PropertyProf Blog

Why the East Side of Town is Usually Poor

It has to do with wind and industrial pollution.

Steve Clowney

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Yellin on The Case for a Reliance Interest Associated with Economic Development Takings

David Yellin (Georgetown) has posted Masters of Their Own Eminent Domain: The Case for a Reliance Interest Associated with Economic Development Takings  (Georgetown). Here's the abstract:

When the Supreme Court, in Kelo v. City of New London, held that economic development was a valid justification for the use of eminent domain, there was a massive public outcry. In the resulting backlash, many communities enacted legislation aimed at restricting economic development takings, but most of these reforms were largely symbolic and had little or no actual effect on such takings. This Note accepts the reality that economic development takings will inevitably occur, and identifies the greatest threat associated with such takings as the risk that when they do they may cause more harm than good. For example, after the failure of the development project at issue in Kelo, Pfizer has recently announced that they will be shutting down their facility in New London, Connecticut, taking 1,400 jobs with them. As a result, the price New London paid by condemning the homes of its residents has been for nothing and the city is left even worse off than before.

This Note analogizes the failures of eminent domain takings to some of the harms that arose during the rash of plant shut-downs in the 1980s and early 1990s. Faced with the loss of the foundations of local economies, municipalities and scholars alike tried to come up with ways to protect the reliance that communities place in economic actors. This Note argues that although many of these proposals were not suitable for responding to the problems of plant closings, they are well-suited to use in the takings context. To that end, I discuss key differences between the two scenarios that justify applying some of the most progressive of these proposals in the takings context. Specifically, I propose that courts recognize a reliance interest, similar to an easement, which gives a municipality a legally enforceable right against corporate entities that benefit from economic development takings.

Steve Clowney

Five Surprising Findings From the US Census

From the Christian Science Monitor.

Steve Clowney

Woe Betide Those Who Disregard Property Norms

I spend a great deal of time writing about behavior with regard to property that is legal, but socially unacceptable.  But the denizens of South Boston live it.  When someone there engages in the legal but socially unaccepable behavior of parking in a public spot she didn't shovel out, her neighbors enforce property norms with screwdrivers and the occasional plunger:

By dawn on Tuesday, the space savers were out in abundance on East Seventh Street in South Boston. Someone had staked out a neatly shoveled parking spot with a potted plant, its dead fronds trembling in the wind. Someone else had reserved a space with a hot-pink beach chair.

Elsewhere in the neighborhood, the epicenter of the parking wars that erupt here after a snowstorm, the narrow streets were lined with bar stools and coolers, end tables and shopping carts, all meant as warnings: This shoveled-out space is mine until the snow melts. Occupy it at your own risk.

. . . .

When snow puts parking spots at a premium, as the blizzard that just left 18 inches of snow here did, snatching someone’s marked space can lead to hurled insults, slashed tires or worse — in 2005, a man was arrested after smashing a car window with a plunger during an argument over a freshly shoveled spot.

“A lot of people around here carry screwdrivers in their trunk,” said Kim Rader, 35, who had just started digging out her Mazda and predicted it would be a two-hour job.

 
Note, too, the normative strategy of informally marking property in which one has invested one's labor, as a means of communicating a claim rightful possession.  Whaler Ghen would undoubtedly be proud of his Massachusetts descendants.  Let's just hope they leave the bomb-lances at home.

Picture from the New York Times article linked above.

Mark A. Edwards

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African Farmers Booted Off Land They Thought They Owned

For anyone interested in international property issues, the NY Times reports on a conflict between subsistence farmers in Mali (who unkowningly don't have good title to the land they farm) and international agricultural investors:

Across Africa and the developing world, a new global land rush is gobbling up large expanses of arable land. Despite their ageless traditions, stunned villagers are discovering that African governments typically own their land and have been leasing it, often at bargain prices, to private investors and foreign governments for decades to come.

Organizations like the United Nations and the World Bank say the practice, if done equitably, could help feed the growing global population by introducing large-scale commercial farming to places without it.

But others condemn the deals as neocolonial land grabs that destroy villages, uproot tens of thousands of farmers and create a volatile mass of landless poor.

Steve Clowney

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Loan Servicers and Modification: the Critical Flaw in Satisfying Our Self-Interest

Since I've been blogging incessantly about the grinding, often needless, sometimes unlawful, disaster that is the foreclosure wave, I was heartened to read in this week's New York Times an article by Gretchen Morgenson that acknowledged both the irrationality of some foreclosures and the severe external costs they impose on others.  But Morgenson's article does more: it pinpoints the flaw that is producing these disastrously irrational results.

Happily, the article describes the successful effort of a homeowner to modify their mortgage loan in order to keep their home -- an effort that became successful only after the New York Times contacted the borrowers' loan servicer.  But such modifications are exceedingly rare.

