Friday, March 11, 2011

$99/week Apartment on Upper West Side

As a former New Yorker, I tend to read stories like this with a mix of envy and disgust at the bizarre quirks in NYC landlord-tenant law.

On the other hand, as a current resident of central PA, I'm glad that I live somewhere with a better price per square foot.  There aren't that many places where that price for that place would be a good deal.

Ben Barros

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March 11, 2011 in Landlord-Tenant | Permalink | Comments (1) | TrackBack (0)

Defending the 30 Year Fixed Rate Residential Mortgage

[The following was published in Huffington Post on March 9th]

The New York Times ran a story earlier this week suggesting that if Fannie Mae and Freddie Mac cease to exist, the 30-year fixed-rate residential mortgage loan would become a "luxury" product rather than the norm. This kind of shift could have profound economic consequences that policymakers need to carefully consider.

As the story noted, the 30-year fixed rate loan is an aberration that exists primarily because of government support. There are three key characteristics of the now-typical loan that merit discussion: (1) its long-term nature; (2) the fixed interest rate; and (3) the full amortization.

--more after the jump--

Continue reading

March 11, 2011 in Mortgage Crisis | Permalink | Comments (1) | TrackBack (0)

Thursday, March 10, 2011

Schwartz and Scott on the Good Faith Purchase of Stolen Goods

Alan Schwatrz (Yale) and Robert Scott (Columbia) have posted Rethinking the Laws of Good Faith Purchase (Columbia Law Review) on SSRN.  Here's the abstract:

This article is a comparative economic analysis of the disparate doctrines governing the good faith purchase of stolen or misappropriated goods. Good faith purchase questions have occupied the courts and commentators of many nations for millennia. We argue that prior treatments have misconceived the economic problem. An owner of goods will take optimal precautions to prevent theft if she is faced with the loss of her goods; and a purchaser will make an optimal investigation into his seller’s title if the purchaser is faced with the loss of the goods. An owner and a buyer cannot both be faced with the full loss, however. The good faith purchase question thus presents a problem of "double marginalization," and as with these problems generally, it cannot be solved in a first best efficient way. However, the laws of the major commercial nations are less efficient than they could be. This is particularly true of current U.S. law: In the U.S., an owner always can recover stolen goods, which reduces her incentive to take optimal precautions but creates first best incentives to search for stolen goods. In turn, a buyer of those goods makes a suboptimal investigation into title because the owner may never find him. We propose that the owner should be permitted to recover goods only if she satisfies a negligence standard set at the socially optimal precaution level (which we argue is feasible). This would increase her incentive to take precautions while retaining her efficient incentive to search. Since owner search and buyer investigation are complements, our proposal leaves unchanged the buyer’s (suboptimal) incentive to investigate. Also under current law, an owner who voluntarily parts with her goods cannot recover them from a good faith purchaser. This rule reduces the owner’s incentive to search and so reduces the buyer’s incentive to investigate. Thus, we propose that a negligence standard should apply to owners generally. We argue that the verifiability objections to a vague standard of negligence can be satisfied by the specification of rule-like proxies for owner negligence. A comparative analysis of the law of good faith purchase in the leading commercial jurisdictions shows the chaotic nature of the current disparity in treatment of owners and buyers. Since today many stolen goods cross national borders, a generally applicable solution to the good faith purchase issue will further reduce the demand for stolen goods, reduce the incidence of strategic litigation and enhance social welfare.

Steve Clowney

March 10, 2011 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

What Property Hiring Can Learn From Squash

Squash Here's a question I've been mulling over: Why don't more American law schools consider hiring an international scholar when they look for new property professors?  Unlike other subjects on the law school curriculum, there's still a ton of overlap between British property law and American property law.  It wouldn't take an English or Welsh scholar very long to pick up the nuances of the U.S. system.  Moreover, I'm told that salaries in the UK aren't as high as they are in America.  It seems that an ambitious, mid-level law school might be able to get a lot of scholarly "bang for its buck" if it took the time to recruit abroad.  Such a strategy has worked wonders in college athletics.  As the NY Times recently chronicled, Trinity University has raised its profile by dominating college squash.  The unheralded school upended 30 years of Ivy League dominance by canvassing the globe for foreign talent.  The result -- 13 consecutive national championships and 244 straight match victories (the longest streak, by far, in the history of college sports).  Based on that evidence, I'll argue that hiring more British scholars represents a real opportunity for a creative law school dean.  And if that doesn't work out, you could always just throw a little money at a clever property blogger. 

