PropertyProf Blog

Adams on Homeownership

Kristen Adams (Stetson) has posted Homeownership: American Dream or Illusion of Empowerment? on SSRN.  Here's the abstract:

In this Article, I endeavor to show that because Americans value homeownership so much — in fact, more than we should — we have placed ourselves in an untenable position as a country and now find ourselves in the midst of a well-documented housing crisis. In addition, we have used the primacy of homeownership as an excuse not to fulfill our country’s commitment to provide housing assistance to those persons who need it most. We have done this in part by undervaluing quality, affordable rental property (and quality renters) just as we have overvalued homeownership (and homeowners). Some have used the word “myth” in talking about the American view of homeownership; however, the word I prefer is “illusion,” which I intend to be less pejorative while still acknowledging that homeownership does not always deliver the benefits it promises, particularly for lower income homeowners. This Article is not particularly concerned with the question of who is to blame for the current housing crisis, because I believe fault in this context is too complicated to be laid at the feet of just one party or another. Part II of this Article examines the median American household, mortgage, and house, concluding that many Americans cannot afford the homes they have purchased. Next, Part III addresses the question of why our country overvalues homeownership to such an extent that it now finds itself in this position. In doing so, Part III examines the many benefits that homeownership supposedly provides to both individuals and society. Part IV contrasts society’s customary treatment of homeownership as a virtue with its stigmatization of renters, concluding that the latter is unfounded. Part IV also explores how the very interests that have promoted homeownership have also benefited most from its growth. Part V considers several factors that contributed to the real estate boom that culminated in the mid-2000s, including homeowners’ treatment of mortgage debt as wealth, financing options such as no-down-payment and interest-only loans, increased utilization of home equity loans, and certain features of subprime lending. Part VI concludes by suggesting that universal homeownership does not provide the benefits Americans have come to expect from it and proposing four steps policymakers should follow in creating healthier, more sustainable housing policy.

Ben Barros

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Smith on Institutions and Indirectness in Intellectual Property

Henry E. Smith (Harvard) has posted Institutions and Indirectness in Intellectual Property on SSRN.  Here's the abstract:

Intellectual property rights are controversial because on first glance they present a disjunction between the purposes they serve and the mechanisms they employ. New Institutional Economics (NIE) suggests that for reasons of transaction costs, broadly conceived, institutions are imperfect and their imperfections may nonetheless be cost-effective. This Article draws on the NIE to present a theory of the similarities and differences between IP and regular property, and sharpens some empirical questions relating to the advisability of property-style IP protection. IP is characterized by two types of indirectness that need not both be present in regular property. In first-order indirectness, the resource to be measured is difficult to meter, leading to the use of rough proxies. Variation in outcomes along dimensions of the resource – for example, animals supported by grazing land – show high variance, i.e. risk. Second-order indirectness involves uncertainty or ambiguity about the return from a resource, in terms of how to employ it or even to carve it up – for example choosing crops or deciding between agricultural and residential subdivision. The greater the uncertainty, the more attractive, in terms of maximizing option value, it is to delegate decisions over these dimensions of resource activity to those close to the resource. Both types of indirectness point to advantages that in theory a modular structure of rights can provide: difficulty in measuring dimensions (first-order) or identifying the relevant dimensions (second-order) suggests that a given activity be placed within a module and control over local remodularization be given to private actors. Because information is nonrival, the benefits of modularity must be traded off against the benefits of exclusion costs. In both patent licensing and remedies, an NIE approach to property that does not emphasize information costs has difficulty explaining patent rights as opposed to other internalization and coordination devices. The Article applies the information-cost theory to IP licensing and patent remedies. Licensing implements a governance strategy that enriches the interface between IP rights in limited ways. Injunctive remedies dovetail with a modular structure of exclusion rights, and the traditional equitable approach to injunctions provides for targeted safety valves for problems relating to lack of notice and reasonable reliance by potential infringers.

