PropertyProf Blog

Case of the Week

State ex rel. Merrill v. Ohio Dept. of Natural Resources

Background:  Lakefront-property owners brought action against Ohio Department of Natural Resources (ODNR), seeking declaration that owners of property abutting Lake Erie held title to the land between the ordinary high-water mark and the actual legal boundary of their properties as defined by their deeds, and that the public trust did not include nonsubmerged lands, or in the alternative seeking to compel the state to compensate them for its alleged taking of their property.

Holding: The territory of Lake Erie held in trust by the state of Ohio for the people of the state extends to the natural shoreline, which is the line at which the water usually stands when free from disturbing causes.

Steve Clowney

Chan, Gedal, Been & Haughwout on What Happens to Distressed Mortgage Borrowers and Their Homes?

Sewin Chan (NYU - Public Service), Michael Gedal (NYU - Public Service), Vicki Been (NYU) and Andrew Haughwout (Federal Reserve Bank) have posted Pathways after Default: What Happens to Distressed Mortgage Borrowers and Their Homes? on SSRN.  Here's the abstract:

We use a detailed dataset of seriously delinquent mortgages to examine the dynamic process of mortgage default – from initial delinquency and default to final resolution of the loan and disposition of the property. We estimate a two-stage competing risk hazard model to assess the factors associated with whether a borrower behind on mortgage payments receives a legal notice of foreclosure, and with what ultimately happens to the borrower and property. In particular, we focus on a borrower’s ability to avoid a foreclosure auction by getting a modification, by refinancing the loan, or by selling the property. We find that the outcomes of the foreclosure process are significantly related to: the terms of the loan; the borrower’s credit history; current loan-to-value and the presence of a junior lien; the borrower’s post-default payment behavior; the borrower’s participation in foreclosure counseling; neighborhood characteristics such as foreclosure rates, recent house price depreciation and median income; and the borrower’s race and ethnicity.

Steve Clowney

Can Landlords Discriminate Against the Unemployed?

Not in California. The California Fair Employment and Housing Act bars discrimination based on a rental applicant's source of income, as long as the applicant can show the financial ability to pay the rent.  The justification for this rule is "the need to protect access to housing for rental applicants whose income comes from sources other than employment," such as social security and pension benefits.

 

Steve Clowney

 

Scanlan on the Great Lakes Compact

Melissa Scanlan has posted Realizing the Promise of the Great Lakes Compact: A Policy Analysis for State Implementation (Vermont Journal of Environmental Law) on SSRN.  Here's the abstract:

This article provides an overview of the Great Lakes as both a shared commons and a public trust. It outlines the challenges facing management of any commons and highlights the importance of the Public Trust Doctrine as a way to manage shared waters. This provides a backdrop for understanding and assessing the agreements and laws the Great Lakes States and Canadian Provinces have created to manage the Great Lakes Basin. The article starts with the Boundary Waters Treaty of 1909 and ends with the Great Lakes-St. Lawrence River Basin Water Resources Compact and Agreement of 2005 (Compact), identifying progress and gaps. The author offers four areas where states can take action to improve the Great Lakes Compact, and assesses the water supply issues in Waukesha, Wisconsin, where the first request to divert water out of the Great Lakes under the Compact is projected.

Steve Clowney

The Best Places to Be a Woman

A slideshow from the Daily Beast:

We examined five measures [Justice, Health, Education, Economics & Politics] that affect women’s lives. Of 165 countries, these 10 earned top marks in factors from health care to political power. We graded each country on 5 factors, using a scale of 1 to 100.

Steve Clowney

Mortgage Assignments and Mortgage Taxes

The New York Times on why people thinking about refinancing their home loans should look into mortgage assignments.  "Instead of granting and recording a new loan when a borrower refinances, the assignment process transfers a mortgage to a new lender, which then revises it."  The borrower then doesn't have to pay mortgage recording taxes on this amount.

