June 13, 2012
Backfilling Vacant Borders Stores
The Wall Street Journal has an interesting piece on the struggle of shopping center owners to backfill former Borders locations, a year after the book seller closed its doors. In Winston-Salem's Thruway Shopping Center, the Borders space is being retooled for Trader Joe's to open in August. While I miss having the book store, I welcome not having to drive to Charlotte for my favorite Trader Joe's items. But as chains which occupy large boxes fail, backfilling those spaces becomes more problematic, particularly at the healthy rents the former tenants paid. For example, the Circuit City location on Hanes Mall Boulevard remains empty, three years after it closed its doors.
May 08, 2012
The ABA Section of Real Property, Trust and Estate Law Fellows Program
Troy Rule (Missouri) passes on this info about the ABA Section of Real Property, Trust and Estate Law Fellows Program
The ABA Section of Real Property, Trust and Estate Law Fellows Program encourages the active involvement and participation of young lawyers in Section activities. The goal of the program is to give young lawyers an opportunity to become involved in the substantive work of the RPTE Section, while developing into future leaders.
As a RPTE Fellow, You Will:
• Be assigned to work with a substantive Committee Chair, who will serve as a mentor
and help expose you to all aspects of committee membership
• Get involved in a substantive project, which could include writing for a RPTE publication
• Become a Section liaison to the ABA Young Lawyers Division or your local bar association
• Become an active member of the Membership Committee
• Attend important Section leadership meetings
Click here for more information and to view the 2012 Fellows application
The Fellowship appointment is for two years. To be considered for selection, a person (1) must have practiced in the trusts and estates or real property area for at least one year (and be younger than 36 years of age or have been admitted to the bar less than 10 years), and (2) should have demonstrated leadership at the state or local bar level or in the Young Lawyers Division of the ABA. As part of the Section's commitment to diversity, three of the six Fellows selected will be minority applicants.
Fellows applications are due June 15, 2012.
According to Troy, you need not have “demonstrated leadership at the state or local bar level or in the Young Lawyer’s Division of the ABA” to get a fellowship. The fellowship provides $4,000 to cover expenses for four great trips to ABA conferences over a period of two years. E-mail Troy (email@example.com) if you have any questions about the fellowships.
Sadly, I aged out of this opportunity a while ago.
[Comments are held for approval, so there will be some delay in posting]
January 11, 2012
Case of Week: MERS Has Standing to Foreclose
Via Joseph Singer, here's an interesting decision from the Michigan Supreme Court:
Contrary to the ruling of some other courts, the Michigan Supreme Court held that MERS (Mortgage Electronic Registration Systems) has standing to foreclose on properties for which it is the record holder of the mortgage even if it does not “own’ the note or the right to moneys under the note. The court held that because MERS is the “holder of the mortgage, MERS owned a security lien on the properties, the continued existence of which was contingent upon the satisfaction of the indebtedness.” The court concluded that the legislature would want the record mortgage holder to have the right to foreclose on the property. The case is Residential Funding Co. v. Saurman, 805 N.W.2d 183 (Mich. 2011).
December 15, 2011
Nevada Gets Tough on Foreclosures
The LA Times reports that the number of Nevada properties that entered foreclosure fell by 75% in October, even as the rate climbed elsewhere in in the country.
That news, though, did not result from a reversal of fortune in the Nevada housing market. It was spawned by a new Nevada law that plays hardball with companies doing the foreclosing. Assembly Bill 284, which took effect in October, requires those foreclosing on a home to file an affidavit proving they have the right to bring the action — and it increases civil and criminal penalties for using fraudulent documents in a foreclosure.
November 30, 2011
Property Themes in the Movie Burlesque
Thanks to Alice Noble-Allgire for passing along this post from a real estate blog on the property themes in the movie Burlesque. Property saves the day!
[Comments are held for approval, so there will be some delay in posting]
November 21, 2011
Swire on What the Fair Credit Reporting Act Should Teach Us About Mortgage Servicing
Peter Swire (Ohio State) has posted What the Fair Credit Reporting Act Should Teach Us About Mortgage Servicing on SSRN. Here' the abstract:
The current housing crisis has revealed deep flaws in the way monthly mortgage payments by homeowners are handled by mortgage servicers – the companies that collect monthly mortgage payments from homeowners and forward the payments to investors in those mortgages. This article suggests that the structural flaws in mortgage servicing are directly analogous to the market failures that led to the creation of the Fair Credit Reporting Act of 1970 (FCRA). The FCRA thus serves as a significant model for possible reforms in mortgage servicing.
