PropertyProf Blog

The Root of All Evil

Wired magazine distills a new research study which argues that as an individual's wealth and status rise, they tend to behave more unethically.  The paper incorporates the findings of seven different, and equally fascinating, experiements.  In one, reasearchers found that owners of fancy cars are more likely to cut off pedestrians. In another, subjects were asked to imagine themselves as either very rich or poor.  They were later given an chance to take candy from a jar that was being delivered to children in another lab. Students who had imagined themselves to be rich took more candy, suggesting that “the experience of higher social class has a causal relationship to unethical decision-making and behavior.”  In the end the study concludes that:

[U]nethical behavior in the study was driven both by greed, which makes people less empathic, and the nature of wealth in a highly stratified society. It insulates people from the consequences of their actions, reduces their need for social connections and fuels feelings of entitlement, all of which become self-reinforcing cultural norms.

Steve Clowney

Alexander on Culture, Urban Space, Power, and Law

Lisa Alexander (Wisconsin) has posted Hip-Hop and Housing: Revisiting Culture, Urban Space, Power, and Law (Hastings) on SSRN.  Here's the abstract:

U.S. housing law is finally receiving its due attention. Scholars and practitioners are focused primarily on the subprime mortgage and foreclosure crises. Yet the current recession has also resurrected the debate about the efficacy of place-based lawmaking. Place-based laws direct economic resources to low-income neighborhoods to help existing residents remain in place and to improve those areas. Law-and-economists and staunch integrationists attack place-based lawmaking on economic and social grounds. This Article examines the efficacy of place-based lawmaking through the underutilized prism of culture. Using a sociolegal approach, it develops a theory of cultural collective efficacy as a justification for place-based lawmaking. Cultural collective efficacy describes positive social networks that inner-city residents develop through participation in musical, artistic, and other neighborhood-based cultural endeavors. This Article analyzes two examples of cultural collective efficacy: the early development of hip-hop in the Bronx and community murals developed by Mexican immigrants in Chicago's Pilsen neighborhood. These examples show that cultural collective efficacy can help inner-city residents mitigate the negative effects of living in a poor and segregated community and obtain more concrete benefits from urban revitalization in their communities. Cultural collective efficacy also provides a framework to examine important microdynamics in the inner-city that scholars and policymakers have ignored. Lastly, this Article devises new combinations of place-based laws that might protect cultural collective efficacy, such as: (1) historic districts with affordable housing protections secured through transferable development rights, (2) foreclosure prevention strategies, (3) techniques to mitigate eminent domain abuse, and (4) reinterpretations of the Fair Housing Act's "affirmatively furthering" fair housing mandate. These examples of place-based lawmaking may more effectively promote equitable development and advance distributive justice in U.S. housing law and policy.

Steve Clowney

Property at the Supreme Court

The Supreme Court recently announced its decision in PPL Montana, LLC v. Montana, a case with some implications for property law.  Writing at Scotusblog, Tom Merrill (Columbia) has an overview of the opinion.

Steve Clowney

Banks Make Crummy Landlords

NPR has a piece up about what happens when banks end up serving as landlords over foreclosed property.  In a nutshell, the results aren't pretty:

Across the country, big banks and other large investors are buying up tens of thousands of foreclosed rental properties. They're not always model landlords, according to tenants and regulators. Some banks are failing to follow local and state housing codes, leaving tenants to live in squalor — without even a number to call in the most dire situations.

Steve Clowney

Newman on the Nature of Licenses

Christopher Newman (George Mason) has posted A License is Not a 'Contract Not to Sue': Disentangling Property and Contract in the Law of Copyright Licenses on SSRN.  Here's the abstract:

The assertion that a “license” is simply a “contract not to sue” has become a commonplace in both copyright and patent law. I argue that this notion is conceptually flawed, and has become a straightjacket channeling juristic reasoning into unproductive channels. At root, a license is not a contract, but a form of property interest. It may be closely intertwined with a set of contractual relationships, but its nature and consequences cannot be satisfactorily explained from within the world of contract doctrine alone. In this article, I seek to explain the complementary but parallel roles played by property and contract doctrine in creation of the various forms of legal interests we refer to as “licenses.” Each doctrine has its own set of governing formalities that afford titleholders various means through which to create and protect use privileges granted to others, while still retaining residual title for themselves. I argue that clarifying the extent to which licenses are exercises of powers conferred by property rather than contract law provides a key to proper application of Section 204 of the Copyright Act of 1976, which has been (erroneously) construed as a statute of frauds governing contract formation, as opposed to one governing a specific form of property conveyance.

