PropertyProf Blog

Editor: Stephen Clowney
Univ. of Kentucky College of Law

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Friday, October 1, 2010

Document Flaws in Mortgage Foreclosure Process

Today's NY Times has an interesting story about how various documentation issues are creating problems in the mortgage foreclosure process.  A taste:

The foreclosure machinery that has forced millions of Americans out of their homes is beginning to seize up as some lenders and their lawyers are accused of cutting corners in their pursuit of rapid home repossessions.

Evictions are expected to slow sharply, housing analysts said, as state and national law enforcement officials shine a light on questionable foreclosure methods revealed by two of the country’s biggest home lenders in the last two weeks....

As more defaulting homeowners become aware of the lenders’ problems, they are expected to hire lawyers and challenge the proceedings against them. And if completed foreclosures were not properly done, families who bought the troubled homes could be vulnerable to claims by the former owners.

Apparently alarmed about such a possibility, one of the major title insurance companies, Old Republic National Title, has sent a bulletin to agents saying that “until further notice” it would not insure title to properties foreclosed upon by GMAC Mortgage, the country’s fourth-largest home lender and one of the two big lenders at the center of the current controversy.

Ben Barros

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October 1, 2010 in Real Estate Finance, Real Estate Transactions | Permalink | Comments (0) | TrackBack (0)

Denial

The N.Y. Times digs into a problem that's long puzzeled me:  Why don't the nations upstream of Egypt lay claim to more of the Nile's water?  Egypt takes 80%.  By many accounts, it uses the water in a terribly wasteful and inefficient manner.  Moreover, Egypt's legal claim over the water comes from a colonial-era treaty drawn up by the British.  All of this seems profoundly unfair to the seven upstream countries (most with rapidly growing populations)--Ethiopia, Uganda, Tanzania, Kenya, the Democratic Republic of Congo, Burundi and Rwanda.  Why should these countries honor the initial allocation of property rights? Why not engage in some kind of massive self-help?

Also, I think the article points out the danger of thinking of water as some kind of quasi-mystical, inaleinable resource.  The people of Egypt seem to regard the Nile's waters as a sacred birthright, not a commodity (imagine if we thought of food like this).  This seems really, really problematic because it leaves so little room for bargaining with the upstream neighbors.  No one wants to be the politican that sells away part of the Nile.

Steve Clowney

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October 1, 2010 | Permalink | Comments (0) | TrackBack (0)

PropertyProf Wanted at Elon

Elon University School of Law invites applications for tenure-track or visiting faculty positions for appointments to begin in August 2011.  Our principal needs are in the areas of property law and/or wills, trusts, and estates.  We may also attempt this year to fill needs in environmental law, real estate transactions and finance, transactional skills, or legislation and legislative drafting, as well as other areas.  We will consider both entry-level and junior or senior lateral candidates for these positions, though there is a preference for candidates who have at least some teaching experience and who have demonstrated strong potential for scholarship.  We will also consider senior lateral candidates who teach in a wider range of subject areas than those listed.
 
The law school, now in its fifth year, is provisionally approved, and plans to seek full ABA approval this year and AALS membership at the earliest opportunity.  Elon Law is located in downtown Greensboro, close to Federal and state courts, city and county government buildings, and a variety of cultural and historic attractions.  The main campus of Elon University is one-half hour to the east.  More than 40,000 college and university students in Greensboro create a vibrant intellectual and cultural community. 

Elon University is an equal employment opportunity employer, and the law school actively seeks a diverse faculty.  Interested applicants should send a resume, cover letter, and any supporting documents to the chair of the faculty recruitment committee - Professor Howard Katz, Elon University School of Law, 201 North Greene Street, Greensboro, North Carolina 27401 - or email to hkatz@elon.edu.

October 1, 2010 in Help Wanted | Permalink | Comments (0) | TrackBack (0)

Mossoff on Patent Takings

Adam Mossoff (George Mason) has posted How the "New GM" Can Steal from Toyota on SSRN.  Here's the abstract:

This essay explains how a 2006 court decision arising from the manufacture of the F-22 Raptor fighter jet paves the way for government-owned General Motors to steal intellectual property. In Zoltek v. U.S., the Court of Appeals for the Federal Circuit held that a loophole in the Tucker Act (28 U.S.C. § 1498) prevented owners of patented processes from suing the federal government for certain types of unauthorized uses of their patents. The Zoltek court also held that patents are not secured as constitutional "private property" under the Takings Clause of the Fifth Amendment. At the time, many judges and lawyers thought that these statutory and constitutional loopholes for patent-owners were insignificant; at worst, they argued, this benefits only military contractors and the like.