Morgenson accurately notes that "millions of Americans have been sucked into the foreclosure maelstrom that is ruining their finances and their lives."  The fundamental question about the foreclosure wave, according to Morgenson, is: "should homeowners simply [continue to] be foreclosed upon en masse, or should banks work with them to modify mortgages and reduce the loans to levels that homeowners can manage?"  Perhaps another, equally important question is, why should we care?

The answer is simple: it's in our self-interest to care very deeply that banks modify mortgage loans to prevent foreclosure.  That may seem counter-intuitive: why would it be in our self-interest to, in essence, reward borrowers who borrowed irresponsibly during the housing market madness of recent years?

Here's why: in Morgenson's words,

Foreclosures blight neighborhoods, put financial pressure on families and drive down local real estate values.  Investors who hold loans in securitization trusts are also hurt be foreclosures, because recoveries on these properties are low.  And consumers, made more cautious by a crippled housing market, spend less freely, curbing the economy's growth.

So, why, then are loan modifications exceedingly rare?  Because one group is profiting immensely from foreclosures: loan servicers.  The very same people that most borrowers first contact seeking loan modification.  As Morgenson says, "loan servicers can profit significantly by pushing borrowers into foreclosure."

In other words -- and this is absolutely critical to understanding the foreclosure wave -- loan modifications are in the self-interest of every actor affected by foreclosures except the one actor to whom borrowers first turn when seeking a modification: loan servicers.  Loan servicers have the opposite incentive: to refuse modification and force foreclosure.  Loan servicers are externalizing the costs of foreclosure onto the rest of us, and internalizing the benefits.  That, of course, is what they should do, as rational, profit-maximizing entities.

We need to change the rules of the game so that it is in loan servicers' self-interest (through carrot, stick, or a combination of both) to permit loan modification.  Until we do, loan modification will remain exceedingly rare and foreclosure will continue, catastrophically, en masse -- even though it is in nearly every party's interest that just the opposite is true.  

Mark A. Edwards

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Merry Christmas!

Gifts for the libertarian-leaning property profs among you!

Also, here.

Steve Clowney

End of a Housing Era

On December 9, Annie Ricks and five of her children left the run-down 11th-floor apartment where she has lived for the past 22 years.  Ricks and her family were the last residents of Chicago's Cabrini-Green. The Root profiles the closing of Cabrini-Green, and asks what happens to the families that are forced to relocate:

It's an interesting question, and one that should be examined by social scientists in terms of tracking exactly where the people are dispersed to and finding out if their quality of life is vastly improved," said Campbell, who was mayor of Atlanta from 1994 to 2002. "No matter how bad some of those areas were, there was a sense of community and family. Is the trade-off of a better place to live worth losing the sense of family and community? I don't know the answer.

Steve Clowney

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Foreclosures and Unlawful Bank Break-Ins

I apologize for continuing to beat the same drum I've been pounding on for a few months here, but today there is yet more news that management of the foreclosure crisis has gone badly awry.

We already know about a host of severe problems: banks foreclosing on properties despite not having the right to do so, sham affidavits used in support of foreclosure proceedings, sham special courts specifically designed to process foreclosures as rapidly as possible.  Today we can add to that list that banks are illegally breaking into homes and stripping them of their possessions.    

In some cases, because of negligent record-keeping, banks have entered and cleaned out homes of that are not in foreclosure -- even some properties that have no connection to the bank whatsoever.  In one case, described in today's Times article, the owner's property was wrongfully foreclosed upon, without notice to her.  She notified the bank; it promised to rescind the foreclosure.  Then, again without notice to the owner, the bank broke into the property and removed all of her belongings -- including the ashes of her dead husband.    More commonly, without notice, banks have entered and cleaned out homes of borrowers who were negotiating loan modifications with the banks in good faith, even after the banks had promised not to foreclose. 

Banks aren't foreclosing unlawfully out of malicious intent.  They're foreclosing unlawfully out of negligence.  But negligence is a choice too; it is a choice to refuse to invest sufficient resources to act with reasonable care.  At some point, indifference to one's own negligence becomes recklessness.  And a reckless disregard for the rights of others becomes, over time, a type of malevolence.  

The word 'system' is used routinely to describe, in general terms, the foreclosure process.  I think that word is inapt.  Foreclosures are occurring in massive numbers, but there is no real system.  The process is often improvised, contradictory, and often nothing we'd describe as 'due.'  Worse, the substantive results of that process are too frequently unjust and irrational. 

