Saturday, April 16, 2011

Levitin Rips Mortgage Servicers' Study

Over at Credit Slips, Adam Levitin has yet another spot-on analysis related to the mortgage and foreclosure crisis.  This time he rips apart a study, bought and paid for by mortgage servicers, that purports to reveal the costs they'll reluctantly have to pass on to borrowers if they are forced by states to act lawfully.  It's well worth reading.

Mark A. Edwards

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April 16, 2011 in Mortgage Crisis | Permalink | Comments (0) | TrackBack (0)

Impediments to Rebuilding in Japan

I had the great good fortune of having my colleague Ken Port, Director of William Mitchell's Intellectual Property Institute and Japanese law scholar-extraordinaire, visit my Comparative Property Rights seminar this week.  Besides some very interesting historical information regarding Japan's adoption and adaptation of the German civil law system in the 19th century, we focused on some unique features of Japanese property law that may make recovery and rebuilding in Japan more difficult than it would be otherwise.Port_Kenneth_07

One impediment arises from the Japanese version of concurrent estates.  Japanese law recognizes one version of co-ownership of property, which is without precise parallel to any of the estates recognized in the Anglo-American common law.  Each co-tenant has the right to use the property in proportion to her share, but no co-tenant can alter the property without the permission of the other co-tenants.  Moreover, there is no right of survivorship among co-tenants; the deceased tenant's share passes by will or through intestacy. 

The problem with this form of co-ownership in post-tsunami Japan should be immediately apparent.  Co-owned property cannot be altered without the agreement of all of the co-tenants.  Therefore, rebuilding cannot take place until the co-tenants reach agreement.  In the tsunami stricken regions, even if the property itself can be identified without boundary markers and in a land physically altered by the tsunami, locating all co-tenants is likely to be extremely difficult if not impossible.  Many co-tenants are, unfortunately, likely dead; their interests must be distributed through will (often destroyed with the home) or through intestacy.  Locating heirs may be difficult if not impossible, since many heirs may also be dead, and their heirs must be located.   After that nearly impossible task has been completed, all of the interest holders must reach agreement on whether, and how, to rebuild or attempt to sell.110314_japan_aftermath1

In the United States, governments faced with insurmountable coordination problems and transaction costs might cut through them by exercising the power of eminent domain.  Although Article 29 of the Japanese Constitution authorizes the government to take private property in return for just compensation, the ability of the government to exercise that power is severely limited compared to the United States, both legally and normatively.  It is limited legally because civil courts in Japan lack the contempt power, so they lack a means of enforcing their rulings.  Therefore, unlike in the United States, in Japan courts cannot send armed agents of the state to enforce an eviction order. 

More importantly, normatively, there is deep opposition to the exercise of the eminent domain power in Japan -- much deeper than in the U.S.  Consider, for example, what happened when the Japanese government tried to build Narita, the main airport serving Tokyo, by using eminent domain to expel inhabitants of a small village.  The plan met with widespread, and sometimes violent opposition, not only from those displaced but from those the airport was intended to serve.  I quote from Ken's book to describe the level of opposition :

The airport was supposed to open on March 30, 1978. . . . Hurling Molotov cocktails and driving a flaming vehicle through the perimeter of the airport, [protesters] briefly occupied the completed control tower.  They proceeded to destroy most of the air traffic control equipment and delayed the opening of the airport for two months. . . . . Until the early 1990's, Narita Airport appeared to be under armed siege.  The entire airport was surrounded by unclimbable fences, lookout towers and armed police in full riot gear.

During the decades of protests, 3 policemen and several protestors were killed. 

In other words, the exercise of the eminent domain power in Japan is legal, but often socially unacceptable.  Therefore, to rebuild after the tsunami, Japan may have to undergo something much more difficult and more fundamental than just changes in law; it may have to undergo a change in norms as well. 

Mark A. Edwards

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April 16, 2011 in Estates In Land, Takings | Permalink | Comments (0) | TrackBack (0)

Friday, April 15, 2011

Friday's Architecture Moment: How IKEA Works

This weekend, I made a pilgrimage from my home in Lexington to the IKEA in Cincinnati. Five hours, five-hundred dollars, and five unintended purchases later, I was back home.  I really love IKEA. L-O-V-E.  I want to die by being buried alive under a pile of Ritvas, Bomulls, and Erslevs.   Occasionally, however, I'm hesitant to venture into the store because I always spend more money than I intend.

