Wednesday, November 30, 2005
Well, that was fast. Last month I had a post in which I suggested that interest-only ARMs would be the source of the next class action boom. Yesterday's Wall Street Journal had a story by Ruth Simon (subscription required) on what may be the first of many such class actions involving option ARMs, a similar type of mortgage that used a teaser rate to keep payments low in the first year:
In a lawsuit seeking class-action status filed in U.S. District Court in Milwaukee earlier this year, the Andrews allege that their lender, Chevy Chase Bank, violated the federal Truth-In-Lending Act by misleading borrowers into thinking they were getting rates lower than those actually charged. There are "deceptive disclosures," says Kevin Demet, an attorney representing the Andrews.
In a written response to questions about the lawsuit, Robert D. Broeksmit, president and chief executive of Chevy Chase Bank's mortgage lending unit, says the company offers option ARMs "only to affluent borrowers who use its various payment features to manage their cash flow intelligently." He says the bank makes "every effort to ensure that all of our customers understand the loan product they choose." This includes providing a "one page, large print, plain English flyer, which the borrower signs, which clearly states that the loan has a monthly adjustable interest rate," he says.
Other lawsuits are likely, particularly if interest rates rise and housing values level off or fall, says Paul F. Hancock, a partner with the Miami office of law firm Hogan & Hartson. "The most likely claim will be a consumer-protection claim ... [that borrowers] weren't properly informed or were sold a product that wasn't suited to them," he says. Mr. Hancock says the risks of option ARMs and other exotic loan products are getting more attention both from lenders and consumer advocates.
[Comments are held for approval, so there might be some delay in posting]
Tuesday, November 29, 2005
Michael C. Blumm , Harrison Dunning and Scott W. Reed (Lewis & Clark Law School , UC Davis and Stanford Law School) have posted Renouncing the Public Trust Doctrine: An Assessment of the Validity of Idaho House Bill 794 on SSRN. Here is the abstract:
Under the influence of powerful irrigation and timber lobbies, the state of Idaho enacted a law in 1996 which renounced the application of the public trust doctrine to water rights and public land decisionmaking, in an effort to overturn several decisions of the Idaho Supreme Court. This article explains the genesis of that law, exposes its flaws, and questions its validity.
In particular, we maintain that the rights that Idaho legislature attempted to terminate are in fact inalienable, sovereign rights that a state cannot renounce. We also argue that a state cannot, consistent with the federal law, terminate public rights in lands conveyed to the state under the equal footing doctrine. Finally, we contend that the Idaho statute violates the state constitution's declaration of the public character of water within the state. The article notes that its analysis may have use beyond the state of Idaho, as several other western states have constitutional provisions that could be interpreted to incorporate the public trust doctrine.
[Comments are held for approval, so there may be some delay in posting]
Monday, November 28, 2005
Susan French (UCLA Law School) has posted Perpetual Trusts, Conservation Servitudes, and the Problem of the Future on SSRN. Here is the abstract:
This short article explores the similarities between perpetual private trusts and conservation servitudes granted in perpetuity, the adequacy of existing doctrines to handle future changes in circumstances, the deference due to donor intent, and concludes that legal changes will be needed to give private trust beneficiaries more power to determine how trust assets will be used and to protect the public interests in conservation servitudes and the continuing utility of the land subject to them.
David Bernstein over at the VC has a post describing the decine in housing prices in some markets. Could it be that litigation will follow shortly behind?
[Comments require approval, so there may be a delay in posting]
Sunday, November 27, 2005
NPR has a story that asks whether post-Kelo eminent domain reform is going too far, using the example of waterfront redevelopment in Portland, Maine.
[Comments require approval before posting, so there might be some delay]
Not much change from last week, as most people focused on turkey rather than property law.