Steve Clowney

The Promise and Peril of Renting to Own

An article from the Pittsburgh Post-Gazette runs through the ups and downs of renting-to-own real property.  The story chronicles the attempt of the Heckter family to purchase a small home in the Pittsburgh suburbs: 

The couple signed a contract in August to buy the three-bedroom home and a detached two-bedroom rental house on the same property for $31,000. What they say they didn't understand at the time was that they would have to make a $16,000 balloon payment on Aug. 1, 2013.

With no credit history, no disposable income, a 1-year-old daughter and another child on the way, Matthew, 22, and his wife, Christine, 21, are beginning to feel they've gotten in over their heads.

Steve Clowney

Levitin & Wachter on The Commercial Real Estate Bubble

Adam Levitin (Georgetown) and Susan Wachter (Wharton) have posted The Commercial Real Estate Bubble on SSRN.  Here's the abstract:

Two parallel real estate bubbles emerged in the United States between 2004 and 2008, one in residential real estate, the other in commercial real estate. The residential real estate bubble has received a great deal of popular, scholarly, and policy attention. The commercial real estate bubble, in contrast, has largely been ignored.

This Article explores the causes of the commercial real estate bubble. It shows that the commercial real estate price bubble was accompanied by a change in the source of commercial real estate financing. Starting in 1998, securitization became an increasingly significant part of commercial real estate financing. The commercial mortgage securitization market underwent a major shift in 2004, however, as the traditional buyers of subordinated commercial real estate debt were outbid by collateralized debt obligations (CDOs). Savvy, sophisticated, experienced commercial mortgage securitization investors were thus replaced by investors who merely wanted “product” to securitize. The result was a noticeable decline in underwriting standards in commercial mortgage backed securities that contributed to the commercial real estate price bubble.

The commercial real estate bubble holds important lessons for understanding the residential real estate bubble. Unlike the residential market, there is almost no government involvement in commercial real estate. The existence of the parallel commercial real estate bubble presents a strong challenge to explanations of the residential bubble that focus on government affordable housing policy, the Community Reinvestment Act, and the role of Fannie Mae and Freddie Mac. Instead, the changes in commercial real estate financing closely mirror changes in the residential real estate financing, which shifted from regulated government-sponsored securitization to unregulated private securitization. This indicates that changes in the securitization market contributed to the problems in both the commercial and residential real estate markets.

Steve Clowney

Whaling & Innovation

The Atlantic has an informative piece for anyone who teaches Ghen v. Rich (or loves the sea).  The magazine has a fun, info-packed take on the rise and fall of the whaling industry in America:

One hundred and fifty years ago, around the time Herman Melville was completing Moby Dick, whaling was a booming worldwide business and the United States was the global behemoth. In 1846, we owned 640 whaling ships, more than the rest of the world put together and tripled. At its height, the whaling industry contributed $10 million (in 1880 dollars) to GDP, enough to make it the fifth largest sector of the economy. Whales contributed oil for illuminants, ambergris for perfumes, and baleen, a bonelike substance extracted from the jaw, for umbrellas.

Fifty years later, the industry was dead. Our active whaling fleet had fallen by 90 percent. The industry's real output had declined to 1816 levels, completing a century's symmetry of triumph and decline. What happened? And why does what happened still matter?

Steve Clowney

Adler on Water Rights

Jonathan Adler (Case Western) has posted Water Rights, Markets, and Changing Ecological Conditions (Environmental Law) on SSRN.  Here's the abstract:

Conventional environmentalist thought is suspicious of private markets and property rights. The prospect of global climate change, and consequent ecological disruptions, has fueled the call for additional limitations on private markets and property rights. This essay, written for the Environmental Law Symposium on 21st Century Water Law, presents an alternative view. Specifically, this essay briefly explains why environmental problems generally, and the prospect of changing environmental conditions such as those brought about by climate change in particular, do not counsel further restrictions on private property rights and markets. To the contrary, the prospect of significant environmental changes strengthens the case for greater reliance on property rights and market institutions to address environmental problems, such as the management of fresh water resources.

Steve Clowney

A Good Title Search Matters

Here's a good story to show students the importance of careful and diligent title searching.  For years a huge, boarded-up building has sat vacant near the Staples Center in downtown L.A.  As the rest of the neighborhood gentrified, the shell at 1130 S. Hope St. remianed unused and unloved.  Why didn't developers snatch up this parcel?