Ben Barros

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Epstein on Heller's Gridlock Economy

Richard A. Epstein (Chicago) has posted Heller's Gridlock Economy in Perspective: Why There is Too Little, Not Too Much, Private Property on SSRN.  Here's the abstract:

This Article critiques Michael Heller’s important contribution in the Gridlock Economy. At no point does it take the position that gridlock, or the associated anticommons, is not a serious issue in the design of a legal system. But it does insist that gridlock is not the major source of social dislocation, or that private ownership is the major source of gridlock. More concretely, the articles examines the other important sources of economic distortion that are unrelated to economic gridlock from private action. These include the use of excessive government subsidies (as with health care), misguided government licenses (as with broadcast licenses); the unwise use of government power to create gridlock situations (as with employment law); the excessive role of government permitting (as with real estate development); and the use of creative private techniques to overcome gridlock (as with patent licensing as a way to combat the patent thicket). Thereafter, the Article explains how traditional common law rules did a better job in controlling for gridlock than many current initiatives, by narrowly defining the class of actionable harms to exclude competitive loss, blocked views, and hurt feelings. It closes with an explanation of how broad definitions of harm slow down decisions in the public sector, thereby impeding the use of the eminent domain power that could otherwise respond to gridlock issues.

Ben Barros

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Lehavi on Fennell's Unbounded Home

Amnon Lehavi (Interdisciplinary Center Herzliyah - Radzyner School of Law) has posted Is Law Unbounded? Property Rights and Control of Social Groupings on SSRN.  Here's the abstract:

This review essay follows up on a suggested model for resolving problems of neighborhood externalities and exclusionary associational patterns in today's metropolitan areas through a property rights regime of "alienable entitlements," as articulated by Lee Anne Fennell in The Unbounded Home (2009). The essay frames the model as promoting a groundbreaking approach to the fundamental quandary over the role of law as a tool for broad-based social change, which has been at the center of the law and society literature.

The essay asks if legal rules can fully absorb the multiple types of societal effects that influence the nature of contemporary homeownership. It then assesses more pointedly the normative desirability of controlling metropolitan-wide social exclusion through alienable property entitlements, identifying an internal tension between Fennell's support for a market-like process and her pursuit of an objective ideal that impacts the analysis. The essay concludes by suggesting that even if one accepts the tentative blueprint for addressing social engineering issues through alienable legal entitlements, it is unclear if such an approach would practically change the ways in which the social dynamics of groupings and exclusion currently take place.

This analysis aims at offering broader insights for socio-legal inquiries beyond the above particular themes of examination. Its central arguments are not limited to a certain ideological perspective - be it the promotion of social justice or of utilitarianism - or to a particular type of social concern. The essay aspires to broadly illuminate the complex ties between law and social studies, and the boundaries of law in controlling social conduct.

Ben Barros

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Hamilton on the Unconstitutionality of RLUIPA

Marci A. Hamilton (Cardozo) has posted The Constitutional Limitations on Congress's Power Over Local Land Use: Why the Religious Land Use and Institutionalized Persons Act is Unconstitutional on SSRN.  Here's the abstract:

The purpose of this Article is to bring to the forefront of discussion bedrock principles of land use law, which have been ignored to date, and to place RLUIPA analysis on a more constitutionally sound base. The Article is divided into three main sections. Section I recounts the history of land use principles from the drive to ordering urban centers in the seventeenth and eighteenth centuries to the development of the rich amalgam of modern practices that now constitute local land development and planning. Section II examines the Supreme Court’s constitutional doctrine of land use law and describes the federal laws that directly or incidentally affect local land uses and shows that these few are cabined within narrowly circumscribed arenas or in fields in which federal coordination of the states is necessary. These laws are readily distinguishable from the sweeping effect of RLUIPA on local land use determinations. Section III then looks closely at Section 2(a), to show how it impacts local decision-making, and operates as a radical and careless interference with settled constitutional principles. In addition, it points out that state courts have a history of rooting out invidious discrimination against religious landowners and invalidating discriminatory or arbitrary zoning and permitting decisions.