Fast forward four years and the federal government now owns the "new GM." It was inconceivable in 2006 that Uncle Sam soon would be in the business of making cars, not to mention in the businesses of banking and insurance, setting salaries of CEOs, purchasing mortgages, etc., etc. This dramatic turn of events means that court decisions that once seemed exceedingly narrow have acquired new breadth and scope. This essay thus explores how Zoltek justifies extensive infringement of U.S. patents by GM and other firms now working for the federal government. Although it is arguable that denying patent-owners their constitutional rights is insignificant in any situation, the events since 2006 at least suggest that many people spoke too soon when they claimed that Zoltek was of little import or concern.

Ben Barros

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October 1, 2010 in Intellectual Property, Recent Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Thursday, September 30, 2010

Recording Acts In-Class Exercise

Today in Real Estate Transactions we began talking about the Recording Acts (Chapter 14 in Professor Lefcoe's book).  We talked a little bit about the reasons that we have Recording Acts and how the system works in America.  I walked them through how to do a title search with the White House (look for the deed from G.W. Bush to B. Obama, then search forward for encumbrances, then search back for prior grantor, etc.).

But most of today's class was spent with the students working alone or in small groups to conduct an actual title search. I provided them with the name of a homeowner and the legal description.  I picked Sarasota County, Florida, but any county with on-line records would have worked.  I gave them five questions that walked them through the title search.  As they went through the questions, I would stop and make sure everyone was on track.  When class was over, everyone handed in a sheet with their answers (this won't be graded) and I posted my model answer on TWEN.  On Monday, we will talk about the different kinds of recording statutes and this example will be helpful to illustrate the applicability of the doctrine.  One of the deeds they uncovered, for example, went unrecorded for 14 months.  Most of the documents were delayed 3 weeks or more after they were signed.

This exercise worked really well for my class because it allowed me to talk about the Recording Acts in an actual context, as long as a lot of other related issues, like MERS.  I am thinking of using a version of this exercise in my Property class next semester. 

If anyone is interested in a copy of the questions and my model answer, send me an e-mail.  I'm happy to share.

Tanya Marsh

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September 30, 2010 in Teaching | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 29, 2010

Property LLMs?

In the last two weeks, LLM programs have come under scrutiny (See here, here, here, and here).  The general consensus seems to be that the master of law degree is valuable for aspiring tax attorneys and graduates of foreign law schools looking to work in the US.  What about the real property-based LLM?  At least four U.S. schools--John Marshall, Miami, Pace, and New York Law School--offer an advanced degree in Real Estate.  Shelby Green, Director of Pace's program, promoted the LLM as a solution to the growing complexity of Real Estate law (see here, pdf).  If I'm reading Prof. Green correctly, she's arguing that real estate practice--like tax--has become so complex and sub-specialized that an extra year of study is merited.  I think you could also argue that law schools do a rather poor job of teaching transactional skills and, thus, a year of focusing on negotiating and closing deals could give a student an edge in the job market. 

Does our audience have any sense if these programs are worth the cost and time?  Does having a real estate LLM give applicants a significant boost in hiring?  If an aspiring real estate attorney couldn't find work, would they be better off working for free in a real estate practice?

Steve Clowney

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September 29, 2010 in Real Estate Transactions | Permalink | Comments (3) | TrackBack (0)

Tuesday, September 28, 2010

The Fight for the Arctic

In 2007, Russia planted its flag on an underwater mountain range arising from the oil-rich Arctic seabed, adding a show of power to its legal claim that the range belonged to it under international law.  Not surprisingly, other nations claiming property rights in the Arctic seabed loudly objected, most notably Canada.  As the ice shelf in the Arctic disappears, making areas accessible that were inaccessible before, arguments over sovereign property rights are gathering momentum.  Russian and Norway recently concluded a 40-year dispute over Arctic territories.  And this week scientists and diplomats from a number of nations claiming rights are meeting at a conference in Moscow.Arctic  For an excellent source of analysis of international relations in the Arctic, see Professor Michael Byers's blog, Who Owns the Arctic? 

Beyond the obvious geopolitical and resource-management importance of the dispute, it is fascinating to see the array of tactics contemporary competing claimants to property use to establish their dominion over it, particularly for those of us who teach first-year property students.  The parties' use of law, custom, marking & signaling, and raw power to make their claims certainly would not surprise anyone teaching Johnson, Pierson and Ghen.

For example, Russia has gone to great lengths to mark the territory as its own, using a submarine to plant its titanium flag.  It has argued that by custom, the Arctic is its own, since more Russians live within the Arctic circle than any other nationality.  And Russia and Canada are both submitting claims to the territory to the UN for a ruling under the Convention on the Law of the Sea.