"The problem was figuring out who owned it," said Homer Williams, one of the developers of the 19-story Luma residential high-rise next door.

City officials later hoped to raze the building at 1130 S. Hope St. to make a public park, but also had difficulty figuring out who held its title as competing parties claimed control. The picture was complicated by more than a dozen liens from contractors, developers, lawyers and others who did work involving the building.

Enter Kevin Burke, a retired life insurance salesman from Manhattan Beach who managed to work through the title disputes and negotiate a complex $2.1-million transaction last year that got him the keys.

Steve Clowney

Mandelker on Planned Communities

Daniel Mandelker (Wash U.) has posted The Design Problem in Planned Communities on SSRN.  Here's the abstract:

Planned communities are a dominant form of development, both in suburban areas and as infill in urban settings. Planned communities can be clusters of homes with common open space or master-planned communities covering thousands of acres, but in any form they provide opportunities for excellent design. This is the first chapter in a book that reviews the concepts and ideas that go into the design of planned communities, and explores how local governments can encourage and provide for their good design through land-use regulation.

Steve Clowney

A Follow Up on Fair Housing and Discriminatory Roommate Advertising

David Bernstein gives an update on the recent Fair Housing Act case our of the Ninth Circuit:

When I blogged about the Roommates.com case recently, I pointed out the Ninth Circuit seemed to assume that if discriminating in one’s choice of roommates is legal, it would also be legal to advertise a discriminatory preference.  I suggested that this wasn’t so clear.  Some commentors thought it was absurd to suggest that HUD would try to penalize expressing discriminatory roommate preferences when advertising for a roommate, given that the underlying discrimination is both legal and protected by the constitutional right to intimate association.  But here is what HUD’s website has to say:

It is illegal for anyone to "Advertise or make any statement that indicates a limitation or preference based on race, color, national origin, religion, sex, familial status, or handicap. This prohibition against discriminatory advertising applies to single-family and owner-occupied housing that is otherwise exempt from the Fair Housing Act."

Steve Clowney

Lee on Romantic Gifts

Ruth Lee (Harvard- student) has posted A Legal Analysis of Romantic Gifts (Miami Law Review) on SSRN.  Here's the abstract:

While many law review articles are devoted to the legal analysis of gifts, this article addresses romantic gifts in particular, to which many legal exceptions apply. In addition to offering a review of the legal economics behind gift-giving, this article is the first to survey the five legal theories of revocability for romantic gifts, as well as an unprecedented new theory recently employed in federal court.

Although the general presumption is that gifts are irrevocable, courts have used five main theories to return romantic gifts to their donors — conditional gift, pledge, consideration, unjust enrichment, and fraud — as well as a new approach which has actually been used recently in federal court: criminal fraud. Criminal fraud is a surprising and unprecedented development because it not only requires the disgorgement of the gifts as the other theories do, but also punishes the donee beyond the cost of the gift. Thus, it is the only theory of revocability that will change the ex ante incentives of the donee.

In the course of discussion, this article will note three economic paradoxes that arise in the context of romantic gifts: (1) non-cash gifts appear on first glance to be extremely inefficient because it involves guessing the desires of donees, but are nonetheless ubiquitous; (2) extremely inefficient gifts tend to be better signaling mechanisms than efficient gifts in romantic relationships; and (3) although one who pursues a relationship blatantly for financial benefits faces more social condemnation than one who tastefully hides her motivations, she or he is actually facilitating a more efficient relationship. This leads to a discussion of when romantic gifts should be revocable, which theories of court interference are the most appropriate, and how courts should craft doctrine in the future. Because of the potential of over-deterrence, courts should only impose punishments that exceed the value of the gift when there is a clear enough information asymmetry between the donor and the donee that it would be impossible for the donor to give his informed consent to the relationship or the gift.

Steve Clowney

Property Art

Over at the Faculty Lounge, former PropertyProf blogger, Al Brophy, has a post about property art & U.S. Embassies. 

Steve Clowney

The World's Best Manhole Covers

The Atlantic has a fun slideshow of the world's most unique manhole covers:

Mundane by their very nature, manhole covers don't necessarily stand out to us while we walk or drive over them (although sometimes their simplistic appearance leads to interesting urban art). On occasion though, municipalities and even private property owners see the value of using the manhole cover as a unique way to help establish the identity of its surroundings. 

Turns out we're not the only ones who are intrigued by the possibilities these underfoot pieces of infrastructure provide: there's even a Flickr pool with over 14,000 entries of manholes from around the world.

