds the value of her home. The reason for bankruptcy’s inadequacy in this regard is the Bankruptcy Code’s prohibition on the modification of home mortgages, a prohibition that became part of bankruptcy law in 1978, when most home mortgage loans were 30-year fixed rate loans made by savings and loan associations. While most secured loans can be stripped down in bankruptcy, reflecting the payment that the lender would receive if it were forced to foreclose on the collateral, a home mortgage loan must be paid in full, giving the lender more than it would receive under state law.

In recent years, abusive mortgage practices have proliferated. These abusive practices, which have prevented homeowners from building equity in their homes, harm not only the debtor, but also the debtor’s other creditors. Despite their behavior, however, home mortgage lenders who engage in these practices continue to receive favorable treatment in bankruptcy. In this paper, I argue that creditors should be denied special treatment in bankruptcy unless they behave in an “honest but unfortunate” manner. Judges can deny this special treatment by using a time-honored bankruptcy principle, the principle of equitable subordination, to subordinate the unsecured portion of a home mortgage loan to all secured and priority claims. While equitable subordination, by itself, will not solve the foreclosure crisis, it may, by reducing the claims of abusive mortgagees, deter abusive lending practices in the future.

Ben Barros

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April 2, 2010 in Mortgage Crisis, Real Estate Finance, Real Estate Transactions, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Bell and Parchomovsky on Takings Compensation

Abraham Bell (San Diego) and Gideon Parchomovsky (Penn) have posted The Hidden Function of Takings Compensation on SSRN.  Here's the abstract:

To date, scholars have justified the constitutional mandate to pay compensation for takings of property on the intuitively appealing grounds that fairness demands recompensing aggrieved owners; on the basis of a belief that government that fails to pay will suffer from “fiscal illusion” and take excessively; or due to the need to neutralize politically powerful property owners who would otherwise foil socially beneficial projects.

This Essay offers a new explanation of the role of takings compensation in ensuring good government. Inspired by public choice theory, we argue that takings compensation reduces the incentives for corruption by limiting corrupt politicians’ ability to profit from takings. Specifically, we show that mandating compensation reduces the funds self-serving politicians can extort from property owners. At the same time, mandating compensation permits publicly-oriented politicians to continue pursuing socially beneficial projects.

This explanation yields important insights into the optimal structure of takings compensation. First, current incentives to use eminent domain excessively in the service of private developers cannot be blunted by modifying compensation policy. Only by a separate policy that charges developers for the benefits they receive can reduce or eliminate such misuse of the taking power. Second, overcompensation is even worse than under-compensation insofar as corruption is concerned. For this reason, laws requiring the payment of fixed percentage bonus above market value to property condemnees are in error. Additionally, where judges are thought systematically to overrate the subjective value owners attach to their properties, market value compensation may have some merit. Third, public compensation cannot be replaced by a private insurance system, even if such insurance were practical, since insurance too would encourage corruption.

Ben Barros

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April 2, 2010 in Property Theory, Recent Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Thursday, April 1, 2010

Burdon on Land Use Ethics

Peter D. Burdon (Univ. of Adelaide) has posted What is Good Land Use? From Rights to Relationship on SSRN.  Here's the abstract:

Food is our most basic common need. It nourishes us, brings people together and is a source of profound pleasure. However, the way we currently produce food is a primary cause of the current environmental crisis. This is evidenced in the rapid loss of topsoil, the pollution of water systems, and loss of biodiversity from land clearing and toxic pesticides. The degradation of agricultural land presents a significant challenge for global food security and broader environmental health. It also provides a pertinent opportunity to evaluate current land use practices and construct new guiding principles for future interaction. In this article I will describe and contrast two visions of land use, industrial and agrarian. From the industrial perspective, the question of land use is considered in economic terms. Land use is good if it increases production and maximises profit. Central to this perspective is the liberal theory of private property, which provides the law’s main message on ownership and is the key legal institution governing land use. I contend that the liberal theory is contributing to land degradation in three important ways. First, ownership is premised on individualism and the liberty to use property in a manner that maximises individual preference. Second, the legal idea of private property focuses on interactions between people, rather than considering physical nature. Finally, private property views the land as a ‘bundle of rights’, which can be divided into discrete parcels and used with no overarching vision of natural health. In contrast, the agrarian vision of good land use considers not just human good, but also relationship with place, ethics and the needs of the broader ecosystem. This philosophy offers not only a viable alternative to the way we produce food, but also a different perspective on ownership and the idea of private property. Agrarian philosophy is being practised by a growing number of people throughout the world who are choosing a different idea of ownership for themselves. Importantly, the liberal theory of private property allows this freedom and as an evolving social institution, social change is critical to reforming private property as an idea and an institution.