Ben Barros

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Peñalver and Katyal's Property Outlaws

Yale University has just published Property Outlaws, by Eduardo M. Peñalver (Cornell) and Sonia K. Katyal (Fordham).  Here's the burb from the YUP website:

Property Outlaws puts forth the intriguingly counterintuitive proposition that, in the case of both tangible and intellectual property law, disobedience can often lead to an improvement in legal regulation. The authors argue that in property law there is a tension between the competing demands of stability and dynamism, but its tendency is to become static and fall out of step with the needs of society.

The authors employ wide-ranging examples of the behaviors of “property outlaws”—the trespasser, squatter, pirate, or file-sharer—to show how specific behaviors have induced legal innovation. They also delineate the similarities between the actions of property outlaws in the spheres of tangible and intellectual property. An important conclusion of the book is that a dynamic between the activities of “property outlaws” and legal innovation should be cultivated in order to maintain this avenue of legal reform.

Ben Barros

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Eduardo Moisés Peñalver is a professor at the Cornell Law School.

Sonia K. Katyal is a professor of law at Fordham Law School.

Lehavi on Takings and Taxings

Amnon Lehavi (Interdisciplinary Center Herzliyah - Radzyner School of Law) has posted The Taking/Taxing Taxonomy on SSRN.  Here's the abstract:

Takings jurisprudence is engaged in a constant paradox. It is conventionally portrayed as chaotic and “muddy,” and yet attempts by the judiciary to create some sense of order in it by delineating this field into distinctive categories that apply to each a different set of rules are often criticized as analytically incoherent or normatively indefensible.

This Essay offers an innovative approach to the taxonomic enterprise in takings law, by examining what is probably its starkest and most entrenched division: that between taking and taxing. American courts have been nearly unanimous in refusing to scrutinize the power to tax, viewing this form of government action as falling outside the scope of the Takings Clause. Critics have argued that the presence of government coercion, loss of private value, and potential imbalances in burden sharing mandate that the two instances be conceptually synchronized and subject to similar doctrinal tests.

The main thesis of the Essay is that this dichotomy, and other types of legal line-drawing in property, should be assessed not on the basis of a “pointblank” analysis of allegedly-comparable specific instances, but rather on a broader view of the foundational principles of American property law and of the way in which takings taxonomies mesh with the broader social and jurisprudential understanding of what “property” is.

Identifying American property law as conforming to two fundamental principles-formalism of rights and strong market propensity-but at the same time as devoid of a constitutional undertaking to protect privately-held value against potential losses as a self-standing “strand” in the property bundle, the Essay explains why prevailing forms of taxation do seem to be disparate from other forms of governmental interventions with private property. Focusing attention on property taxation, the Essay shows why taxation is considered a “lesser evil” type of government coercion, how the taking/taxing dichotomy better addresses the public-private interplay in property law, and why taxation is often viewed as actually empowering property rights and private control of assets.

Ben Barros

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Akee on Property Institutions and Efficiency in Housing Markets

The May issue of the Journal of Law and Economics has an article by Randall Akee (Tufts University) titled Checkerboards and Coase: The Effect of Property Institutions on Efficiency in Housing Markets (free download for subscribers only).  Here's the abstract:

In the late 1800s, Palm Springs, California, was evenly divided into 1-mile-square blocks—like a checkerboard—and property rights were assigned in alternating blocks to the Agua Caliente tribe and a non-Indian landowner by the U.S. federal government. The quasi-experimental nature of land assignment holds land quality constant across the two types of landowners. Sales, mortgaging, and leasing restrictions on the Agua Caliente Reservation land created large transaction costs to development on those lands; consequently, there was very little housing investment. The non-Indian blocks, which were extensively developed, provide a benchmark for efficient outcomes for the Agua Caliente lands. Once the restrictions on Agua Caliente lands were relaxed in 1959, the number of homes and real estate values converged to those of non-Indian-owned lands as predicted by the Coase theorem.