Steve Clowney

Dagan on the Pluralist Conception of Property

Hanoch Dagan (Tel Aviv) has posted Inside Property (Toronto Law Journal) on SSRN. Here's the abstract:

Taking seriously the complexity and heterogeneity of property law, this Essay claims that a proper conception of property must account for both governance and inclusion. Neglecting governance obscures the significance of the internal life of property, which is often structured by sophisticated mechanisms aiming to facilitate various forms of interpersonal relationships in ways that no contractual arrangement can. Ignoring inclusion improperly marginalizes non-owners’ rights to entry in categories of cases where inclusion is an indispensable feature of the property institution under examination.

Looking inside property in these two senses requires abandoning the conception of property as an exclusive right and substituting it with a pluralist conception. Property should be understood as an umbrella for a limited and standardized set of institutions, which serve as important default frameworks of interpersonal interaction regarding various types of resources. At its best, the plurality of property configurations — the different contents of owners’ rights in these different property institutions — enables property law to vindicate differing balances among the different values that property can serve, according to the type of social relationship and the nature of the resource at stake. The pluralist conception of property, therefore, not only fits property law better; it is also the only understanding of property suitably attending to and facilitating the individuality-enhancing role of multiplicity, which is indispensable for meaningful autonomy.

Steve Clowney

Map of the Day: The Mormon Population in the U.S.

Slate has a well-done map that shows where Mormons live in the United States.  Here's a screen-cap, but you may want to check out the original since its interactive and embedded with lots of statistical data: 

Steve Clowney

Making the Case for Sprawl

Christopher Mims profiles L. Brooks Patterson, the county executive of Oakland County, Michigan and the country's most vocal advocate of urban sprawl:

Let’s stop the hysteria and honestly ask ourselves what is sprawl? “Sprawl” is the unfortunate pejorative title government planners give to economic development that takes place in areas they can’t control. In reality, “sprawl” is new houses, new school buildings, new plants, and new office and retail facilities. “Sprawl” is new jobs, new hope and the fulfillment of lifelong dreams. It’s the American Dream unfolding before your eyes.

Steve Clowney

Claeys on Exclusion and Legal Theory

Eric Claeys (George Mason) has posted Exclusion and Legal Theory: A Comment on Property as the Law of Things on SSRN.  Here's the abstract:

This Comment responds to an article by Professor Henry Smith, “Property as the Law of Things,” forthcoming in a symposium sponsored by the Harvard Law Review on “The New Private Law Theory.” In his lead Article, Professor Smith critiques what he calls the “bundle” picture of property, which he attributes to Legal Realists. This Comment argues that “Property as the Law of Things” does not go far enough in breaking with Legal Realist theory, because it assumes a social-scientific view of legal theory and an instrumentalist command theory of law.

This Comment draws on private-law and jurisprudential analytical scholarship arguing that the study of law requires attention to law’s internal point of view. From the internal point of view, a comprehensive account of property must acknowledge that property laws are meant to secure and reconcile interests in using external assets – interests of owners and non-owners both. “Property as the Law of Things” is incomplete because its argument abstracts from citizens’ normative interests in using things. Even if the Article’s information-cost efficiency argument is right, that argument does not supply a satisfactory explanation how the law comes to approximate what efficiency prescribes. In addition, the Article portrays important property doctrines -- riparian rights, de minimis building encroachments, and the relation between the “property” and “tort” components of nuisance – unpersuasively, because it abstracts from the connection between property rights and use.

Steve Clowney

Salkin on Callies' Work on Land Use in Hawaii

Patricia Salkin (Albany) has posted David L. Callies, Regulating Paradise: Land Use Controls in Hawai’i (2d Ed. 2010) (Book Review) (The Urban Lawyer) on SSRN.  Here's the abstract:

In 1984, Professor David Callies wrote Regulating Paradise to describe the regulatory scheme in Hawai’i. In 2010, he followed up that book with Regulating Paradise: Land Use Controls in Hawai’i to reexamine the issues as they have developed over the last 25-plus years: housing affordability, the subjects of development agreements, condemnation, defining open space and agricultural lands, takings, cultural sensitivity, environmental assessment, the prevalence of covenanted communities, and redevelopment.

This essay is a review of Professor Callies work which is a must read for anyone involved in land use in Hawaii. What emerges from his work are lingering questions about whether the regulatory scheme has over protected paradise.

Steve Clowney