Russian flag on seabed

In addition, both Russia and Canada are making a show of expanding their presences in the region.  Both countries have found new enthusiasm for sponsoring scientific expeditions to, and building research stations in, the region.  The presence of those stations sends an important signal about territorial claims.  More ominously, in moves that both display territorial claims and threaten the use of raw power, both countries have increased their military presences there as well.  Canada, in fact, held military exercises there and vowed to increase its spending on defense forces for the area.

We teach students that actual, physical presence can be a key to making a successful property rights claim under doctrines such as adverse possession.  That same impulse seems to be animating the competing nations, even without the benefit of a doctrine that would reward their efforts.  That suggests to me that doctrines such as adverse possession merely ratify a deeply felt normative sense that claims to property rights are strengthened by the fact of physical presence.  And this may be our last, best opportunity to see competing claims to "new" earthly territory -- in other words, the doctrine of discovery, and the raw military power that animates it, at work.     

Mark A. Edwards

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September 28, 2010 in Miscellaneous, Natural Resources, Property Theory, Teaching | Permalink | Comments (0) | TrackBack (0)

Monday, September 27, 2010

Sidney (NY) Town Board Objects to New Cemetery

At its August 12th meeting, the town board of Sidney, New York (population 10,000) voted to seek an injunction against the Muslim Osmanli Naksibendi Hakkani Sufi Order on Wheat Hill Road to prevent it from continuing to use a portion of the land for cemetery purposes.  The order will also seek to disinter the two bodies buried there. 

In an article in the local paper, Supervisor Bob McCarthy described the town's basis for the action:

"These burials were done illegally, without notifying local authorities or obtaining proper permits," he said.

"We will be seeking to have these bodies disinterred and stop future burials," he said. "Unauthorized cemeteries have the potential of placing a financial burden on the local government as well as dictating the use of the land for perpetuity.

"It is unfortunate that we have to take these steps to prevent people from gaming the system and climbing on the backs of an already overtaxed local taxpayer, but anything that we have to do to prevent this will include every religion," McCarthy said.

When pressed to describe what legal steps the private landowners failed to follow before establishing the cemetery, Mr. McCarthy admitted that didn't "know what the exact law is."

In fact, New York law permits private landowners to use their property for cemetery purposes provided that it is permissible under local zoning codes.  When the Muslim cemetery was established in Sidney in 2005, the town provided written assurance that the use was within applicable zoning codes.

Apparently, the only law that the cemetery violates is the New York state law which forbids cemeteries to be mortgaged.  That's a common restriction throughout the states and makes perfect sense.  What lender wants to foreclose on a cemetery?  But the $200,000 mortgage on the larger parcel leaves the owners with two reasonable options -- pay off the entire mortgage or subdivide the property (with the permission of the lender) and carve the cemetery parcel out of the mortgage.

The Huffington Post has picked up this story and presents it in the broader context of Islamophobia.  I find this fascinating because the town board apparently doesn't know what rules apply to the creation of new cemeteries in the town.  This is part of a broader problem that my research touches on -- we make a number of assumptions about cemeteries but most people, even lawyers and, apparently, governmental officials, really have no idea what the rules are which govern their creation and management.

Tanya Marsh

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September 27, 2010 in Land Use | Permalink | Comments (2) | TrackBack (0)

Diamond and Homeownership, Shared Equity, and Poverty

Michael Diamond (Georgetown) has posted The Meaning and Nature of Property: Homeownership and Shared Equity in the Context of Poverty on SSRN.  Here's the abstract:

While a Blackstonian view of property envisaged a "despotic dominion" of an owner over a thing, property has never been so absolute. In fact, as I argue in this paper, the nature of property has been culturally constructed and property means different thinks across cultures and even over time within the same culture. The question of the nature of property was highlighted for me when a student questioned whether equity limitations placed on homes purchased by low income buyers using subsidized public financing created a "second class" form of homeownership.

In attempting to answer this question, I examined the ideas of property and ownership over various cultures and then concentrated on those ideas in the American cultural, legal and political history. After examining the various views of property in America, I examine the reality of property ownership and the restrictions on such ownership in today’s legal and political milieu. I conclude by suggesting that the equity restrictions associated with some publicly financed mortgages are not different in kind from other restrictions on property generally that are widely accepted in society. Finally, I suggest that a concept of property might be broadened to include the reasonable expectations of future potential users. Thus, a recognized principle such as stewardship might give property like entitlements to generations of low income persons who will be seeking decent affordable housing in the future.