Steve Clowney 

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March 10, 2011 in Help Wanted | Permalink | Comments (2) | TrackBack (0)

Wednesday, March 9, 2011

Dyal-Chand on Demsetz and Emerging Property Rights

Rashmi Dyal-Chand (Northeastern) has posted Useless Property (Cardozo Law Review) on SSRN.  Here's the abstract:

In his exposition of an economic theory of property rights, Harold Demsetz reinforced a foundational assumption in property law: that private ownership is the best way to harness resources for wealth-building purposes. Implicit in Demsetz’s model is the largely undefined belief that private ownership will incentivize appropriate use of the property because such use produces higher exchange value. This Article identifies a blind spot in Demsetz’s theory that has largely escaped attention in property law and theory. While fully acknowledging the powerful connection between use and exchange value delineated by Demsetz, it argues that, in disparate markets for new or emerging forms of property, the grant of property rights produces the opposite result from his prediction. As a consequence of failures in or deteriorations of use, a fundamental disconnect occurs in the process of developing exchange value. Rather than creating individual and systemic wealth, property ownership in these settings produces rent-seeking and systemic instability.

Because use appears to derive inevitably from ownership, property law does little to incentivize use. To correct this omission, this Article provides a framework for incentivizing use by owners of emergent property. It provides both a more detailed definition of use and a spectrum of interventions for this purpose. This normative framework sheds new lights on recent debates about commodification of such things as human organs and cultural property. It also provides insights on property’s role as a stabilizer of markets that are prone to bubbles and crashes. A greater sensitivity to use can guide appropriate policy choices in each of these difficult areas of market malfunction.

By undertaking a theoretical analysis of use’s potential as a facilitator of stable market exchange, this Article provides a framework for analyzing and solving instability at the core of many markets for emergent property. The concept of use has been under-theorized and underappreciated for its prescriptive potential. This Article begins the work of correcting that omission in property scholarship by giving use the more instrumental place it deserves in the owner’s bundle of rights.

Steve Clowney

March 9, 2011 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Madoff on Immortality and the Law

I took the Megabus to DC for last weekend's ALPS conference, which gave me the opportunity to catch up on some reading, including a great 2010 book by Ray D. Madoff (Boston College) entitled Immortality and the Law: The Rising Power of the American Dead.  The book is divided into four chapters: (1) Controlling the Body; (2) Controlling Property (Part 1): Transfers to People; (3) Controlling Property (Part 2): Transfers for Charitable or Other Purposes; and (4) Controlling Reputation.

My first reaction to Madoff's book, after reading about 20 pages, was "ACK!  This is the book that I was going to write!"  But I bravely soldiered on, and after reading more deeply, realized that I was wrong.  As the chapter titles indicate, Madoff covers a broad range of issues related to conflicts between the rights of the dead and the interests of the living.  She focuses on two main themes.  First, that the American treatment of the interests of the dead is different than that of other societies.  Second, that there is a recent and accelerating trend in American law to grant greater rights to the dead, with little attention paid to the costs imposed on the living.  It is this second theme that is most evident, particularly in her discussions of the dead's control of property (personal, real, and intellectual).

One of the ideas that she briefly mentioned in the beginning of the book resonated with me most deeply given my own scholarly interests -- that the dead have increasing control over the disposition of their real, personal, and intellectual property, but limited control over the disposition of their own remains.  What a curious reality.  My summer project may be to try to figure out what's going on there, and whether giving the deceased some property rights in their own remains might be a good thing.

Great stuff, really thought provoking, and of particular interest to Property Profs!

Tanya Marsh

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March 9, 2011 in Recent Scholarship | Permalink | Comments (1) | TrackBack (0)

Tuesday, March 8, 2011

The Future of Housing Finance in the U.S.

The New York Times is running a 'Room for Debate' segment on the future demise of Fannie Mae and Freddie Mac.