Ben Barros

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Salkin on Land Use Ethics

Patricia Salkin (Albany) has posted 2009 Ethical Considerations in Land Use on SSRN.  Here's the abstract:

This article is one in a series of annual updates on reported cases and opinions in the area of ethics and land use regulation, A number of themes emerged from the round of litigation in the last year. The most surprising discovery was for a second year in a row, the number of reported cases involving allegations of unethical conduct on the part of land use attorneys. This article reviews these cases, as well as cases involving conflicts based on community involvement, familial relationships, employment and finacial interests; and cases involving allegations of bias and prejudgment.

Ben Barros

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Saxer on Property and Speech

Shelley Ross Saxer (Pepperdine) has posted A Property Rights View: Commentary on Property and Speech by Robert A. Sedler on SSRN.  Here's the abstract:

This Article, published as part of a Symposium on “The Rehnquist Court and the First Amendment,” responds to another Article, titled “Property and Speech,” by Professor Robert A. Sedler. In the Article, Professor Saxer builds upon Professor Sedler’s analysis that the First Amendment can be used as a “sword” against property owners who seek to exclude free expression with claims of private ownership rights and as a “shield” against government attempts to restrict individual rights by regulating property use. While Professor Sedler concludes that, because the First Amendment has been used to significantly interfere with property rights, protection of free expression is strong in the United States, Professor Saxer posits that such a conclusion may show just how weak property rights have become. Professor Saxer argues that the Rehnquist Court has reduced the protection of private property rights against government action, while restricting private property owners’ rights to exclude private actors who trespass or substantially interfere with their use and enjoyment of property interests.

Professor Saxer also addresses a category of government action not mentioned by Professor Sedler – the government’s use of eminent domain, which can be used as a “sword” against undesirable land uses, even if those uses are protected by the First Amendment. Professor Saxer contrasts the treatment of church property and adult businesses in the eminent domain context. The Religious Land Use and Institutionalized Persons Act (RLUIPA) acts as a “shield” against government land use decisions that impact religious land uses by requiring heightened judicial scrutiny. However, adult business land uses are not similarly protected against eminent domain actions.

Ben Barros

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Tate on Assignability of Charitable Trust Enforcement Rights

Joshua C. Tate (SMU) has posted Should Charitable Trust Enforcement Rights Be Assignable? on SSRN.  Here's the abstract:

In recent years, scholars have given much attention to the problem of charitable trust enforcement. Departing from the common law, section 405(c) of the Uniform Trust Code provides that “[t]he settlor of a charitable trust, among others, may maintain a proceeding to enforce the trust.” This Article addresses the question of whether, and to what extent, a settlor’s right to enforce a charitable trust should be assignable to third parties. Should the law permit the settlor of a charitable trust to assign her enforcement rights after the creation of the trust, or should assignments be recognized only if they are spelled out in the trust instrument? How many potential assignees may the settlor properly select? Once the right has been assigned to a third party, should that third party also retain the right of assignment, so that the right can potentially be passed from one individual to the next in perpetuity? What would be the ramifications of granting a right of assignment to the settlor’s personal representative? Any resolution of these issues must protect the interests of charitable beneficiaries, but also be fair to trustees and not overwhelm the courts with frivolous litigation.

Ben Barros

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Rosser on Indians and Judicial Humility

Ezra Rosser (American University) has posted Assumptions Regarding Indians and Judicial Humility: Thoughts from a Property Law Lens on SSRN.  Here's the abstract:

Negative assumptions regarding Indians can be found in the recent decisions of the U.S. Supreme Court and attention to these assumptions is required if courts are to base their decisions on how Indians and non-Indians actually impact each other. This brief article uses a property and liability rules framework to argue for judicial restraint when considering cases that could limit tribal soveriegnty

Ben Barros

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Saxer on Eminent Domain and First Amendment Land Uses

Shelley Ross Saxer (Pepperdine) has posted Eminent Domain Actions Targeting First Amendment Land Uses on SSRN.  Here's the abstract:

This Article explores constitutional and statutory limitations on land use regulations where First Amendment rights are implicated. The government’s eminent domain power can weaken the protection due undesirable land uses under the First Amendment. Professor Saxer advocates that courts should distinguish between the government exercising eminent domain and the government using typical land use regulation and should impose stricter constitutional limitations on the eminent domain power.