Ben Barros

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September 27, 2010 in Home and Housing, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Smith on The Structural Causes of Mortgage Fraud

Jim Smith (Georgia) has posted The Structural Causes of Mortgage Fraud on SSRN.  Here's the abstract:

Mortgage fraud, often a violation of federal and state criminal statutes, covers a number of different types of behavior, all of which have the common denominator of conduct that has the intent or effect of impairing the value of residential mortgage loans. Mortgage fraud has become prevalent over the past decade and shows no signs of diminishing despite the collapse of domestic housing markets during the past two years. This paper analyzes the complex relationships between prime mortgage loan markets, subprime markets, and various types of mortgage fraud. This paper concludes that the root causes of mortgage fraud are associated with the core institutional and structural components of mortgage markets, which cut across all types of residential mortgage products. The organizing principle is the historical evolution from proximity to distance within the mortgage market, which is explored along three axes. First, geographical distance between lenders and borrowers has replaced geographical proximity. The mortgage market is national, with local lending institutions no longer making a significant proportion of the loans that are originated. Second, transactional distance has replaced transactional proximity. Lenders and borrowers have little direct contact; instead intermediaries such as mortgage brokers, appraisers, insurers, and closing officers, separate the principals. Third, financial distance has replaced financial proximity. Previously both borrowers and lenders had significant financial interests in the mortgage loan transaction. The borrower had equity in the property, and the lender held the loan in its portfolio. Presently many borrowers have no equity (or negative equity) in their homes, and due to the securitization of loans through the secondary mortgage market, few originating lenders retain a stake in the loans they create. Reforms that could serve to reduce borrower-lender distance or to ameliorate its effects include the fashioning of better closing procedures for verifying borrower identity, providing a premium for community-bank loans to local borrowers, making originating lenders liable for all misconduct by appraisers, requiring significant down payments for borrowers, and allowing secondary market purchasers full recourse against originating lenders for losses caused by borrower defaults.

Ben Barros

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September 27, 2010 in Real Estate Finance, Real Estate Transactions, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Eagle on The Really New Property

Steven J. Eagle (George Mason) has posted The Really New Property: A Skeptical Appraisal on SSRN.  Here's the abstract:

This article reviews recent scholarship invoking the prophetic tradition in American jurisprudence and calling for the transformation of property law. It contrasts imposed top-down social change with Burkean and Oakeshottian gradual change derived from conversation within our legal and cultural tradition. The work of Robert Ellickson is presented as illustrating the development of property law in the Burkean tradition. Transformative property scholarship, on the other hand, largely reflects Osborne and Gaebler's view that government should steer and private actors row, reinforced by Thaler and Sunstein's call for soft paternalism. The article asserts, however, that Kant and Berlin's admonition that all of humankind is "crooked timber" precludes officials from a privileged position, a postulate well supported by public choice theory.

The article views the change in conceptual thinking from Hohfeldian property to Heller's anticommons and assertions of disintegration and entropy of property. These set the stage, for instance, for advocacy of "rightsizing", through the shrinking private parcels through smart growth and densification, and the supersizing of government-controlled land through condemnation for urban redevelop.

Other topics discussed are regionalism, new governance, and the creation of affordable housing, through, among other things, the rearrangement of traditional landlord-tenant relationships. The article expresses skepticism that flaws inherent in the top-down transformation of property would permit outcomes that are coherent and effective, and could withstand capture by affected interest groups.

Ben Barros

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September 27, 2010 in Recent Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Ng on Property and Progress

Alina Ng (Mississippi College School of Law) has posted Property and Progress on SSRN.  Here's the abstract:

Copyright laws aim to protect intangible interests in the use of literary and artistic works to provide creators with an incentive to produce. The law rationalizes that by granting exclusive “property” rights in creative works, authors will be encouraged to produce works for the ultimate benefit of society as the potential for commercial rewards is assumed to be the primary motivation for creativity. But, the exclusive control these rights give creators and owners of copyrighted works have been the subject of severe criticism because they create access barriers to the use of content, which, free speech and civil liberties advocates, argue should be free of restrictions for civil discourse and political dialogue. This Article argues that, contrary to contemporary thought that rights in the copyright system hampers progress, the protection of individual rights in literary and artistic works - besides encouraging creativity for progress - also brings into the copyright system a normative order for social conduct that advances society towards the Constitutional goal of progress. A strong institution of property rights for the copyright system correlates with greater progress of science and arts because the recognition and protection of individual authorial autonomy instills individual and collective social responsibility in how works are used and produced, generates public respect for the act of authorship, and fosters education, research, and economic development through the production and use of literary and artistic works. The creation of diverse works will contribute towards progress of science and arts only if an underlying foundation of property rights protect the creator of a work to instill a sense of individual autonomy and responsible authorship and directs public use of the work toward socially beneficial purposes in ways that strengthen, rather than weaken, the moral fabric of society. This Article concludes that the progress of science and arts is not only dependent on a system of statutory copyright provided by the Copyright Act but on an institution of property laws to provide normative guidance on proper conduct in the production and use of literary and artistic works in ways, which would advance progress.

Ben Barros

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September 27, 2010 in Intellectual Property, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)