Here's why I say that: foreclosure is a scourge that feeds upon itself, reducing neighborhood property values, making more foreclosures more likely.  It is often manifestly against the lenders' own self-interest.  It renders people homeless.  It destroys decades of work.  Now, add to that witches brew that foreclosures are too frequently unlawful -- and that undoing unlawful foreclosures will likely take years of work and consume enormous resources -- and you get a sense of the irrationality at work here.  And yet, through our courts, we are stamping both irrational and unlawful dispossessions with the imprimatur of our approval.

One day we will shake our heads and wonder what we were thinking.  I'm more and more convinced the answer will be: we weren't.

Mark A. Edwards

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Pammela Quinn Saunders on the Maine Lobstermen, Common Pool Resources, and Cultural Property

Pammela Quinn Saunders (Drexel) has posted  A Sea Change Off the Coast of Maine: Common Pool Resources as Cultural Property (Emory Law Journal).  Here's the abstract: 

The power of small groups to manage common pool resources has been the focus of groundbreaking and award-winning research by social scientists. This research suggests that collective or communal ownership of common pool resources may be optimal in certain circumstances. While group- and community-level rights have sometimes been conceived in property law terms, these accounts have not focused on whether and how to recognize some type of collective or communal property right in the groups that have been the subjects of commons scholarship – i.e., those that have already developed methods of sustainably managing resources. The idea that such a movement might occur, and what form it should take, is ripe for consideration and evaluation.

In this article, I use an initiative currently being advanced by a community of Maine lobstermen to create and illustrate a model that might be broadly used for the recognition of group-level property rights in communities, or other groups, that are the de facto stewards of common pool resources. Describing both when and how such a community-level right might be recognized and what its substantive contours should be, the article draws not only from the recent social science research that recognizes the benefits of small group management of common pool resources, but also from the growing field of cultural property rights, in which group-level rights have already been embraced in both domestic and international law.                 

Steve Clowney

An Environmental Justice Bleg

I'm interested in getting more familiar with the literature on environmental justice.  Can anyone out there point me toward the "classic" or important articles on the topic?  Where's the hidden gold?

Thanks,

Steve Clowney

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Spain's Real Estate Collapse

The U.S. wasn't the only place hit hard by the collapse of it's real estate sector.  Things in Spain look pretty bleak:

The boom and bust of Spain’s property sector is astonishing. Over a decade, land prices rose about 500 percent and developers built hundreds of thousands of units — about 800,000 in 2007 alone. Developments sprang up on the outskirts of cities ready to welcome many of the four million immigrants who had settled in Spain, many employed in construction. . . .   But almost overnight, the market disappeared. Many immigrants went home. The national unemployment rate shot up to 20 percent. And the northern Europeans stopped buying, too.

The Bank of Spain says the banks have about $240 billion in “problematic exposure” out of $580 billion invested in real estate and construction, a situation, they say, the banks are capable of handling.

Steve Clowney

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Seasonal Use Zoning

Forty homeowners in Old Lyme, Connecticut have launched a federal lawsuit against a zoning regulation that prevents them from occupying their property on a year-round basis.  Currently, the town has zoned their homes for seasonal use only:

Friction between town officials and the roughly 2,000 homeowners in what is known as the R-10 zone has increased in recent years as values in those areas have risen. Once cottage communities, these neighborhoods were established as far back as the 1930s on lots of a quarter acre or less. As more owners improve their properties and want to live in them or rent them out full time — or at least to have that right — town officials have cited a variety of concerns, including inadequate septic systems, public safety and the impact of increased population on the “rural character” of Old Lyme. . . . “ There’s a sentiment that the more people you have living there year round, the harder it is to ensure that people can live there safely,” Mr. Knapp said.

Procedurally, I'd be curious to know more about the decision to bring the case in federal court, given the hostility federal have shown toward zoning disputes.

Steve Clowney

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Brescia on State Enforcement Actions in the Wake of the Robo-Sign Scandal

Ray Brescia (Albany) has posted an article on SSRN entitled "Leverage: State Enforcement Actions in the Wake of the Robo-Sign Scandal."  You can find it here.  In the article, Brescia argues that the actions of residential lenders and servicers violate the Unfair and Deceptive Acts and Practices (UDAP) laws which are on the books of each state and the District of Columbia.  His article examines the UDAP regimes and argues that these laws could be used by the state attorneys general as leverage to halt abusive foreclosure practices or to negotiate for a more robust mortgage modification regime.

Ray has posted an essay on Huffington Post which makes the same argument here.

Using the UDAP laws as leverage against lenders is a really interesting argument.  I highly recommend you check out these pieces!