Adam Levitin, who in my opinion has been one of the sharpest analysts of the crisis for quite some time, joins with Susan Wachter to make the following point that I think is critical:

Privatizing the housing finance system means increased financial vulnerability for homeowners and greater systemic risk from the housing sector. The risk of the housing finance market is inevitably socialized -- unlike other markets, the government will always step in to prevent a collapse of the housing finance market.

That the housing finance system would be nationalized, and then privatized, is no surprise given our history.  But that's not the end of the story; as Levitin and Wachter warn, we may well end up having to nationalize it again, after an unregulated system collapses again.  I wrote along similar lines, albeit less succinctly and eloquently, in an article whose title (Nationalization, De-Nationalization, Re-Nationalization) captures the dynamic that Levitin and Wachter warn of.  Our ideological reflex for privatization is a very, very expensive habit. 

Mark A. Edwards

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March 8, 2011 | Permalink | Comments (0) | TrackBack (0)

Hundreds of Foreclosures Halted in Oregon

Perhaps -- perhaps -- the tide is finally turning in the foreclosure crisis: courts are actively preventing unlawful foreclosures (Florida excepted).  I think that's a very, very good thing, because (1) I have a soft spot for the rule of law and (2) most foreclosures serve absolutely no one's interest except the mortgage servicer's, who collects fees for foreclosing.  The borrower is worse off, and both the lender and the investors in the securities backed by the loans are worse off in a stagnant re-sale market. 

But undoing the unlawful foreclosures that have already been completed will take many, many years.  Ibanez was likely the tip of a very large iceberg.  We had a mortgage crisis; we now have a foreclosure crisis; get ready for the restitution crisis.

From the Oregonian:

Since October, federal judges in five separate Oregon cases have halted foreclosures involving MERS, saying its participation caused lenders to violate the state's recording law. Three of those decisions came last month, the key one in U.S. Bankruptcy Court in Eugene.

Attorneys say it's not clear whether lenders in Oregon will simply start over or head to court to foreclose, steps that could prolong the crisis for months and drive up costs, attorneys say. Some suggest lenders might not have access to the documents they need to comply with state law.

"A lot of us are questioning whether there is a solution," said David Ambrose, a Portland attorney who represents lenders in mortgage transactions. "It's pretty amazing. There are a lot of unanswered questions."

MERS is listed as an agent for lenders on more than 60 million U.S. home loans, about half of all such loans.

Mark A. Edwards

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March 8, 2011 in Home and Housing, Mortgage Crisis | Permalink | Comments (0) | TrackBack (0)

The Supreme Court and RLUIPA

Earlier in the year, the Supreme Court denied cert on yet another case involving the land use provisions of RLUIPA (Religious Land Use and Institutionalized Persons Act).  For the uninitiated, the land use portion "protects places of worship and other religious uses of property from discrimination and unreasonably burdensome regulation in zoning and landmarking law" (this comes from the DOJ's recent report on RLUIPA). The court has denied cert before (see here and here).  The question, I think, is why?  Especially considering the clear circuit splits on the meaning of substantial burden and the "equal terms" provision.  I think there are two possible explanations.  First, the judges most concerned with expanding religious liberty could be waiting for a case with "better" or cleaner facts.  That's reasonable, but I think there's a more likely explanation; Looking at the refusal to grant cert in view of both the San Remo Hotel and Williamson County decisions suggests that the Supreme Court is pulling out of making land use decisions.  Maybe we should view the refusal to grant cert as part of the Court's federalism jurisprudence -- why do land use rules need to be consistent from state to state?   Maybe the world would be a better place if the Court had never taken Euclid or Nectow.

Steve Clowney

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March 8, 2011 | Permalink | Comments (1) | TrackBack (0)

A Slideshow of Abandoned Mines

From Slate:

As early as the 1920s, road trippers headed "out West" to explore the ruins of America's boom-and-bust 19th-century gold rush. Alongside successful mines, towns sprang up in the middle of nowhere in a matter of months and many crashed just as precipitously when the easy gold or silver was exhausted. Today, there are over 500,000 abandoned mines in the U.S. Most are on private property, blocked up, or too dangerous to venture into, but others have been shored up enough to visit.