Ben Barros

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April 1, 2010 in Land Use, Property Theory, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Blumm and Ruhl on Background Principles and Takings Law

Michael C. Blumm (Lewis & Clark) and J. B. Ruhl (Florida State) have posted Background Principles, Takings, and Libertarian Property: A Response to Professor Huffman on SSRN.  Here's the abstract:

One of the principal, if unexpected, results of the Supreme Court's 1992 decision in Lucas v. South Carolina Coastal Commission is the rise of background principles of property and nuisance law as a categorical defense to takings claims. Our writings on the background principles defense have provoked Professor Huffman, a devoted advocate for an expanded use of regulatory takings to protect landowner development rights, to mistakenly charge us with arguing for the use of common law principles to circumvent the rule of law, Supreme Court intent, and the takings clause. Actually, ours was not a normative brief at all, but instead a positivistic explanation of takings cases in the lower courts since Lucas, which include judicial recognition of statutory background principles. In this article, we respond to Huffman, examining the continuing importance of the background principles defense and explaining the trouble with his vision of libertarian property and his peculiar notion of the rule of law. We focus especially on wetlands regulation, which Huffman thinks is a recent development when in fact its origins date to medieval England, and therefore is particularly suited to the background principles defense. We conclude that background principles, as "the logically antecedent inquiry" into the nature of a claimant's property interest, are now a permanent feature of the takings landscape.

Ben Barros

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April 1, 2010 in Recent Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Chase on Rethinking the Homeownership Society

Arlo M. Chase (Brooklyn) has posted Rethinking the Homeownership Society: Rental Stability Alternative on SSRN.  Here's the abstract:

This paper radically challenges two of the dominant theories about housing policy: (a) that promoting homeownership is the best way to achieve household and neighborhood stability; and (b) that rent regulation has no place in competitive and thriving rental markets.

I argue that our national housing policy has failed by overemphasizing and over-subsidizing homeownership and by neglecting the rental market. These policies have not served the purported goals of individual and community stability. Indeed, over-subsidizing homeownership and home borrowing incentivized millions of households to overstretch their budgets in order to purchase homes, thereby contributing to the foreclosure crisis. The resulting housing instability has been further exacerbated by the failure of the rental markets to provide affordable and stable housing for low- and moderate-income households.

To address this increasingly untenable situation, I propose a rental stability program that would offer tenants an option for longer lease terms, rights to lease renewal, temporary regulation of rents, and federal rental subsidies to cover rent increases for rent-burdened low- and moderate-income households, while maintaining market-based incentives for owners to create new rental housing units and maintain existing ones. While my program takes pains to avoid many of the pitfalls of some “strict” rent regulation schemes, I do not shy away from the need to regulate rents for some finite period.
While they are not as dire as predicted by economists, I acknowledge that there are costs to rent regulation and my program is designed to minimize those costs. The specific consequences of rent regulation that often result, and that my proposal seeks to minimize, include: (i) the emergence of a “shadow” or “black” market for rental units; and (ii) incentives for landlords and tenants to litigate. My program would mitigate these and other unintended consequences by making the rent regulation time limited and subjecting all units in a jurisdiction to its purview. In the final assessment, states and localities considering my program would likely accept any small costs in market inefficiencies because of the gains achieved by increasing tenant stability.

Ben Barros

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April 1, 2010 in Home and Housing, Landlord-Tenant, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 31, 2010

Rybczynski on Centralized City Planning

At Slate, Witold Rybczynski has a post skeptical of centralized city planning that raises some points similar to those discussed in the recent Prawfs bookclub on Nicole Garnett's Ordering the City.

Ben Barros

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March 31, 2010 in Land Use | Permalink | Comments (0) | TrackBack (0)

Monday, March 29, 2010

More Popular Outrage Today over Westboro

I'm sorry to keep beating this drum, but when the news demands it . . .

Today the newswires and blogs are crackling with outrage over the 4th Circuit's ruling that the man who sued Westboro Church for demonstrating at his son's funeral must pay Westboro's court costs ("Should Phelps' vile attacks on dead soldiers be rewarded with court fees? Court says yes"). 

As I posted earlier (see post on 3/26, below) about the Westboro demonstrations, when behavior -- including the use of public property -- is legal but normatively unacceptable, the inability of legal institutions to prevent it (even if that inability is appropriate) can lead to popular outrage and dangerous informal sanctions.  In the case of Westboro, it already has.  Expect more.

Mark Edwards

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March 29, 2010 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Is Federal Land Subject to State Eminent Domain Power?

Several weeks ago, one of my students (hat tip: Emily Pabalan) forwarded an article about a bill pending in the Utah legislature that would authorize the state to condemn certain parcels owned by the federal government.  According to this AP story in yesterday's Washington Post, the legislation apparently has passed both chambers and been signed by the governor.  I was going to post a few thoughts, only to discover that I've been beaten to the punch both by Stephen Bainbridge and Eugene Volokh.