Steve Clowney

The Ambiguous Triumph of the City

Robert Bruegmann notes that "[a]t the very moment when urban population has been reported to surpass the rural, this distinction has lost most of its significance . . . ."

Two hundred years ago, before automobiles, telephones, the internet and express package services,  cities were much more compact and rural life was indeed very different from urban life.  Most inhabitants of rural areas were tied to agriculture or industries devoted to the extraction of natural resources. Their lives were fundamentally different from those of urban dwellers. 

Today the situation has changed radically.  Most people living in areas classified as rural don’t farm or have any direct connection with agriculture.  They hold jobs similar to those in urban areas.  And although they might not have opera houses, upscale boutiques or specialized hospitals nearby, the activities that take place in these venues are available to them in ways that they never were before.

Steve Clowney

(HT:  The Daily Dish)

The Diehard Effect

A great story in today's New York Times about the evolution of immigrant neighborhoods and the hold-outs from a prior era.  Although the article focuses on neighborhoods in Brooklyn, the same story could be told in cities across the U.S.

Tanya Marsh

Friday's Architecture Moment

Canadian Living Magazine's list of the world's ten most beautiful buildings.

Steve Clowney

Salkin and Lavine on Land Use Planning and Access to Locally Grown Produce

Patricia Salkin (Albany) and Amy Lavine (Albany) have posted Regional Foodsheds: Are Our Local Zoning and Land Use Regulations Healthy? (Fordham Environmental Law Journal).  Here's the abstract:

Governments at all levels have become increasingly interested in fostering healthy eating habits and sustainable agricultural production. Promoting access to locally grown produce is an important part of many policy goals seeking to address these concerns, and the concept of regional foodsheds has risen in popularity as one method to achieve these goals. Research indicates that community based food systems have the potential to address food security, public health, social justice, and ecological health. Food production and consumption patterns are influenced by a range of federal, state, and municipal policies, but meaningful change in regional food system policies is likely to start with state and local governments, which can take proactive measures to strengthen their regional foodsheds through a variety of land use planning and regulatory actions. This Article focuses on how existing land use plans and regulations can promote healthier and more sustainable communities through the foodshed movement. In particular, this Article discusses specific land use strategies that can be implemented in urban and suburban settings to facilitate local and regional food production and distribution that go beyond farmland preservation strategies and examine, among other things, smaller-scale community gardens, residential agricultural uses and farmers markets.

Steve Clowney

Gold as a Security Deposit?

The Wall Street Journal reports today that the Trump Organization has accepted a security deposit in the form of 99.9% pure gold bullion, rather than cash or a letter of credit.  Landlords probably don't need to buy safes just yet -- this appears to be a publicity stunt by the tenant (precious-metals dealer Apmex) and the landlord (who told the Journal that he saw the move as a "repudiation of the Obama administration's economic policies").  Now, if the lease called for all the rent to be paid in gold, that would really be interesting...

Trump told the Journal that depositing gold was the tenant's idea.  I'm not surprised.  From the landlord's perspective, it makes for a fairly problematic security deposit.  Most commercial leases provide that if the tenant fails to pay rent or is otherwise in default, the landlord can dip into the security deposit to cure the default.  That's a little tougher when your security deposit consists of three gold bars.  Bigger problem is that the price of gold fluctuates, which impacts the value of the security deposit.  If gold goes up in value, the tenant has an increasing incentive to meet its leasehold obligations, because it will get the bars back at the end of the lease.  If the security deposit had been in cash, the landlord could have invested the money in an interest-bearing account (which is, admittedly, pretty much worthless right now), but it can't capture any appreciation in the value of the gold.  But if gold plummets, then the landlord is left with a security deposit worth less than he originally bargained for.  In short, the landlord can't capture the upside on changing gold prices, and is stuck with the downside. 

But hey, at least Apmex and Trump bought themselves a little publicity!

