PropertyProf Blog

A Terrible Wind and Ice Storm Is Coming. Go Stand on Your Snow-Covered Roof.

In keeping with Steve's post below, another reason home ownership may not be every it's cracked up to be:

Today, New York City's Department of Buildings issued an advisory urging property owners to remove snow from their roofs and out of their gutters in anticipation of an imminent icy storm.  It reminds property owners that they are obligated under the city ordinances to maintain their property in safe condition. 

A telling edit in the advisory suggests, to me at least, that the Department is cognizant that the prospect of high winds and ice is not likely to encourage people to climb up their snow-covered roofs.  Without previous mention of winds, the advisory suddenly states "These gusts may reach higher speed than forecast . . ."  

Before I got up on my roof, I'd want to hear more about "these gusts."

And for for your amusement, here's a video of roof clearing gone wrong.

Mark A. Edwards 

 

Rent or Buy?

At the beginning of the the material on Landlord-Tenant, I do a song and dance about how this country has fetishized homeownership in very strange and unproductive ways.  I also try to convince the class that (in financial terms) renting is often the better long-term option.  Quite frankly, I find this exercise to be one of the most difficult teaching moments of the year, as many students have completely internalized the maxim that renting amounts to "flushing money down the toilet every month."  

A report from Trulia (a real-estate search engine) might force me to reassess my opinion.  Trulia claims that the foreclosure crises has made it more practical to buy rather than rent a two-bedroom home in 72% of America's 50 largest cities.  Pete Flint, CEO of Trulia, notes, "Since the start of the ‘Great Recession,’ many former homeowners have flooded the rental market. Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets. Though necessary for achieving true economic recovery, stricter bank lending practices have also further aggravated the struggling housing market in the short term."

 

Top Cities to Rent v. Buy                   Top Cities to Buy v. Rent

1.  New York                                           1.  Miami

2.  Seattle                                                2.  Las Vegas

3.  Kansas City                                        3.  Arlington, TX

4.  San Francisco                                    4.  Mesa, AZ

5.  Memphis                                             5.  Phoenix

6.  Los Angeles                                        6.  Jacksonville

7.  Forth Worth                                         7.  Sacramento

8.  Oakland                                               8.  San Antonio 

9.  Portland                                               9.  Fresno

10.  Albuquerque                                    10.  El Paso

 

Steve Clowney

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How Much Mortgage and Foreclosure Crisis Do You Teach?

I teach a lot of M&F crisis -- or at least I think I do.  Property is (for the time being, at least) a two-semester, 6-credit odyssey at William Mitchell, so I have time I can devote to the crisis, and I seem to be spending more and more time on it.  This semester, we'll devote close to 3 weeks to mortgages, foreclosures and evictions, as the conclusion of our section on real estate transactions. 

It seems to me that the M&F crisis is the property law issue of the day, and we'd be remiss in not adding it to the property law curriculum.  The students obviously know it's out there and are very curious.  It's relevant, timely, compelling and a great teaching tool.

The problem is that for those of us whose background isn't in the mortgage and housing-finance industry, there's a lot to learn, and it can be difficult to find good class materials.  I'm learning, and slowing piecing together some good usable materials (a case here, a primer there, a newspaper article there, etc.), and would be happy to share if anyone is interested.

I teach it in several pieces:

(1) what a mortgage is; the history of the secondary and tertiary mortgage markets in the U.S.; the mortgage-backed securities crisis;

(3) the foreclosure process generally;

(4) the current foreclosure crisis, and flaws in foreclosure proceedings; and

(5) eviction.

I've also been linking up with Mitchell's Community Development Clinic (run by Professor Diane Dube, resident adjunct extraordinaire), bringing people from the clinic into the classroom, and sending interested students into the clinic, and through the clinic into local public interest groups working on the front lines of the crisis. It's an opportunity for them to do good work, in both senses.  And in addition to the obvious benefit of some practical experience for the students, it's my hope that some can find work in foreclosure law after graduating -- sadly, one of the very few growth areas for the legal profession at the moment. 

I'd love to hear your ideas on how, and how much, to teach about the crisis.