Tanya Marsh

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Why Republicans Love Zoning

Over at PrawfsBlawg, Rick Hills has a post outlining Governor Christie's attack on the Mt. Laurel doctrine.  Hills then discusses why Republicans, who otherwise endorse private property, love local zoning rules. Hills says:

I think that there are two ways to understand this odd conservative solicitude for suburban zoning. . . . First, race and class might take priority over property rights in conservative ideology. Libertarian rhetoric against intrusive government is just fine -- but not when it allows low- and moderate-income housing to invade your suburban enclave. Second, hostility to redistribution of wealth might trump hostility to regulation in conservative ideology. By insuring that each resident live in a structure of similar value, restrictive zoning insures that each resident pays a similar property tax bill, thereby transforming ad valorem property taxes into an annual fee reflecting the average costs of living in the jurisdiction.

A thoughtful, well-argued post.

Steve Clowney

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Iglesias on Regulation of Affordable Housing

Tim Iglesias (U. San Francisco) has posted State and Local Regulation of Particular Types of Affordable Housing on SSRN.  Here's the abstract:

This chapter is part of "The Legal Guide to Affordable Housing Development", a practical guidebook covering most important areas of law that apply to affordable housing development. This chapter analyzes a wide variety of state and local regulation affecting the development of several types of affordable housing which are neither traditional single family nor multi-family. Specifically, the chapter discusses statutes, ordinances, regulations and leading case law concerning the siting of manufactured housing (Section II), farmworker housing (Section III), accessory or secondary units (Section IV), single room occupancy hotels (SROs) (Section V), condominium conversion regulation (Section VI), and emergency shelters and transitional housing, including domestic violence shelters (Section VII).

Ben Barros

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The Coolest Infographic Ever

The New York Times latest feature is, quite simply, a treasure.  The paper's computer whiz has taken the data from the Census Bureau's American Community Survey and transformed it into a series of completely searchable and user-friendly maps.  It's now possible to visualize the geography of segregation, income, educational achievement, and housing expenditures for any location in the country (Seriously - it covers every block in every city!).  Here, for example, is a map of the household income distribution of New York City:

A red dots indicates 100 households making above $200,000 a year.  A light blue dot represents 100 households making less than $30,000.  This is just very, very, very cool.   

Steve Clowney

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Using Facebook to Illustrate Land Use Issues?

I admit that I'm a bit of a gamer.  I will even admit that I spend time playing Zynga games on Facebook.  (You know... FarmVille, Mafia Wars, etc.)  And perhaps this just me trying to justify wasting my time harvesting virtual crops, but I'm thinking that the newest Zynga game, CityVille, might actually be a useful tool for Property students to conceptualize some land use issues.  There is an article about CityVille here.  If you've ever played SimCity, its very similar, but free. 

Everyone starts with the same blank slate and resources, but then you can design your city in any way you choose.  Some designs and allocations of resources work better than others.  The aesthetic employed by the game is interesting because players get a bonus if they use green space elements like flowers and shade trees next to housing and businesses.  

I'm thinking about having my Property students sign up for CityVille when we get to Land Use, play it for a week and then compare their creations with each other and use that experience as a springboard for a discussion of zoning, restrictive covenants, etc.

Thoughts?

Tanya Marsh

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The Worst Rental Unit in the World?

In case you're looking for real-life landlord/tenant problems to incorporate into your exam:

Several notable features of Flatbush Gardens, a 59-building rental complex in East Flatbush, Brooklyn, are missing from its inviting ads, which show comely young couples enjoying life there.  Among the site’s woes: dried feces and toilet paper carpet some basements, unleashing an unholy stink; one of its owners, David Bistricer, is on the New York City public advocate’s “worst landlords” list; and it has 8,100 outstanding building violations, 400 of which have been added in the past two months. . . .  In October, the workers filed a complaint with the Occupational Saftey and Health Administration, citing conditions like overflowing raw sewage, leaking overhead waste pipes and vermin infestations.

Steve Clowney

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Midterm in Property?

I'm working on my first syllabus for Property, a 4 credit spring course.  I am considering having a midterm a week before Spring Break.  The midterm would make up probably 40% of the final grade and the final exam would be non-cumulative.

This is not an original idea -- another Wake Forest Property Prof does the same thing.  I'm wondering how many other Property Profs give a midterm and what you see as the advantages and disadvantages.  Here's my initial list of pros and cons:

Pros:

-- The midterm would be given a week after we wrap up the material on estates in land and future interests.  The main "pro" is that students would be tested on future interests while the material is still fresh in their minds and they wouldn't waste a lot of their finals prep time with the material.

-- The ABA (and many other folks) think that midterms are a good idea, for a variety of different reasons.

Cons:

-- Possible student revolt at the prospect of a test on future interests a week before Spring Break?

-- I would end up spending Spring Break grading midterms.

 

Property Profs, I would appreciate your thoughts on the matter.

Tanya Marsh

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