November 11, 2011
Roger Bernhardt on Property Transactions:
Roger Bernhardt (Golden Gate) has published a flurry of short pieces on Real Estate Transactions:
November 07, 2011
Ellickson on the Costs of Complex Land Titles
Robert Ellickson (Yale) has posted The Costs of Complex Land Titles: Two Examples from China on SSRN. Here's the abstract:
Chinese customs and law have traditionally prevented a land seller from conveying outright title to a buyer. The ancient custom of dian, which persisted until the 1949 Revolution, gave a land seller and his lineage an immutable option to buy back sold land at the original sale price. This little-analyzed custom discouraged soil conservation and land improvements, and, especially after 1600, contributed to China’s inability to keep pace with England.
After calamitous experiences with land collectivization between 1951 and 1981, China’s Communist government began to confer private land-use rights. But, instead of making outright sales, it chose to award contractual rights only for a fixed-term, for example, 50 years in the case of an industrial parcel. For the same reasons dian did, this policy threatens to impair China’s prospects of economic development.
September 29, 2011
The Federal Government's Real Estate Fire Sale
There have been reports for a year or more that the Obama Administration is considering selling surplus real estate assets (leases and fee simple interests) as part of an effort to ease the federal deficits. The New York Times reports today that this idea has garnered rare bipartisan support and may be building steam.
But a recent study by the GAO argues that GSA (the real estate arm of the federal government) has over-relied on leasing and that used owned real estate is a better strategy for the government than leasing.
I hate to criticize that rare policy issue that both parties have apparently agreed upon, but I have two issues with the administration's plan. First, in light of the GAO report, does it make sense to divest of owned real estate while GSA is still leasing? Perhaps GSA has reviewed all of the "surplus" real estate (such as Plum Island) and rejected it, but then again, perhaps not. Second, in a time when commercial real estate values are still significantly depressed, is it a good idea for the government to dump more inventory on the market?
August 28, 2011
At the SEALS conference a few weeks ago, I was introduced to a great, free resource for law professors and law students: Practical Law (http://us.practicallaw.com). Designed as a paid, subscription service for law firms and libraries, those of us in law schools can get free access.
Click on a practice area of interest to access an organized list of practice notes, form documents, clauses, checklists, and articles. Materials about corporate & securities, employee benefits, finance, and labor & employment are well developed. Of interest to those of us who teach property and real estate courses is the “real estate” practice section. There are some good practice notes on commercial real estate, including workouts, REITs, mezzanine financing, and international real estate. The form documents (with notes) available to date mostly concern office leasing.
The real estate section is still under development, but this is a resource that I plan to keep an eye on as it becomes more robust.
August 15, 2011
A Primer on Title Insurance
The New York Times' introduction to title insurance.
August 08, 2011
More Home Buyers Walking Away From Signed Contracts
According to the LA Times, an unusually large number of home purchase contracts are falling through. Lawrence Yun, chief economist of the National Association of Realtors, thinks that low-ball appraisals and tough mortgage underwriting are the main culprits. Interviews with realtors, however, suggest another cause:
Buyer confidence about the direction of the national economy has been badly rattled in the last six to eight weeks by the gridlock in Congress over raising the national debt ceiling and cutting the deficit. That is making buyers less willing to take a risk on a major purchase, brokers say. It's also making them pickier and more demanding when defects are found in home inspections and frequently is leading to contract cancellations for relatively minor reasons.
July 11, 2011
Pavlov and Wachter on REITS
Andrey Pavlov (Simon Fraser) and Susan Wachter (Penn - Wharton) have posted REITS and Underlying Real Estate Markets: Is There a Link? on SSRN. Here's the abstract:
This paper utilizes the Carlson, Titman, and Tiu (2010) model of REIT returns to estimate the strength of the relationship between REIT and underlying real estate returns. Our work further offers an innovative method for computing the returns of the real estate properties underlying each REIT using the Moody’s/REAL commercial property price indices by region and property type. We find a statistically significant relationship between REIT and real estate returns only in the office sector. Other property types offer only very weak and insignificant relationships. This finding suggests that direct real estate investment or investment through the property price index derivatives cannot be replicated using REITs.
May 20, 2011
Pottow on Consumers' Ability to Pay Mortgage Loans
John Pottow (Michigan) has posted Ability to Pay on SSRN. Here's the abstract:
The landmark Dodd-Frank Act of 2010 transforms the landscape of consumer credit in the United States. Many of the changes have been high-profile and accordingly attracted considerable media and scholarly attention, most notably the establishment of the Consumer Financial Protection Bureau (CFPB). But when the dust settled, one profoundly transformative innovation that did not garner the same outrage as CFPA did get into the law: imposing upon lenders a duty to assure borrowers’ ability to repay. Ensuring a borrower’s ability to repay is not an entirely unprecedented legal concept, to be sure, but its wholesale embrace by Dodd-Frank represents a sea change in U.S. consumer credit market regulation. This article does three things regarding this new duty to assess a consumer’s ability to pay mortgage loans. First, it tracks the multifaceted pedigree of this requirement, looking at fledgling strands in U.S. consumer law as well as other areas such as securities law; it compares too its more robust embrace in foreign systems. Second, it offers conjecture regarding just how this broadly stated principle might be put into practice by the federal regulators. Finally, it provides a brief normative comment, siding with the supporters of this new obligation on lenders.