1. (288) How City Hall Causes Sprawl: A Case Study, Michael Lewyn (George Washington University Law School)
2. (232) How Overregulation Creates Sprawl (Even in a City without Zoning), Michael Lewyn (George Washington University Law School)
3. (216) Suburban Sprawl, Jewish Law, and Jewish Values, Michael Lewyn (George Washington University Law School)
4. (198) Sprawl, Growth Boundaries and the Rehnquist Court, Michael Lewyn (George Washington University Law School)
5. (115) Information Asymmetries and the Rights to Exclude, Lior Strahilevitz (University of Chicago Law School)
6. (111) Home as a Legal Concept, Benjamin Barros (Widener University - School of Law)
7. (99) Property Rights in Spectrum: Taking the Next Step, Dale Hatfield (University of Colorado at Boulder) and Phil Weiser (University of Colorado at Boulder - School of Law)
8. (76) Testimony Before Pennsylvania House of Representatives State Government Committee Re: Eminent Domain, Benjamin Barros (Widener University - School of Law)
9. (57) Leasing, Ability to Repossess, and Debt Capacity, Andrea L. Eisfeldt and Adriano A. Rampini (both from Northwestern University - Department of Finance)
10. (55) Bargaining for Takings Compensation, Abraham Bell and Gideon Parchomovsky (Bar Ilan University - Faculty of Law and University of Pennsylvania - School of Law)
Tuesday, November 22, 2005
Royce de Rohan Barondes (University of Missouri at Columbia - School of Law) and V. Carlos Slawson Jr. (Louisiana State University, Baton Rouge - E.J. Ourso College of Business Administration) have posted Examining Compliance with Fiduciary Duties: A Study of Real Estate Agents on SSRN. Here's the abstract:
The traditional default rule in the United States has been that, where two brokerage firms participate in the sale of a piece residential real estate, both firms are fiduciaries of the seller. This article provides original empirical evidence showing to be erroneous a common assumption - that, in conflicts between their principals and third parties, real estate agents promote their principals' interests - underlying revisions made in a number of jurisdictions to those principles in the last twenty years.
This article examines whether agents act in accordance with their duties along two dimensions: First, we hypothesize that selling agents may secure business by taking actions that promote the interests of buyers to the detriment of selling agents' principals, the sellers, in ways that decrease sales prices. Second, we examine whether sellers receive worse sales prices where the selling and listing functions are divided between two firms. Such a relationship would be consistent with selling agents improperly seeking to promote buyers' interests, with intra-firm relationships restraining that misconduct better than inter-firm relationships.
The results support the conclusion that, to secure business, selling agents who are fiduciaries of sellers use actions that decrease the returns to their principals, with some evidence that the participation of a listing agent in the same firm as the selling agent partially restrains this activity. In sum, some economically significant malfeasance is not restrained by the duties imposed by law.
Monday, November 21, 2005
The New York Times has a story today about the current status of the New London project that gave rise to the Kelo litigation. Tom Blumer at BizzyBlog has some useful commentary on the Times story. Hat tip: Todd Zywicki.
A few weeks ago, I posted on some of Tom Merrill's remarks at the GELPI Takings Conference, where he described two frameworks for looking at issues like public use: the utilitarian frame and the moral rights frame. The utilitarian frame is concerned with promoting the common good, and as a result would favor a broad reading of "public use". The moral rights frame, in contrast, would be more concerned with a property owner's interest in maintaining possession of property, and as a result would favor a narrow reading of "public use".
I covered Kelo last week in my Property Theory seminar. In a reaction paper discussing the case, one of my students described the majority opinion as Vulcan, imagining the following conversation between Kirk and Spock:
Kirk: We can't just kick people out of their homes!
Spock: Captain, your concern about a few property owners is irrational; this taking is clearly for the greater good.
While Merrill's categories might have more academic appeal, I think that the Spock/Kirk distinction is a lot more fun. Plus, there is the somewhat unexpected result that Justice Stevens is playing the role of the arch-rational Spock, while Justice Thomas is playing the role of the emotional Kirk.