Mark A. Edwards

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Balganesh on Property in News

Shyamkrishna Balganesh (Penn) has posted 'Hot News': The Enduring Myth of Property in News (Columbia Law Review) on SSRN.  Here's the abstract:

The ‘hot news’ doctrine refers to a cause of action for the misappropriation of time-sensitive factual information that state laws today afford purveyors of news against free riding by a direct competitor. Entirely the offshoot of the Supreme Court’s 1918 decision in International News Service v. Associated Press, the doctrine enables an information gatherer to prevent a competitor from free riding on its efforts at collecting and distributing timely information. While the doctrine lay dormant for decades, the last few years have seen a renewed interest in its utility, given the financial difficulties of the newspaper industry. News gatherers of different kinds have begun using the doctrine with increased frequency, in the belief that it creates and protects an ownership interest in news, a right that they might be able to leverage to create a licensing market for the use of news that they collect. This Article argues that this belief misapprehends the basis for the hot news doctrine. As a doctrine that originates in the synthesis of two different areas of the common law, unfair competition and unjust enrichment, hot news is concerned principally with solving a collective action problem in the market for news gathering. Recognizing that news gathering involves enormous expenditures on the part of newspapers, it attempts to preserve the incentives of individual competitors to enter into cooperative newsgathering and sharing arrangements that raise their individual and collective profitability, while simultaneously maintaining the common pool (i.e., public domain) nature of factual news. Thus, it attempts to maintain a competitive equilibrium among news gatherers through a gain-based liability framework and, in the process, emphasizes a very different distributive baseline from that inherent in the idea of property in news. Appreciating this difference and its significance is crucial to the doctrine’s continuing survival and sheds light on its inherent unsuitability as a mechanism by which to "reinvent" or "save" newspaper journalism, as some claim it will.

Steve Clowney

The Popularity of Property Textbooks

Snagging an idea from Lawrence Cunningham's post on Contracts casebooks, I decided to check out the Amazon sales of leading property textbooks.   According to Amazon, these are the 10 most popular Property books (and their rank in total Amazon book sales - that includes all books sold on the site):

1.  Dukeminier, Krier, Alexander, Schill  (4,880)

2.  Merrill & Smith  (6,295)

3.  Singer  (40,018)

4.  Sprankling & Coletta  (120,134)

5.  Kurtz & Hovenkamp  (179,568)

6.  Nelson, Stoebuck, Whitman  (192,986)

7.  Donahue, Kauper, Martin (200,028)

8.  Cribbet, Findley, Smith  (268,434)

9.  Rabin, Kwall, Kwall (275,789)

10.  Casner, Leach, French (298,704)

 

A found a few things here pretty surprising.  First, I'm a little shocked that the Merrill & Smith has become so popular.  I don't mean to imply that it's not a good or erudite text - it most certainly is.  However, I would have guessed that its deeply theoretical bent would have curtailed its spread beyond the very top schools.  Second, the success of both the Merrill & Smith (first published in 2007) and the Sprankling & Coletta (first published in 2009) seems to indicate that there's a hunger for new voices in the property textbook market.   

I'll also use this post to highlight the debate between Cunningham and Bainbridge over what makes a "good" textbook.  Bainbridge argues that the success of his Corporations textbook comes from it's exhaustive teacher's manuel and the textbook's "lean and mean" take on the subject.  Cunningham, in contrast, likes a book packed with "notes, questions and comments, scholarly excerpts, problems, statutory and restatement selections, interdisciplinary perspectives and more."  I think I side with Bainbridge on these issues - I'm not sure students get much out of the extras and I think that stuff works to drive up the price of textbooks.  Thoughts on any of this?

Steve Clowney

UPDATE: Looking at the data again, I think this list almost certainly undersells the popularity of the Dukeminier casebook. As the post indicates, the newest edition (7th) is the number one book in the field. However, I overlooked that the 6th addition would currently rank as the fourth most sold Property textbook. Combining the 6th and 7th addition sales would likely show that Dukeminier leads the field by a much wider gap than the post indicates.

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Foreclosing on God

The Wall Street Journal has an article today regarding an upswing in foreclosure actions against religious groups.  I don't think I can link to it since it is in a part of WSJ.com that is subscription only, but the article is entitled "Churches Find End Is Nigh: The Number of Religious Facilities Unable to Pay Their Mortgage Is Surging," by Shelley Banjo.

The article makes a few interesting points, including that lenders were eager to make loans to religious congregations for two reasons -- (1) the weekly contributions and (2) the willingness of pastors (or other religious leaders) to put their own money into the project in order to avert foreclosure, even though they had no contractual obligation to do so.  I would have thought that religious congregations would have found it difficult to get a loan because of the lack of contractual income (rent) and difficulty of adapting a religious building to an income-producing, commercial use.  If I were a lender, I wouldn't want to foreclose a religious building because I would assume that even in good times there would be a limited market.  Plus, by foreclosing on God, you earn a lot of bad press.