Tanya Marsh

Payments in Lieu of Taxes by Nonprofit Organizations

If you are in New York City on October 4, 2011, consider attending a CLE sponsored by the Center for Real Estate Studies at New York Law School, entitled "Payments in Lieu of Taxes (PILOTs) by Nonprofit Organizations."  Here's the brief synopsis:

Other cities (such as Boston) are adopting policies to "encourage" and "compel" nonprofits that are exempt from property taxes to make payments to the city to defray costs of city services (fire protection, police, streets, etc.) attributable to those exempt properties.  This is a growing trend as municipalities face budget crunches with decreased tax revenues and increased costs.  The October 4th program will present different perspectives on whether New York should consider nonprofit PILOTs.  This program will be of interest to lawyers, the nonprofit sector, policy makers, professional services providers, and the public.

Event Speakers Daphne A. Kenyon and Adam H. Langley are also co-authors of Payments in Lieu of Taxes : Balancing  Municipal and Nonprofit Interests, a report published in November 2010 by Lincoln Institute of Land Policy.  This report will be discussed during the program and is available for download at http://www.lincolninst.edu/pubs/1853_Payments-in-Lieu-of-Taxes.

The program is free, but registration is required.  You can register here. 

This looks like a fascinating program -- I wish New York was a little closer to Winston-Salem!

Tanya Marsh

Map of the Day

Pop, Soda, or Coke?  Here's a map of the generic name for soft drinks.  The answer is clearly pop.

Steve Clowney

How Much is the Life Estate in the Window?

From the Chicago Tribune, a quick Q&A about a dispute between a life tenant and a remainderman who wants to cash-in his interest in the property.

Steve Clowney

Juergensmeyer and Nicholas on Growth Management in the Time of Recession

Julian Juergensmeyer (Georgia State) and James Nicholas (Florida) have posted Loving Growth Management in the Time of Recession (Urban Lawyer) on SSRN.  Here's the abstract:

The current deep and long lasting recession has challenged the value of local government growth management programs – especially those which rely heavily on developer funded infrastructure finance programs such as impact fees. An examination of the characteristics of the current recession reveal that its severity is due in large part to excessive exuberance in housing development in the years preceding the burst of the housing bubble. Many local governments intensified the consequences of over-building by adopting ambitious infrastructure programs funded by impact and other fees charged to developers upon the issuance of building permits or other development approval actions. With residential building permit issuance at near zero in many formerly double-digit growth areas, local governments can no longer pay for nor do they need much of the planned or already constructed infrastructure. The authors advocate greater restraint by local governments in accepting growth projections and issuing bonds to be repaid through impact fee collection. Most importantly, the authors suggest as a pre-condition of development approval requiring developers to submit market studies establishing probable market demand for the proposed development.

Steve Clowney

Free Love But Not Free Housing

The New York Times reports on a clash over affordable housing in Woodstock:

[A] protracted battle over a 53-unit affordable housing project is dividing this still-crunchy town where mellow ’60s vibes and liberal politics coexist uneasily with real estate prices increasingly out of the reach of the humbler classes.

Steve Clowney

Case of the Week

Glenelk Ass'n, Inc. v. Lewis (Colorado Supreme Court) 2011 WL 4014396

Background:  This case is a real life, modern example of a landlocked piece of property and an owner seeking an easement by necessity.  Lewis owned a landlocked parcel and brought a private condemnation proceeding against Glenelk to obtain an easement over Glenelk's land.

Holding:  The party seeking the private condemnation must state the purpose of the condemnation in a way that enables the trial court to examine the scope and necessity of the proposed easement.