[Comments are held for approval, so there may be some delay in posting]
Friday, November 18, 2005
Michael C. Blumm and Lucus Ritchie (both of Lewis & Clark Law School) have posted The Pioneer Spirit and the Public Trust: The American Rule of Capture and State Ownership of Wildlife on SSRN. Here is the abstract:
The law of capture, a central feature in Anglo-American property law, has deep historical roots, running at least to Rome, where capturers could create private property in res nullius resources like wildlife (ferae naturae) if they did so consistent with Roman law (imperium). When transfered to English common law, capture doctrine was laden with pervasive restrictions imposed by royal prerogatives, as the English king was said to own wildlife that had been unowned in Rome. Thus, royal forests and hunting franchises imposed substantial limits on wildlife capture.
In early America, the lack of royal prerogatives seemed for a time to sanction a free-wheeling rule of wildlife capture unknown in England. For example, the English rule allowing landowners to exclude capturers was largely discarded, at least with respect to unfenced lands. But as the overharvesting consequences of expansive capture rules became apparent, American courts rediscovered and republicanized the royal prerogatives into the concept of state ownership of wildlife. This 19th century development was grounded on both sovereign power and public ownership principles, or sovereign ownership, a concept endorsed by the Supreme Court in 1896.
Although during the 20th century the Supreme Court repeatedly limited the state ownership of wildlife where it conflicted with federal law - and finally overturned the case that endorsed the doctrine in 1979 - today nearly every state claims ownership of wildlife. This article examines this phenomenon and explains both the limits and utility of the state ownership doctrine in the 21st century. We claim that although modern notions of the police power justify expansive state regulation of wildlife, the state ownership doctrine retains vitality because it may bolster or enlarge police power regulation by 1) imposing affirmative duties to protect wildlife, 2) empowering states to collect damage for damages to wildlife, and 3) offering an affirmative defense against landowner claims of constitutional takings due habitat protections.
Not much change from last week, though Lior Strahilevitz's new article Information Asymmetries and the Rights to Exclude makes its first appearance on the top 10.
1. (283) How City Hall Causes Sprawl: A Case Study, Michael Lewyn (George Washington University Law School)
2. (228) How Overregulation Creates Sprawl (Even in a City without Zoning), Michael Lewyn (George Washington University Law School)
3. (213) Suburban Sprawl, Jewish Law, and Jewish Values, Michael Lewyn (George Washington University Law School)
4. (192) Sprawl, Growth Boundaries and the Rehnquist Court, Michael Lewyn (George Washington University Law School)
5. (107) Home as a Legal Concept, Benjamin Barros (Widener University - School of Law)
6. (86) Property Rights in Spectrum: Taking the Next Step, Dale Hatfield (University of Colorado at Boulder) and Phil Weiser (University of Colorado at Boulder - School of Law)
7. (81) Information Asymmetries and the Rights to Exclude, Lior Strahilevitz (University of Chicago Law School)
8. (75) Testimony Before Pennsylvania House of Representatives State Government Committee Re: Eminent Domain, Benjamin Barros (Widener University - School of Law)
9. (56) Leasing, Ability to Repossess, and Debt Capacity, Andrea L. Eisfeldt and Adriano A. Rampini (both from Northwestern University - Department of Finance)
10. (51) Bargaining for Takings Compensation, Abraham Bell and Gideon Parchomovsky (Bar Ilan University - Faculty of Law and University of Pennsylvania - School of Law)
Thursday, November 17, 2005
The Onion has a typically brilliant post up on judicial activism that is worth checking out. Be warned that the context is a wet t-shirt contest, but the post is a great send-up of the current "debate" about activism.
Dan Solove has an amusing post up on some of the odd Google searches that have directed people to Concurring Opinions. I suspect that some of the oddities are the result of comment and trackback spam. Blogs tend to rank very high in Google searches because blogs tend to link to each other. Spammers try to take advantage of this fact by sending spam comments and trackbacks; I'm not clear on whether they are hoping that a person Googling the spam topic will click on the link in the comment or whether they are trying to increase the rank of their own site by linking to it from a blog. In any event, I've deleted spam comments in the last couple of days about young Asian shemales and low mortgage interest rates. I've also had some odd trackback spam in the last couple of days.