Tanya Marsh

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Drexel Symposium on Business Improvement Districts

Over at the Faculty Lounge, Dan Filler announces the publication of a symposium that will be of interest to many property profs.  He writes:

I'm very proud to say that the Drexel Law Review has published a particularly interesting and in depth symposium, Business Improvement Districts and the Evolution of Urban Governance.  The symposium, which was held here at Drexel last year, includes commentary from several major players in the field: Richard Briffault (Columbia), Nicole Stelle Garnett (Notre Dame), Gerry Frug (Harvard), and Richard Schragger (Virginia).  It also features sixteen case studies of different Philadelphia BIDS. 

I'm particularly pleased with this symposium because it weaves together the macro perspective of these national scholars with a micro study of one city.  This, it seems to me, is a project that offers long-term value to both scholars and policy makers.

Steve Clowney

When Property Disappears

Tony Barboza chronicles a growing problem along the nation's coastlines: What happens when the ocean moves in and tries to retake the land?  Barboza writes:

The effort by the city of Ventura [to move a bike path 65-feet inland] is the most vivid example to date of what may lie ahead in California as coastal communities come to grips with rising sea levels and worsening coastal erosion. As the coastline creeps inland, scouring sand from beaches or eating away at coastal bluffs, landowners will increasingly be forced to decide whether to spend vast sums of money fortifying the shore or give up and step back.

Steve Clowney

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Turner on Degrees of Property

Peter G. Turner (Cambridge) has posted Degrees of Property.  Here's the abstract:

Navigating a way through a complex idea such as property can be tricky. What guides do we have? Jeremy Bentham showed the way by pointing out that property is rights in relation to things, not the things themselves. But the celebrated “dematerialisation” or “dephysicalisation” of property has left property jurisprudence, courts and students feeling disorientated. The first argument of this article is that lawyers in fact navigate their way through property’s complexity guided by a materialist archetype of property, even where the asset in question has no material existence at all. This argument contradicts a prominent vein of mainstream scholarship going back to Bentham’s account of property.

The supporting evidence indicates that lawyers are also guided by a second tool: the perception that property has varying degrees of strength. This forms the basis of a second theoretical argument. Scholars and courts say that property is not “monolithic”, but leave their assertions undeveloped. Using a large and unnoticed body of evidence that lawyers understand property in terms of its varying degrees of strength, this article gives the first developed account of why property is not monolithic.

The result is to put property analysis on a footing which enables us to attempt to explain the whole of the legal concept of property, where Bentham’s advice only disables us from doing so. The article’s findings impact on property jurisprudence, the workings of the courts and on legal education.

Steve Clowney

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The 10 Greatest Landscape Paintings of All Time

If you need a touch of inspiration, here are the 10 most beautiful, most amazing, most inspiring pictures of Blackacre ever put down on canvass:

10.  Ivan Shiskin, A Rye Field

9.  Milton Avery, Green Sea

8. Albert Bierstadt, The Rocky Mountain, Lander's Peak

7.  Emil Nolde, Lake Lucerne

6. Winslow Homer, Northeaster

5. Vincent Van Gogh, Wheat Field with Cypresses

4.  Andrew Wyeth, Pennsylvania Landscape

3.  J.M.W. Turner, Snow Storm (Hannibal and His Army Crossing the Alps)

2.  Edwin Church, Heart of the Andes

1.  Claude Monet, Water Lilies (The Clouds)

 

Steve Clowney

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Anyone Need a Leaseholds Exam Question?

Cause I gotta beauty for ya, right here.

The New York Times reports that real estate developers have made such a visually appealing $80 million alteration to the facade and entrance of 112 West 34th Street in Manhattan that they are candidates for a prestigious development award.

The problem: they are tenants, not owners of the building, and the 1963 lease that the then-owners and then-tenants signed (both current owners and tenants are assignees) provides that the tenants must get prior written approval from the owner before making structural changes worth more than $100,000.  As a result, the owner wants the lease terminated and the tenants out.  The lease isn't supposed to expire until 2077.

Why on earth would a landlord object to a tenant making -- at its own expense -- $80 million dollars worth of awarding-winning improvements to a property, you ask?

Because the lease provides that the annual rent for the property is $840,000 per year.  This, for a 26-story building that sits across from Macy's.  This, for a building the tenants lease out to office and retail tenants for many, many times that sum.

So are the owners being unfairly opportunistic in trying to terminate a lease so they can capture the building's increase in market value?  Or are the tenants being hypocritical in arguing that a literal reading of the lease applies to the rent, but not the alterations clause?  How will a court likely decide the issue and why, or is it more likely that a market solution will be found, and how?

