PropertyProf Blog

Stein on a Potential Housing Bubble in China

Gregory Stein (Tennessee) has posted Is China's Housing Market Heading Toward a US-Style Crash? (Arizona Journal of International and Comparative Law) on SSRN.  Here's the abstract:

This article aims to determine whether China is heading toward a U.S.-style market crash in its housing market. Rather than attempting to maintain any suspense, I will disclose here that my conclusion is, “Who knows?” China and the United States have dramatically different histories, cultures, governments, economies, and legal systems. Anyone who claims to have a definitive answer to this question is overly confident.

My more modest goals in this article are to examine the available evidence and see which way it seems to point. The article begins by listing and describing several different ways in which the American housing market failed. It then evaluates the consequences of these failures for the U.S. housing market. Next, the article demonstrates some of the key respects in which the Chinese market differs from the market in the United States. This central portion of the article emphasizes just how difficult it is to make predictions about what might happen in one nation’s housing market based on the experiences of another nation that differs in so many significant ways. Finally, the article provides a description of some of the worrisome similarities between the Chinese and American housing markets. To the extent the previous analysis may have comforted the reader into believing that the Chinese market is unlikely to experience a downturn anytime soon, this last discussion will create some apprehension by highlighting some of the ways in which China might, in fact, be heading down the same path as the United States.

Steve Clowney

Housing in Haiti

The New York Times has a piece that examines the housing situation in Haiti two-and-a-half years after the devastating earthquake.  The news isn't good:

Two and a half years after the earthquake, despite billions of dollars in reconstruction aid, the most obvious, pressing need — safe, stable housing for all displaced people — remains unmet.

In what international officials term a protracted humanitarian crisis, hundreds of thousands remain in increasingly wretched tent camps. Tens of thousands inhabit dangerously damaged buildings. And countless others, evicted from camps and yards, have simply disappeared with their raggedy tarps and rusty sheet metal into the hills.

Steve Clowney

New Casebook Announcement

Peter Gerhart, from Case Western Reserve, has put out a new first-year Property book.  It's entitled Property: Our Social Institution. According to the press release, "The book takes a functional perspective, viewing property law to serve the social function of determining who should make decisions about resource use and how those decisions ought to be coordinated with the relevant interests of others. The book presents traditional property cases and doctrines but rearranges them with a view to understanding the six functions of property law: to divide resources between private and non-private property, to assign ownership rights in private property, to police the boundary between exclusion and access, to coordinate private decisions about use, to coordinate temporal decisions about use, and to mark the boundary between individual rights and rights of the community." A detailed table of contents is available at http://law.case.edu/faculty/gerhart_peter/gerhart_casebook.pdf.Faculty members interested in receiving a review copy of the book may write Professor Gerhart at [email protected].

Steve Clowney

 

Dagan on Private Law Pluralism and the Rule of Law

Hanoch Dagan (Tel Aviv) has posted Private Law Pluralism and the Rule of Law on SSRN.  Here's the abstract:

This Essay considers whether a pluralist account of private law can, notwithstanding its multiplicity, its dynamism, and its disavowal of neutrality, comply with the rule of law. My focus will thus be on two aspects of the rule of law: as a requirement that law be capable of guiding its subjects’ behavior, and as a prescription that law not confer on officials the right to exercise unconstrained power. At first glance, a pluralist and perfectionist understanding of private law is vulnerable on both the guidance and the constraint fronts, but this impression is fortunately incorrect. Private law pluralism neither requires nor should it imply adopting the dubious nominalistic approach of case by case adjudication, which indeed undermines guidance. Rather, properly understood, private law pluralism supports, even requires, relatively stable and internally coherent — albeit properly narrow — doctrinal categories. Each such private law institution is governed by fairly precise rules alongside informative standards founded on the regulative principles of these institutions, enabling people to predict the consequences of future contingencies and to plan and structure their lives accordingly. These private law institutions are shaped and developed through both legislation and adjudication. Courts are appropriately involved in many of these processes because at least insofar as private law is concerned they typically enjoy no less legitimacy, from either a participation or an accountability perspective, than legislatures. Likewise, while the plurality of values involved in the molding of our private law institutions’ regulative principles makes this a challenging endeavor, we have no grounds for assuming that the requirement of normative contextual inquiry typifying common law adjudication does not reliably constrain this judicial power.

Steve Clowney

Beastie Boy's Ill Communication in Will

In his will, the Beastie Boys' Adam "MCA" Yauch prohibited the use of his music in advertisements.

His final testament reads, "Notwithstanding anything to the contrary, in no event may my image or name or any music or any artistic property created by me be used for advertising purposes."  According to sources, Yauch added the phrase "or any music or any artistic property created by me" in handwriting.