It seems I'm not the only one who has this problem.  Professor Alan Penn of the Bartlett School of Architecture recently gave a lecture that describes how architects use space to sell us things.  Penn argues that IKEA has mastered the age-old art of getting customers to buy things that aren't on their shopping lists.  The full lecture is below.  All of it is interesting - but if you're only intrigued by the IKEA stuff then watch the first 50 seconds, and then from 24:20 to 32:40.


Steve Clowney

April 15, 2011 | Permalink | Comments (3) | TrackBack (0)

Thursday, April 14, 2011

Levin-Coburn Report on the Financial Crisis Released

Today I particularly love being a law professor.  Why?  Because the Senate Permanent Subcommittee on Investigations released its 635-page final report on the Financial Crisis yesterday and gosh darn it, I'm going to read the whole thing. 

According to the press release, it should be an interesting read:  "The report catalogs conflicts of interest, heedless risk-taking and failures of federal oversight that helped push the country into the deepest recession since the Great Depression."  The committee reviewed nearly 6,000 pages of documents, including e-mails and internal memos from Washington Mutual, Deutsche Bank, Goldman Sachs, and other parties deeply involved in the residential mortgage bubble. 

Here is a link to the press release, and at the bottom of the press release you can click through to download the full report.

Tanya Marsh

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April 14, 2011 in Mortgage Crisis | Permalink | Comments (2) | TrackBack (0)

Zoning, Amortization Periods, and Regulatory Takings

We covered non-conforming uses in class today, specifically the AVR, Inc. v. City of St. Louis Park case.  My students, having read Lucas in Constitutional Law a few weeks ago, posited that a rezoning would not constitute a regulatory taking.  I disagreed.  My argument (and please consider that I have not studied Constitutional Law since 1999) is that if: (1) a municipality changes the zoning of an improved parcel of land (for example, rezones land occupied by a ready cement plant as residential); (2) the re-zoning diminishes the value of the underlying real estate; and (3) the municipality forces a change in use; then a compensable regulatory taking has occurred. 

Based on approximately 20 minutes of research, I can't find any cases where this has occurred.  I posit that this is because states either: (1) protect lawful nonconforming uses, thus preventing the above scenario from occuring frequently enough for me to easily locate a case; or (2) have adopted amortization periods, which are predicated on the idea that the value of the use will fully amortize over a certain period of time, so that when the prior lawful use is brought to an end, there is no loss to be compensated.

I think that my conclusion is consistent with Penn Central.  If there is a lawful nonconforming use, then the owner had an investment-backed expectations in that use.  If the government cuts short that use, then there is a compensable taking.

I am sure someone has written a brilliant article on this topic that I have not yet found.  Any references to said article or other feedback would be much appreciated.

Tanya Marsh

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April 14, 2011 in Takings | Permalink | Comments (2) | TrackBack (0)

Wednesday, April 13, 2011

Property Worth Saving, ctd

Last August, Tanya wrote a great post that asked,"What would you save if your house were on fire?"  For many families in Japan it appears that the question has become all too real.  The LA Times ran a heartbreaking story today about people who are making mad dashes into the radiation hot zone around the Fukushima Daiichi nuclear plant in order to save a few family treasures.  The paper reports:

On the drive to town, swaddled in clothing to protect them from nuclear fallout, [the Nikaidos] entertained a difficult question: How do you reduce a lifetime of memories and possessions into one mad-dash snatch and scramble?  "I'm going to get some dishes, clothes and my computer: everyday things I can use to start a new life," said Seiko, who along with her mother has relocated to just outside Tokyo. "We can come back to collect the rest, the memories; that is, if they ever let us return here again."