Life doesn't throw perfect hypotheticals at us very often.  Take it!

Mark A. Edwards

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Revenge of the Fox

For anyone who feels sorry about the fox in Pierson v. Post, this story about a fox who shot a hunter should bring some happiness.

Ben Barros

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The Burning Man Festival and The Origin of Property Rules

Burning Man, a festival held in the Black Rock Desert of Nevada attracts roughly 50,000 participants each year.  Nate Berg traces how the festival has evolved from a gathering of 20 friends "into a highly planned, intricately organized and fully functioning city."  The essay touches on city-planning, social norms, and the rise of modern bureaucracy.  A taste:

Burning Man has taken on more order than originally intended, but for the organizers, that's not a bad thing. The event has evolved and expanded, and that means paying attention to the needs and safety of attendees, the impacts on the land (protected by the federal Bureau of Land Management), and the proliferation of a unique culture. With time, this attention has become institutionalized in a city government. This is what makes Burning Man more than just another festival. What forms in the Black Rock Desert every year is not a campout or a love-in or a bunch of merry pranksters dropping LSD. It's a physical community — one made of equal doses of utopianism and pragmatism. A look back at the history shows how this community has evolved.  

Steve Clowney

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Who Owns Your Placenta?

My wife and I had a baby in December (yeah Capricorns!).  During the end of 2010, I ended up reading a lot of stuff (often on the internet, often late at night) trying to prepare myself for the main event.  The strangest things I came across (and that's saying something) is the growing popularity of placenta encapsulation (here's an article from Time magazine).  There appears to be a whole cottage industry of people who will cook your placenta, freeze dry it, and turn it into pills that allegedly help to ward off postpartum depression.

The thing that really surprised me is that a nurse will gift-warp your placenta and let you walk out of the hospital with it.  If poor John Moore didn't have a property right to his leukemia cells, why can women just walk out of the hospital with a bag of biohazard?  Well, after a little digging on the placenta encapsulation message boards (Yes Virginia, they exist!) it turns out that the issue is really complicated and varies a lot by state.  Indiana, for example, forbids hospitals from turning over the placenta to the mother.  On the other end of the spectrum, Hawaii has passed a law protecting the right of parents to access the placenta.  If you're curious about state policies I found a chart on U.S. placenta laws (Internet win!)       

Steve Clowney

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Rick Barber, George Washington, and The Right of Publicity

One more video you may want to use when you cover the right of publicity.  Last year a congressional candidate named Rick Barber shot a campaign ad that got a lot of attention.  He sat at a kitchen table with men dressed as Samuel Adams, Ben Franklin, and George Washington.  He explained the situation in Washington (as he sees it) and the piece ends with a close-up of Washington dramatically intoning "Gather Your Armies."  You can find the clip here.

I showed the commercial in class today in the context of the California common law right of publicity following White v. Samsung.  We discussed whether Washington's right to publicity had been violated.  It was an interesting discussion.  One student suggested that the folks who own Samuel Adams beer would have a more significant claim (although in the piece Sam sits listening, rather than calling to arms.)  Since many felt that Washington had been dead too long to deserve any protection, we also discussed whether the analysis would be different if a more recent president, such as JFK, were depicted.  That led to a discussion of the Kennedy miniseries which will not be shown on the History Channel (because of behind-the-scenes pressure, rather than a right of publicity claim).

Oh yeah, we also discussed Paris Hilton and Snooki's respective paths to fame, and whether a Lockean approach to property rights (i.e. encouraging labor) should really be applied to them.

All in all, a fun and engaging class.

Tanya Marsh

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Kelly from Baltimore to Notre Dame

PropertyProf and clincian James J. Kelly, Jr. will be moving from Baltimore to Notre Dame, after a visit this spring at Washington & Lee.  At Notre Dame, Jim will develop a new community development clinic.  I've been a longtime admirer of Jim's work, and this is a great pick up for Notre Dame.

Ben Barros

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Kelly on Maryland's Affordable Housing Land Trust Act

James J. Kelly Jr. (Baltimore, soon to be at Notre Dame) has posted Maryland's Affordable Housing Land Trust Act on SSRN.

On May 20, 2010, Maryland’s governor, Martin O’Malley, signed the Affordable Housing Land Trust Act (AHLT Act) into law. Its enactment marked the culmination of six years of advocacy by the University of Baltimore Community Development Clinic and by the Maryland Asset Building and Community Development Network. The AHLT Act authorizes a new method of creating and sustaining permanently affordable homeownership. By using the affordable housing land trust agreements outlined in the legislation, Maryland nonprofits and governmental agencies may now enter into enforceable long-term agreements with publicly subsidized low- and moderate-income homeowners to ensure that their homes remain affordable to other income-qualified homebuyers in the future. With the development of this essential tool for the creation of permanently affordable homes, Maryland has addressed key obstacles to preserving the affordable housing gains it has made through its pioneering efforts in community-based nonprofit housing development and inclusionary zoning.