In particular, this Article focuses on how courts have dealt with eminent domain actions targeting adult business and religious land uses. Although these two types of uses are strange bedfellows, they are the land uses that typically involve First Amendment rights and that tend to generate emotional responses from the community leading to content-based regulation. Issues examined in this Article include: eminent domain actions against religious land uses protected under state and federal constitutions, state Religious Freedom Restorations Act (RFRA) statutes, and the Religious Land Use and Institutionalized Persons Act (RLUIPA).; government motivations for targeting protected land uses; and special valuation considerations for just compensation determinations.

Ben Barros

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Bennett's Bibliography on Condos

Donna S. Bennett (Northern Kentucky) has posted Condominium Homeownership: A Selected Annotated Bibliography of Legal Sources on SSRN.  Here's the abstract:

Following a brief historical sketch of the condominium concept, this bibliography focuses on the development and growth of condominium homeownership in the United States.

Ben Barros

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Johnson et al. on No Walmart in My Backyard

Daniel K. N. Johnson, Kristina M. Lybecker, Nicole Gurley, Alex Stiller-Shulman, and Stephen Fischer (all of Colorado College) have posted The NWIMBY Effect (No Walmart in My Backyard): Big Box Stores and Residential Property Values on SSRN.  Here's the abstract:

Recent Wal-Mart openings have been accompanied by public demonstrations against the company’s presence in the community, asserting (among other things) that their presence is deleterious to residential property values. This study empirically evaluates that claim, analyzing the spatial correlation between Wal-Mart locations and residential property values, while comparing Wal-Mart with other big-box retailers for a frame of reference and controlling for other important aspects of a home’s market value. We recognize that market value may represent a trade-off between price and patience, so perform a similar analysis using a property’s days on the market to evaluate any big-box effect. Finally, we interpret the resulting effects in two ways, from both the resident’s and retailer’s point of view, casting new light on the NWIMBY effect.

Ben Barros

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Salkin on Alternate Members of Planning and Zoning Boards

Patricia Salkin (Albany) has posted Providing for Alternate Members of Planning and Zoning Boards: Drafting Effective Local Laws on SSRN.  Here's the abstract:

It is not uncommon for members of planning and zoning boards to have conflicts of interest with repsect to applicants and applications before the board. When these members disclose and recuse themselves from further involvement in pending matters, it can lead to problems including a lack of quorum for the conduct of business and to tie votes resulting in either inaction or in default approvals. A number of states specifically authorize, but do not require, the appointment of alternate members to these local land use boards. However, many of these statutes fail to provide necessary guidance as to how alternate members are to be selected and appointed, and what their responsibilities and powers are during their term of office. This article offers lawyers, municipal officials and other community leaders best practices with respect to the drafting of effective local laws for the appointment of alternative members of planning and zoning boards.

Ben Barros

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Green and Wachter on The Housing Finance Revolution

Richard K. Green (George Washington) and Susan M. Wachter (Wharton) have posted The Housing Finance Revolution on SSRN.  Here's the abstract:

While other countries dismantled their segmented housing finance systems and linked housing finance to capital markets through deregulated depositories, the US linked housing finance to capital markets through depository deregulation and securitization. Elsewhere securitization has not developed. The US provided the underpinnings for its mortgage security infrastructure with the creation of FNMA in 1938 and in order to create liquidity in the mortgage market required the standardization of mortgage documentation and more fundamentally required that home mortgages within securities would be sufficiently homogeneous that they could trade in liquid markets. These developments allowed 22 years of uninterrupted liquidity in the market for conventional conforming mortgages, to be followed by the creation of a subprime mortgage market backed by securities that were illiquid, nonstandardized and marked to model not to market which allowed systemic underpricing of risk. This paper presents the recent history of the linkage of mortgage funding to financial markets in the US and elsewhere and specifically in the US suggests how the housing finance revolution resulted in the "terror" which has brought down global financial markets.