Wendy Goffe, an attorney at Stoel Rives in Seattle outlines why Yauch's amendment promises to cause trouble for the family: "Was he just referring to music or art created solely by him, or to any music or art that he helped create? What did he mean by “advertising purposes?” [...] All this will greatly complicate the settlement of Yauch’s estate. Publicity rights and copyrights, especially when they involve a Beastie Boy, have tremendous value. For estate tax purposes, it will be necessary to attach a present value to the stream of future income stemming from those publicity rights and copyrights. But how can you value rights when you don’t know what he owned?"

Steve Clowney 

Stern on the Meaning of Property & the U.S. Constitution

James Stern (Virginia) has posted Property's Constitution (Cal Law Review) on SSRN. Here is the abstract:

Long-standing disagreements over the meaning of property as a matter of legal theory present a special problem in constitutional law. The Due Process and Takings Clauses set forth individual rights that can only be asserted if “property” is at stake. Yet the leading cases interpreting constitutional property doctrines have never managed to articulate a coherent general view of property and in some instances reach opposite conclusions about its meaning. Most notably, government benefits are considered “property” for purposes of due process but not takings doctrines, a conflict the cases acknowledge but do not attempt to explain.

This Article offers a way to bring order to the confused treatment of property in constitutional law. It shows how a single definition of property can be adopted for all of the major constitutional property doctrines without the calamitous results that many seem to fear. It begins by arguing that property is best understood as the right to have some measure of legal control over the way a particular item is used, control that comes at the expense of all other people. It then argues that legal rights are a kind of private property and that, while courts and commentators are correct that legal entitlements to government benefits — so-called “new property” — should receive constitutional protection, they mistakenly believe the property at issue is the good that a recipient has a right to receive, rather than the legal right to receive it. The Article proceeds to show that legal rights are the only kind of things whose existence government can altogether extinguish and therefore that ownership of legal rights is the only kind of property right government can terminate without conferring equivalent property rights on others. The Article further argues that while due process protection should be read to apply whenever a person is denied an asserted property right (a deprivation), takings protection should only come into play when property rights are transferred from one party to another (a taking). Combining these observations, the Article concludes that termination not only of “new property” rights but also of old-fashioned in personam legal rights should trigger due process but not takings protection. This analysis provides theoretical coherence to constitutional doctrine that has thus far been lacking and it sheds light on the essential characteristics of property rights as a general matter, helping theoreticians understand more clearly the core structures of property law.

Steve Clowney

Usain Bolt Swipes Camera & Takes Pics. Who Owns the Photos?

After winning the 200-meters at the Olympics, Usain Bolt jokingly snatched a Swedish photographer’ camera and took pictures of Yohan Blake, the 200-meter silver medalist, as he preened around the track. After Bolt returned the camera, the Swedish photographer uploaded Bolt's pictures on his newspaper's website.  This raised a fun legal issue: Does Bolt own the shots, did so Swedes have the right to publish them? 

According to Slate, Bolt is the rightful owner: "Under most countries' intellectual property laws, including the United Kingdom’s, the person who actually pushed the button owns the photograph, unless the work was made for hire. That means Wixtröm technically does not own the copyright to Bolt’s photos, unless he and the sprinter negotiated a rights transfer in writing. This legal technicality also means that tourists in London who ask a passerby to take a photo of them would not own the copyright to the resulting photograph, though it is doubtful their use of the work would ever be contested. (According to Carolyn E. Wright’s Photo Attorney blog, in that case you would “likely have an implied license to use the photograph for personal uses. … But you probably wouldn’t have the right to enter the photo into a contest or license it for commercial purposes.”)"

Steve Clowney

Craig on Coastal Water Quality Protection

Robin Craig (Utah) has posted Coastal Water Quality Protection (Book Chapter) on SSRN.  Here's the abstract:

This chapter is for the Second Edition of Coastal and Ocean Law, published by the American Bar Association's Section on Environment, Energy, and Resources. It comprehensively reviews the application of the Clean Water Act in the coastal zone and at sea. For example, the chapter details the regulatory significance of the Act's recognition of three marine zones -- the territorial sea, the contiguous zone, and the ocean -- and explains how the Clean Water Act applies to discharges from non-military ships, vessels of the Armed Forces, and "other floating craft" as well as land-based sewage discharges and discharges from offshore oil and gas platforms.

The Second Edition version of this chapter also highlights developments in this area of law since 2006. For example, the chapter highlights the EPA's newest (2012) National Coastal Condition Report. Moreover, it details the relatively rapid change in the law governing ballast water and other discharges from ships, examines the Chesapeake Bay multi-state TMDL and the litigation over the "dead zone" in the Gulf of Mexico, and examines states' increasing use of the Act's "No Discharge Zone" provisions, especially California's 2012 establishment of its entire coastline as a "No Discharge Zone."