This article will explore the legal obstacles that advocates of permanently affordable homeownership in Maryland faced prior to this year’s statutory amendments, the dialogue that produced the final bill, and the way forward for permanently affordable housing in Maryland and elsewhere. Part I will give background about efforts to create permanently affordable homes and the difficulties presented by several legal doctrines common to many states and one unique to Maryland. Focusing on the legislation itself, Part II will describe the advocacy effort and stakeholder dialogue as well as the resulting bill that addressed a variety of concerns raised by the indefinite dedication of land to affordable homeownership. Part III will discuss how existing models of resale restrictions used by community land trust and inclusionary zoning programs can be adapted to meet the affordable housing land trust approach outlined in the statute. The article concludes with a discussion about the value of possible changes in the law of other states to support stewardship of housing affordability.

Ben Barros

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Mulvaney on Judicial Takings

Timothy M. Mulvaney (Texas Wesleyan) has posted The New Judicial Takings Construct on SSRN.  Here's the abstract:

In Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection, a four-Justice plurality endorsed a novel theory that would make the Takings Clause applicable to a wide collection of state court interpretations of state property law. Writing for the plurality, Justice Scalia declared that a state court’s opinion finding that an "established" property right "no longer exists" may amount to an unconstitutional taking. The opinion draws on two fundamental threads of Justice Scalia’s property jurisprudence: the first is the notion of property as a pre-political, immutable partition between individual interests and permissible government action; the second is a general distrust for the state courts that are tasked with declaring these individual property rights.

This Article has two primary purposes. First, it compares the judicial takings standard established by the plurality to previous discussions of federal constitutional review of state court property declarations, both in prior judicial decisions and in the academic literature. Second, it considers whether the plurality’s standard could be interpreted as applicable not only to state court decisions that allegedly result in a private-to-public reassignment of property, as the petitioners in Stop the Beach Renourishment claimed, but also to two additional instances: (i) adjudications of property disputes between two private parties or (ii) any allegedly improper judicial change in non-property areas of law where damages would serve as the remedy. The Article concludes that the plurality’s judicial takings standard arguably is inclusive of more state court rulings than any standard presented by earlier courts and commentators. Depending upon the breadth of its reach, this standard could serve to chill the ordinary operation of the common law system as responsive to changing conditions.

Ben Barros

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The World's Newest Capital City

If Southern Sudan votes to cut off ties with the North, Juba will become the world's newest capital.  The good folks at Foreign Policy have posted some photos of this city of 250,000.  

Giving this a property angle, The New York Times makes the point that this could be the first step in an attempt to redraw colonial borders to better reflect cultural and linguistic ties.  (For map of linguistic ties, see here)

Steve Clowney

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Levitin and Twomey on Mortgage Servicing

Adam Levitin (Georgetown) and Tara Twomey (National Consumer law Center) have posted Mortgage Servicing (Yale Journal on Regulation) on SSRN.  Here's the abstract:

This Article argues that a principal-agent problem plays a critical role in the current foreclosure crisis. A traditional mortgage lender decides whether to foreclose or restructure a defaulted loan based on its evaluation of the comparative net present value of those options. Most residential mortgage loans, however, are securitized. Securitized mortgage loans are managed by third-party mortgage servicers as agents for mortgage-backed securities (“MBS”) investors.

Servicers’ compensation structures create a principal-agent conflict between them and MBS investors. Servicers have no stake in the performance of mortgage loans, so they do not share investors’ interest in maximizing the net present value of the loan. Instead, servicers’ decision of whether to foreclose or modify a loan is based on their own cost and income structure, which is skewed toward foreclosure. The costs of this principal-agent conflict are thus externalized directly on homeowners and indirectly on communities and the housing market as a whole.

This Article reviews the economics and regulation of servicing and lays out the principal-agent problem. It explains why the Home Affordable Modification Program (“HAMP”) has been unable to adequately address servicer incentive problems and suggests possible solutions, drawing on devices used in other securitization servicing markets. Correcting the principal-agent problem in mortgage servicing is critical for mitigating the negative social externalities from uneconomic foreclosures and ensuring greater protection for investors and homeowners.

Steve Clowney