Steve Clowney

Blumm and Doot on the Public Trust Doctrine

Michael Blumm (Lewis & Clark) and Erika Doot (Lewis & Clark) have posted Oregon’s Public Trust Doctrine: Public Rights in Waters, Wildlife, and Beaches (Environmental Law Review) on SSRN:

Oregon’s public trust doctrine has been misunderstood. The doctrine has not been judicially interpreted in over thirty years but was the subject of an Oregon Attorney General’s opinion in 2005. That opinion interpreted the scope of the doctrine to be limited to the beds of tidelands and navigable-for-title waters and erected a separate “public use” doctrine protecting public rights in other waters, including recreational waters. However, since Oregon courts have never limited public rights in the state’s waters to those with publicly owned bedlands, the opinion should have recognized that the public trust doctrine provides broad public recreational rights in all waters. Indeed, since early statehood, Oregon courts and the legislature have recognized that water is publicly owned, and the Oregon Supreme Court has ruled consistently in favor of public rights in waterways, based on language in the Statehood Act that declared navigable waters to be public highways that would remain “forever free,” not monopolized by private owners. Moreover, in the early 20th century, the court explicitly ruled that the scope of public rights in publicly-owned waters could and should evolve over time.

This Article maintains that the Oregon public trust doctrine is grounded on public ownership of natural resources held in trust by the state in a sovereign capacity. The state has always claimed ownership of water and wildlife within the state, so the courts should recognize both as public trust resources. Although the state can authorize private rights in those resources, all private rights are subject to the state’s sovereign ownership – a public easement – requiring the state to maintain these resources as trustee for the public. Like the Statehood Act’s declaration of public ownership of waterways, courts should interpret the public trust doctrine to be implicit in other statutory declarations of public ownership of natural resources. Similarly, use rights in ocean beaches, claimed by the public under the doctrine of custom, are public trust resources, necessary to enable public use of the adjacent ocean waters. This Article suggests that public ancillary rights exist in other uplands where necessary to provide public access to, or preservation of, public trust water and wildlife resources.

Oregon’s public trust doctrine is not of mere academic interest. The doctrine imposes duties on the state as sovereign owner of water, wildlife, and ancillary uplands. In an era of widespread skepticism of government management, the venerable public trust doctrine seems an especially appropriate mechanism to give citizens an opportunity to gain review of government action and inaction threatening unsustainable development of natural resources that are central to the state’s identity, culture, and economy.

Steve Clowney

America's First Big City

Tim De Chant on the density of cities in the pre-Columbian United States:

Cahokia is one of the largest historical American cities you’ve probably never heard of. Peaking around 1250 CE. . . . With somewhere between 10,000 to 15,000 people, it held the record for the largest American city until around 1800, when Philadelphia finally overtook it.

Steve Clowney

Owley on The Enforceability of Exacted Conservation Easements

Jessica Owley (Buffalo) has posted The Enforceability of Exacted Conservation Easements (Vermont Law Review) on SSRN.  Here's the abstract:

The use of exacted conservation easements is widespread. Yet, the study of the implications of their use has been minimal. Conservation easements are nonpossessory interests in land restricting a landowner’s ability to use her land in an otherwise permissible way, with the goal of yielding a conservation benefit. Exacted conservation easements arise in permitting contexts where, in exchange for a government benefit, landowners either create conservation easements on their own property or arrange for conservation easements on other land.

To explore the concern associated with the enforceability of exacted conservation easements in a concrete way, this article examines exacted conservation easements in California, demonstrating that despite their frequent use in the state, their enforceability is uncertain. The three California statutes governing conservation easements limit the ability to exact conservation easements. California caselaw, although thin, indicates that courts may be willing to uphold exacted conservation easements even when they conflict with the state statutes. This examination of the California situation highlights California-specific concerns while providing a framework for examining exacted conservation easements in other states.

This article illustrates not only challenges of enforceability that arise with exacted conservation easements, but uncertainty in their fundamental validity and concerns about public accountability. This exploration illustrates that enforceability is not straightforward. This raises significant concerns about using exacted conservation easements to promote conservation goals, calling into question specifically the use of conservation easements as exactions.

Steve Clowney