Like Professor Volokh, my initial reaction is that this use of eminent domain will be ruled unconstitutional under an analogy to M'Culloch v. Maryland.  If a state can't tax a federal bank, then it seems difficult to conceive that it could condemn federal property.  And this analogy raises an issue that I find both interesting and important -- i.e., the relationship between the taxing power and the eminent domain power.  As I point out in a forthcoming article in the William and Mary Law Review (see SSRN version here, pp. 28-31) taxes and takings share several theoretical characteristics but are almost always treated separately as a doctrinal matter.  Although some scholars (notably, Richard Epstein, Eric Kades, and Eduardo Peñalver) have tackled how these two powers should inform each other, I think there is probably a lot more to say.  Maybe the litigation that (inevitably) ensues from the Utah statute will help answer some of the questions.

Mike Kent

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March 29, 2010 in Takings | Permalink | Comments (0) | TrackBack (0)

Hernando de Soto and Property in a Market Economy

De Soto Book I'm delighted to announce the publication of Hernando de Soto and Property in a Market Economy, a book that I edited for Ashgate.  Here's the back-cover blurb:

Hernando de Soto is one of the world's leading public intellectuals. His books The Mystery of Capital and The Other Path have had a tremendous impact on debates about international development. But his work also has been controversial, and some of his arguments have received sustained criticism.  One of de Soto's core ideas is that the institution of private property is necessary for the proper functioning of a market economy.  Yet even though many property scholars closely follow de Soto's work, his ideas have been neglected in property law scholarship.  And although his work has been widely discussed in the context of property in developing countries, it has not had the same impact on the property issues that arise in mature market economies like the United States. This new collection seeks to remedy this neglect, bringing together a diverse group of scholars to apply de Soto's work to a wide range of contemporary issues in property law and theory. The important contribution it makes to debates and controversies in property law, as well as in related economic fields, will appeal to scholars of both law and economics.

And the table of contents:

Introduction, D.Benjamin Barros

The costs of regulation or the consequences of poverty? Progressive lessons from de Soto, Eduardo M. Peñalver

Invasions, innovation, environment, Carol M. Rose

Culture and capitalism: a comment on de Soto, Gregory S. Alexander

Hernando de Soto and the histories of property law, Alfred L. Brophy

Anticipating de Soto: allotment of Indian Reservations and the dangers of land-titling, Ezra Rosser

Leaving the body of property law? Meltdowns, land rushes, and failed economic development, Rashmi Dyal-Chand

The bell jar and the bullhorn: Hernando de Soto and communication through title, Nestor M. Davidson

Red tape and gridlock, Larissa Katz

Mercantilism, American style, Nicole Stelle Garnett

Hernando de Soto, formal property systems, and the intangible asset paradox, Juliet M. Moringiello

The economics of welfare: of Hernando de Soto and Susette Kelo, Denis J. Brion

And some nice things that have been said about the book:

'In Hernando de Soto and Property in a Market Economy, leading property scholars masterfully illuminate, challenge, and build on de Soto’s work, connecting it to central questions of property theory and social policy. This perceptive and multi-faceted exploration of how ownership works (or fails to work) offers essential insights to anyone interested in property rights and institutions.'  Lee Anne Fennell, University of Chicago Law School, USA

'This collection is a rich exploration and critique of Hernando de Soto's contributions to our understanding of the relation between the institution of property and the market economy. It is an essential resource for all interested in the theoretical, social, economic and historical underpinnings of land titling, and more generally property law and institutions, as a tool in economic development.' Claire Priest, Yale Law School, USA

You can read the introduction here.

Thanks to all the contributors, and to Lee and Claire.

Make sure your library has a copy!

Ben Barros

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March 29, 2010 in Books, Mortgage Crisis, Property Theory, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Sunday, March 28, 2010

In New York, Roommates and Normatively Acceptable Deviance

The New York Times today ran a great piece ("In New York, Breaking the Law on Roommates") on a regulation that captures the dynamic between acceptable deviance and property rights quite well: limits on the number of roommates that can share an apartment.

As the article shows, illegal behavior with regard to roommates is normatively acceptable.  As one 'deviant' said, “to pack unrelated people in an apartment? I don’t think it’s wrong.  It’s part of New York City culture.” And as usual, enforcement tends to follow the limits of acceptable deviance rather than the law itself: according to the Times, the law is "little known, widely broken and infrequently enforced."

But as the article also shows, the predictable danger when behavior is illegal but normatively acceptable -- selective enforcement -- is lurking.  According to a former New York City housing commissioner, that city's regulation was enacted with a very specific target in mind: "sketchy single-room-occupancy buildings and their often equally sketchy inhabitants."

Mark Edwards

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March 28, 2010 in Home and Housing, Landlord-Tenant, Property Theory, Recent Scholarship | Permalink | Comments (2) | TrackBack (0)