Steve Clowney

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March 8, 2011 | Permalink | Comments (0) | TrackBack (0)

Monday, March 7, 2011

Marsh on the Commercial Real Estate Debt Crisis (again)

I have posted Too Big to Fail vs. Too Small to Notice: Addressing the Commercial Real Estate Debt Crisis on SSRN. (This is the bigger article that I teased earlier.)

I have directed this article to policymakers and scholars, but I hope that it may also be useful for those teaching Real Estate Transactions, to supplement textbooks by providing a current snapshot of the state of the commercial real estate industry.  

Many thanks to Jim Durham of Dayton for taking time out of his vacation to read and comment on this piece! 

Here's my abstract:

The commercial real estate industry has been devastated by the current economic crisis, losing 40% in value since the end of 2007. As a result, commercial real estate borrowers owe lenders $1 trillion more than their properties are worth. Although the federal government has been warned that the commercial real estate debt crisis may cause a double-dip recession, the government’s response thus far has been to allow the market to work itself out. This Article argues that this laissez faire response rests upon flawed assumptions about the structure of the commercial real estate industry. Compounding the problem, policymakers are incorrectly interpreting increased lending and transactions in the upper echelons of the market as a signal that their policies are working. Instead, the current approach has forced sales at distressed prices, numerous foreclosures, and, perhaps most importantly, significant small bank failures without any systemic benefits. Policymakers have seen these losses as an unfortunate but unavoidable cost of the recovery process, and dismissed these small actors as not “systemically important.” In fact, this Article argues that in the aggregate, small commercial real estate borrowers and small banks are vital to fueling job creation and economic recovery. By focusing primarily on the health of large financial institutions, borrowers, and properties without due consideration for the smaller players, the current policy may lengthen the economic crisis by placing further stress and uncertainty on some of the most vulnerable segments of the economy.

As always, comments are much appreciated!

Tanya Marsh

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March 7, 2011 in Mortgage Crisis, Real Estate Transactions, Recent Scholarship, Teaching | Permalink | Comments (0) | TrackBack (0)

More on ALPS

The Association of Law, Property, and Society conference this weekend was fabulous!  A few thoughts:

1.  As Steve mentioned, the papers presented by the diverse group of participants were thought-provoking.  There was something for everyone at this conference, and I particularly enjoyed the presence of so many international participants. 

2.  The conference was well-designed to facilitate scholarly and informal networking.  I thought that the panels were, in general, organized around the same themes or concepts which helped encourage collaboration.  I will definitely be in contact with several people that I met at the conference to provide more info to help their work, or because they had thoughts about resources and ideas to support my work.  I also just met a lot of really nice people that I want to stay in touch with!

3.  My co-bloggers here at PropertyProf and I (re)discovered that this site has a lot of lurkers.  I was struck by how many people mentioned a random post that one of us made months ago.  This isn't a blog that attracts a lot of comments, for whatever reason, so it was very nice to hear that our fellow profs do read the blog and find it useful.  Thanks for reading!

4.  My co-bloggers here at PropertyProf are awesome and it was great hanging out with them in person.  Electronic communication (through blogs and e-mail) is a wonderful convenience, but nothing beats spending time with people! 

5.  The third annual conference is already being planned for next year.  If you haven't attended the first two years, I highly recommend that you try to make it next year! 

Tanya Marsh

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March 7, 2011 in ALPS | Permalink | Comments (2) | TrackBack (0)

Sunday, March 6, 2011

Hylton on Property Rules and Tort Law Theory

Keith Hylton (Boston U.) has posted Property Rules and Defensive Conduct in Tort Law Theory (Journal of Tort Law) on SSRN.  Here's an abstract:

What role does defensive conduct play in a utilitarian theory of tort law? Why are rational (as opposed to instinctive) defensive actions permitted by tort doctrine?  To address these questions I will build on the property and liability rules framework. I argue that defensive conduct plays an important role in establishing the justification for and understanding the function of property rules, such as trespass doctrine. I show that when defensive actions are taken into account, property rules are socially preferable to liability rules in low transaction cost settings, because they obviate costly defensive actions. I extend the framework to provide a positive theory of defense-related doctrines in tort law.

Steve Clowney

March 6, 2011 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)