Maybe because I've been deleting these spam comments, I haven't been getting too many odd Google searches. I do get lots of hits from searches on selling body parts because of this post in property in the body. But lately it seems that more than anything I've been getting a lot of hits for searches on Berman v. Parker, because of this post on the Supreme Court's conference notes in that case. This got me thinking about a frequent topic at faculty lunches -- law students' habit of starting any research project with a search from Google or Ask Jeeves. This habit usually drives faculty nuts, and even now I don't think that this type of search is a good place to start legal research. But if you in fact are researching Berman v. Parker, then my post on the conference notes would be a good thing to read. Unless you are a regular reader of this blog, the only way to find it is through an internet search. With the constant expansion of the legal blogosphere, researchers might miss some very useful commentary if they don't do an internet search. And, on a related topic, they would also miss the most current legal scholarship on almost any subject if they don't include an SSRN search in their research. It all makes me wonder what legal research will look like in a year or two.
[As always, and in part because of comment spam, comments are held for approval, so there might be a delay in posting]
Wednesday, November 16, 2005
On the left side of the blog, under the Resources heading, I've posted a PDF of James Madison's 1792 essay Property. The essay is short (only a bit more than two pages) and can be a helpful teaching resource -- I use it in both my first-year Property class and my Property Theory seminar. In my seminar, I focus on the broad conception of property articulated by Madison. In my Property class, I include the essay in the unit on regulatory takings. The following language is most relevant to the takings discussion:
If there be a government then which prides itself in maintaining the inviolability of property; which provides that none shall be taken directly even for public use without indemnification to the owner, and yet directly violates the property which individuals have in their opinions, their religion, their persons, and their faculties; nay more, which indirectly violates their property, in their actual possessions, in the labor that acquires their daily subsistence, and in the hallowed remnant of time which ought to relieve their fatigues and soothe their cares, the inference will have been anticipated, that such a government is not a pattern for the United States.
Madison's distinction between direct and indirect violations of property suggests to some readers (most notably Bill Treanor) that Madison believed that indirect violations of property (e.g., regulations) were morally wrong but did not fall within the scope of the takings clause. I usually raise this issue during discussion of footnote 15 in Lucas v. South Carolina Coastal Council, where Justice Scalia notes, but declines to follow, the original understanding of the Just Compensation Clause.
I will post additional resources in the near future. If there is anything you would like me to add, please leave a comment or send me an e-mail. [As always, comments are held for approval, so there might be some delay in posting]
Tuesday, November 15, 2005
Lior Strahilevitz (University of Chicago Law School) has posted Information Asymmetries and the Rights to Exclude on SSRN. We covered a part of this article in my Property Theory seminar last week as part of a unit on the right to exclude. Highly recommended! Here is the abstract:
This article addresses a central question in property theory: In a world where an owner can exercise the right to exclude third parties from his resource in any of several ways, what causes him to adopt a particular exclusionary strategy?
Orthodox property scholarship has focused a great deal of attention on those exclusion rights that arise under trespass law. This paper suggests that much can be gained from thinking about exclusion with a bigger tent approach, one that is sensitive to the ways in which non-trespass-based exclusion rights substitute for in rem, trespass-based rights. Non-trespass-based exclusion rights include exclusionary vibes, which are communicative signals that make undesirable third parties feel unwelcome, as well as exclusionary amenities, which impose a disproportionate tax on the undesirable by bundling permission to use a resource with an obligation to pay for a separate, polarizing resource.