May 19, 2011
Mayer et al. on Mortgage Modification and Strategic Behavior
Christopher J. Mayer (Columbia Business), Edward R. Morrison (Columbia Law), Tomasz Piskorski (Columbia Business) and Arpit Gupta (Columbia Business) have posted Mortgage Modification and Strategic Behavior: Evidence from a Legal Settlement with Countrywide on SSRN. Here's the abstract:
We investigate whether homeowners respond strategically to news of mortgage modification programs. We exploit plausibly exogenous variation in modification policy induced by U.S. state government lawsuits against Countrywide Financial Corporation, which agreed to offer modifications to seriously delinquent borrowers with subprime mortgages throughout the country. Using a difference-in-difference framework, we find that Countrywide's relative delinquency rate increased thirteen percent per month immediately after the program's announcement. The borrowers whose estimated default rates increased the most in response to the program were those who appear to have been the least likely to default otherwise, including those with substantial liquidity available through credit cards and relatively low combined loan-to-value ratios. These results suggest that strategic behavior should be an important consideration in designing mortgage modification programs.
May 12, 2011
Real Estate Organizations
Over at the Conglomerate, David Zaring is trying to get to the bottom of a mystery. Why are Real Estate Companies called organizations?
New York City alone has the Durst Organization, the Brodsky Organization, the Trump Organization, &c. Why are these called organizations? It's not that they aren't also limited liability companies as well. And it is the case that many non real estate firms will set up internal "real estate organizations" to manage their property. But my quick search on Westlaw and through the websites of these companies didn't reveal the reason for the fashion for the "organization" moniker. The question isn't easy to resolve via text searching ("organization" isn't very unique). So I thought I might crowd-source the question. Do our readers know the answer?
May 09, 2011
A Ground Zero Update
From the New York Times - and update on the rebuilding underway at the World Trade Center site.
May 06, 2011
Shannon on Repose Protection for Home Builders
Brian Shannon (Texas Tech) has posted The Reach for Repose: Have the Texas Courts Gone Awry? (Texas Tech Law Journal) on SSRN. Here's the abstract:
What do lawsuits filed against building contractors or repairers, other construction professionals, and manufacturers or suppliers of products such as furnaces, elevators, garage door openers, underground storage tanks, and spray-on ceiling materials have in common? All of these actions, provided they have been initiated ten or more years after either the completion of the building project or the manufacture of the item in question, are potentially subject to a statute of repose enacted by the Texas Legislature in 1975. Although the language of this statute is couched in terms of providing repose protection to persons who construct or repair improvements to real property, Texas courts and federal courts applying Texas law have not limited the reach of the statute to cases involving construction professionals. Instead, the courts have greatly expanded the statute's range of applicability to cover off-site manufacturers of products that have become improvements to real property. In this regard, the courts are in error. With respect to persons other than construction professionals, the Texas courts have both misconstrued the statute of repose and virtually ignored the legislative history of the act. Accordingly, this article will examine the Texas statute of repose relating to persons who construct or repair improvements to real property in the context of both the decided cases and with regard to the intentions of the legislature in enacting the repose protections.
May 05, 2011
FHA Loans Still the Best?
Kenneth Harney of the L.A. Times reports that although FHA has raised some fees, it still offers homebuyers many advantages over its private-sector rivals:
The FHA . . . continues to offer much higher and more flexible maximum debt-to-income ratios, far more generous underwriting and lower down payments, and will accept FICO scores that conventional lenders and private insurers won't touch.
May 04, 2011
Rose on The Due Process Rights of Tenants in Mortgage Foreclosure
Henry Rose (Loyola Chicago) has posted The Due Process Rights of Residential Tenants in Mortgage Foreclosure Cases (New Mexico Law Review) on SSRN. Here's the abstract:
The purpose of this article is to explore the rights of tenants who reside in buildings undergoing foreclosure to receive notice and an opportunity to be heard when foreclosures threaten to terminate their tenancies. The federal Protecting Tenants at Foreclosure Act of 2009 (PTFA) will significantly reduce the incidence of residential tenancies being terminated as a result of foreclosure. However, PTFA offers weak procedural protections if the mortgagee or the person who acquires ownership pursuant to a foreclosure seeks to terminate the tenancies of residents in the foreclosed building. In those states that require judicial foreclosures, the Due Process Clause of the Fourteenth Amendment to the United States Constitution should afford tenants faced with termination of their tenancies due to foreclosure with notice and an opportunity to be heard before their tenancies are terminated. In states that allow non-judicial foreclosures, Due Process protections are not likely to be available to tenants due to a lack of state action in the foreclosure process. PTFA should be amended to afford all tenants, including those who reside in non-judicial foreclosure states, with notice and an opportunity to be heard before their tenancies are terminated pursuant to a foreclosure.