Ben Barros

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Pavlov and Wachter on Subprime Lending and Real Estate Prices

Andrey D. Pavlov (Simon Fraser) and Susan M. Wachter (Wharton) have posted Subprime Lending and Real Estate Prices on SSRN.  Here's the abstract:

This paper establishes a theoretical and empirical link between the use of aggressive mortgage lending instruments, such as interest only, negative amortization or subprime, mortgages, and the underlying house prices. Such instruments, which come into existence through innovation or financial deregulation, allow more borrowing than otherwise would occur in previously affordability constrained markets. Within the context of a model with an endogenous rent-buy decision, we demonstrate that the supply of aggressive lending instruments temporarily increases the asset prices in the underlying market because agents find it more attractive to own or because their borrowing constraint is relaxed, or both. This result implies that the availability of aggressive mortgage lending instruments magnifies the real estate cycle and the effects of fundamental demand shocks. We empirically confirm the predictions of the model using recent subprime origination experience. In particular, we find that regions that receive a high concentration of aggressive lending instruments experience larger price increases and subsequent declines than areas with low concentration of such instruments. This result holds in the presence of various controls and instrumental variables.

Ben Barros

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Novikov on Solar Rights in the US

Igor V. Novikov (Suffolk) has posted State of Solar Rights Across the United States on SSRN.  Here's the abstract:

Solar energy is cheap, abundant, and readily available. Solar energy could help the United States to decrease (and, potentially, eliminate) its dependency on oil imports. However, the rate of solar technology adoption has been slow, to say the least. This paper is an attempt to summarize different ways in which state and local governments, courts, and private citizens address challenges arising from solar power adoption.

Ben Barros

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Kennedy on Property and Economic Development

David W. Kennedy (Harvard) has posted Some Caution About Property Rights as a Recipe for Economic Development on SSRN.  Here's the abstract:

In recent years, enhancing the security and clarity or formality of property rights has become something of an idée fixe among global development policy experts. This is more ideological assertion than careful history, however. Western economies have experienced periods of aggressive industrialization and economic growth with a wide range of different property regimes in place. Throughout the West, property rights have always been embedded in a complex legal fabric which modifies their meaning and qualifies their enforcement. In fact, most proposals for “strong and clear” property rights rest, at least in part, on lay conceptions about the legal order which are simply not warranted. These include the following: that “property rights” have an ideal form which can be disentangled from the warp and woof of social and economic struggle in a society; that “private order,” including property rights, and “public regulation” can and ought to be cleanly separated, the one supporting the market, the other potentially distorting it; that “strengthening” property rights has no distributive implications, if only because property law concerns the “rights” of individuals over things rather than complex relations of reciprocal rights and duties among people with respect to things; that concerns about social uses and obligations are only properly pursued outside the property regime, through social regulation of one or another sort; that in a well functioning market economy, all “private” rights can and will be freely rearranged by market forces, rendering decisions about their initial allocation unimportant; or that the formalization of property rights leads cleanly to both efficiency and growth, eliminating the need for policy judgment about the desirability of alternative uses and distributional arrangements.

Each of these six ideas supports the notion that the development of a proper law of property can be accomplished without facing complex questions of social, political and economic strategy. But each is incorrect. Property law is a critical domain for engaging, debating and institutionalizing development policy, but it is not a substitute for strategic analysis and political choice. In this short essay, I review these common, if mistaken, ideas about property rights in the West in light of the Western experience. My objective is to place the strategic choices embedded in any property regime in the foreground and lead one to hesitate before accepting conventional neo-liberal wisdom about the importance of “clear” or “strong property rights” for economic development.

Ben Barros

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