It turns out that information asymmetries often drive owners' decisions about what exclusion strategies to adopt. Where third parties seeking to use property possess private information about their own preferences, behaviors, and intentions, and the owner cannot discover this private information at a low cost, the owner is likely to delegate the exclusion function to the would-be entrants by employing non-trespass-based exclusion strategies. By contrast, where there is little private information involved, or private information can be discovered by the owner at a low cost, the owner is more likely to employ trespass-based exclusion rights.
This relationship between information asymmetries and the choice of exclusion strategies suggests new possibilities for creative government intervention in those settings where particular exclusion strategies conflict with public policy interests. It is well understood that the government can impose outright prohibitions, proscribing some forms of exclusion and permitting other forms. This is the strategy the government has adopted in the housing discrimination arena. Alternatively, the government can adopt subtler but equally effective strategies that regulate access to private information as a means of altering owners' incentives to exclude. Megan's Law is the most prominent and far-reaching example of the subtle approach, although many aspects of information privacy law affect owners' incentives in much the same way. In short, by rendering private information public or public information private, the state can alter, sometimes radically, the mix of exclusion strategies that resource owners employ.
Monday, November 14, 2005
As a new subscriber to The Green Bag, one of my colleagues was entitled to a Justice Scalia bobblehead. The bobbleheads were distributed this weekend at the AALS Hiring Conference (aka, the "meat market"), so my colleague asked the members of our hiring committee to pick his bobblehead up for him. Sadly enough, it appears that some liberal members of the faculty got their hands on the bobblehead before it was delivered, leaving it in this embarrassing state:
Thinking that this display went a bit too far, I sprung into action and tried to restore the bobblehead's dignity:
Now, isn't that better?
[comments as always are held for approval, so there may be a delay in posting]
Sunday, November 13, 2005
Over at Concurring Opinions, Al Brophy has a great post on Images of Property In American Landscape Art. Check it out.
James W. Ely Jr. (Vanderbilt University - School of Law) has posted the Impact of Richard Epstein on SSRN. Here's the abstract:
This essay examines the impact of the scholarship of Professor Richard A. Epstein in the debate over the constitutional protection of property rights. It suggests that Epstein has had little direct impact on judicial decisions pertaining to property rights, but that he has had significant influence in changing the terms of debate over the place of property in the constitutional order. The essay points out that Professor Epstein's influence extends far beyond the academy and has helped to trigger a national dialogue over the rights of owners.
Friday, November 11, 2005
Michael Lewyn, apparently not satisfied with his domination of the Weekly Top 10, has now grabbed the top four spots with the addition of his new article How Overregulation Creates Sprawl (Even in a City without Zoning).
1. (277) How City Hall Causes Sprawl: A Case Study, Michael Lewyn (George Washington University Law School)
2. (208) Suburban Sprawl, Jewish Law, and Jewish Values, Michael Lewyn (George Washington University Law School)
3. (208) How Overregulation Creates Sprawl (Even in a City without Zoning), Michael Lewyn (George Washington University Law School)
4. (184) Sprawl, Growth Boundaries and the Rehnquist Court, Michael Lewyn (George Washington University Law School)
5. (104) Home as a Legal Concept, Benjamin Barros (Widener University - School of Law)
6. (79) Efficient Trespass: The Case for 'Bad Faith' Adverse Possession, Lee Anne Fennell (University of Illinois College of Law)
7. (79) Property Rights in Spectrum: Taking the Next Step, Dale Hatfield (University of Colorado at Boulder) and Phil Weiser (University of Colorado at Boulder - School of Law)
8. (72) Testimony Before Pennsylvania House of Representatives State Government Committee Re: Eminent Domain, Benjamin Barros (Widener University - School of Law)
9. (55) Substituting Complements, Giuseppe Dari-Mattiacci and Francesco Parisi (Universiteit van Amsterdam - Amsterdam Center for Law and Economics, George Mason University School of Law)
10. (55) Leasing, Ability to Repossess, and Debt Capacity, Andrea L. Eisfeldt and Adriano A. Rampini (both from Northwestern University - Department of Finance)