Steve Clowney

April 13, 2011 in Personal Property | Permalink | Comments (0) | TrackBack (0)

Dorfman on Private Property's Conflicting Views of Freedom

dorfman Avihay Dorfman (Tel Aviv) has posted Private Property and the Demands of Respectful Recognition on SSRN.  Here's the abstract:

This article explores the normative implications of an analytical mismatch between two ideas of freedom that arise in connection with private ownership. First, within limits, owners enjoy the freedom to deploy their objects as they see fit. And second, modern liberal societies sustain freedom-to by protecting property owners’ freedom from the interference of others. The mismatch arises because freedom-from is not an analytic feature of freedom-to. This article seeks to show that, rather than morally arbitrary, this mismatch is in fact a defining feature of the distinctively social form that private ownership takes.

Steve Clowney

April 13, 2011 in Property Theory, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 12, 2011

NIMBY Au Francais

Bernard Arnault, the man who runs the Louis Vuitton fashion house, finds himself in a bit of a donnybrook with a local nighborhood association over the construction of a museum to house his art collection.  Arnault has begun construction of his art palace in the middle of the Bois de Boulogne Park, upon land donated by the City of Paris. According to the NY Times, local neighbors object to this intrusion and make a simple argument: "the park is intended for the public, the museum is next to a children’s playground, and the building itself violates the rules governing the park by blocking a paved roadway that should be open to the public."  This reasoning carried the day in a recent court battle.  A judge annulled the building permit with construction on the museum half-finished.

Arnault and his powerful friends frame the issue differently.  They argue that the neighbors “show a blind and pernicious individualism that goes against the general interest. They oppose any change for the sake of it. In their tight little suits, they want to put Paris in formaldehyde. It’s quite pathetic.”

The Times concludes that "this being France, and Mr. Arnault being a sort of Ozymandias, he is likely to get his pyramid anyway" - the French Parliament is in the process of overriding the court's decision and granting the museum a special waiver.

Steve Clowney

April 12, 2011 in Land Use | Permalink | Comments (0) | TrackBack (0)

Stern on the Benefits of Homeownership

Sstern_web Stephanie Stern (Chicago-Kent) has posted Reassessing the Citizen Virtues of Homeownership (Columbia Law Review) on SSRN.  Here's the abstract:

The assumption that homeownership creates more politically and civically engaged citizens who contribute to local communities (as well as national democracy) dominates property law. This belief underlies influential theories of property and land use and justifies housing policies promoting homeownership and expanding homeownership’s reach. This Essay challenges the “citizenship virtues” of homeownership and contends that the evidence reveals a far more modest, and particularized, picture of citizenship effects than commonly assumed. I explore psychological, historical, and economic factors that may underlie the variable citizenship effects from homeownership. Some of these factors elucidate not only why owners and tenants perform similarly in certain citizenship measures but, by the same token, why it is not universally true that fear of increased rents constrains local contribution by tenants. I consider the implications of this analysis for legal theory and note potential applications to housing policy.

Steve Clowney

April 12, 2011 | Permalink | Comments (1) | TrackBack (0)

Monday, April 11, 2011

The Ultimate Personal Property Guessing Game

What tiara will the Queen select for Kate Middleton?  Will the Queen offer a sparkler from the family treasury (some pieces haven’t been seen in public in recent memory), or will they fashion a new diadem for the special day?  The British Press insist that the choice says something about the relationship between Kate and the Queen how Kate sees her role in the family.  Many rumors are swirling  There’s the spectacular "Oriental" tiara, made for Queen Victoria that contains 2,678 diamonds and takes its name from the Indian rubies set into it. Then there’s the beautiful diamond and silver "Girls of Great Britain and Ireland" tiara, a wedding present for Princess Mary of Teck (later Queen Mary), bought with money raised by a committee by Lady Eve Greville.  My favorite is the old-timey Strathmore Rose:


For in-depth analysis (and lots of great pictures) of the contenders, see here and here.

Steve Clowney

April 11, 2011 | Permalink | Comments (1) | TrackBack (0)

What If Nobody Will Serve on the Homeowners Association Board?

The L.A. Times does some digging.  The short answer: "To encourage volunteerism, [California law] provides that an officer or director is protected from personal liability when certain other conditions are met, including not receiving any salary and carrying the required insurance. Without a board, the entire membership is subject to liability should" soemthing happen.

Steve Clowney

April 11, 2011 in Common Interest Communities | Permalink | Comments (2) | TrackBack (0)