Steve Clowney

Tushnet Reviews Modern Chinese Real Estate Law

Rebecca Tushnet (Georgetown) has kindly agreed to let us post her review of Gregory Stein's Recent Book, Modern Chinese Real Estate Law: Property Development in an Evolving Legal System.  Here's Rebecca: 

Gregory M. Stein, Modern Chinese Real Estate Law: Property Development in an Evolving Legal System: Ask your law librarian for a copy!  This is a significant look at an important subject: what is the relationship between property, the rule of law, and economic growth?  China has a powerful government but a weak rule of law; its explosive growth challenges some truisms of law and development.  Stein did interviews to figure out what’s actually going on.  This has obvious limitations in a repressive country suspicious of foreigners, and Stein only occasionally mentions that much of the new construction is empty.  He does devote greater attention to the fact that many new developments require displacing existing residents, often with extremely below-market compensation, with resulting political unrest.  Stein also gets some explanations of how projects are actually approved and financed, which is an important addition to the literature.  Separate chapters cover financing of residential construction, commercial property, and infrastructure.
 
Among other things that stood out to me: Shanghai has been trying to improve the formality and predictability of its procedures, limiting reliance on guanxi (connections), but this may have the effect of locking in the advantages of those who relied on guanxi at the beginning of the boom, became successful and experienced, and now have a head start.  Since all the land is owned by the state (only use rights can be leased, and that at most for several decades; no one knows what happens when that time is up—whether there will be additional fees to stay in place, renewal as of right, or something else), and since there isn’t much in the way of conventional property tax, the lease of land rights is a major way for governments to get funding.  There are Ponzi scheme elements to this: without property taxes, leasing new land is the only way to get more money.  This contributes to the building boom, as does the fact that individual Chinese are also desperate to own property.  Interest rates are heavily controlled and very low, while the stock market is small and rickety, so property is the most attractive form of investment.  (Many Chinese expect to have to self-fund their retirement and perhaps take care of parents; agricultural workers aren’t entitled to the same kinds of state support as urban dwellers, and even those don’t expect much in retirement.  This makes valuable investments vital.)  Stein reports that, by 2007, 15% of urban households owned more than one home—though such homes are often held only for investment, and won’t even have plumbing put in; they’re not even generating rental income but rather expected to appreciate in value.
 
How is all this financed?  Banks focus on proposals’ compliance with legal requirements—the key four documents indicating that the developer has the land lease and other required government approvals—rather than on economic feasibility, as Western lenders would.  This appears to be in part lack of experience and in part politically determined.  The banks don’t generally lend based on ability to repay; they lend because they have lending targets. While some informants suggested that many if not most banks are insolvent due to high percentages of nonperforming loans, residential loans are likely to be performing because of the massive real estate bubble of the last decade or so.  Presales mean that would-be individual owners finance large parts of the project early on, despite serious legal uncertainties about what it is that they would actually own if the overall project were to fail.  Subcontractors are also important sources of sub rosa financing because developers routinely delay paying them; Stein suggests that they are likely to pass these delays along to individual works, often internal migrants with limited employment opportunities.

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Allain & Bales on the Definition of Slavery

Jean Allian (Queen's Law School - Belfast) and Kevin Bales (Roehampton - London) have posted Slavery and Its Definition (Global Dialogue) on SSRN.  Here's the abstract:

The very term ‘slavery’ and its contours are contested despite the fact that an agreed to international definition of slavery was existed since in 1926. It reads:

Slavery is the status or condition of a person over whom any or all of the powers attaching to the right of ownership are exercised.

From the 1930s until recently, the general outlook towards the legal definition of slavery has been a negative one: why it is not applicable to cases of slavery.  Spurred on in 2008 by a determination of the highest court in Australia, that the legal definition was applicable to contemporary cases of de facto slavery; a group of property scholars and experts in slavery set about unpacking those powers attaching to the right of ownership. Much to their surprise, there is no true gap existing between a legal reading of ownership and the factual circumstances of contemporary enslavement.

This article speaks to that group’s findings by setting out an internally consistent reading of that definition within its property paradigm that reflects the lived experience of contemporary slaves. As a result, the definition provides the type of legal certainty which is fundamental to any prosecution of contemporary slavery: within an ordinary reading of its terms, based as it is on a property paradigm, it captures the factual reality of slavery.

Steve Clowney

Cleveland Takes Aggressive Stand on Antiquities

A recent New York Times article chronicled how the Cleveland Museum of Art has assumed one of the most staunchly pro-collecting positions in long-running debate over antiquities of questionable provenance.

The most thought-provoking quote in the piece comes from Jenifer Neils, an art history professor at Case Western.  Neils says, “Buying poorly documented objects from disreputable dealers is akin to looting an archaeological site and destroying the historical record. While such objects may be aesthetically beautiful, museumgoers are robbed forever of their cultural context.” 

I agree that their are complex legal and moral questions swirling around the international antiquities market, but Neils goes too far.  If you're really concerned about the historical record, it seems like we should be encouraging museums to buy things from private collectors, even if the record-keeping is less than perfect.  Moreover, the notion that we need to view art in it's "cultural context" seems really troubling.  Does that mean we need to view all Picassos in the region of France where Picasso painted (Or do we have to view them in Spain where Picasso was born)? 

Steve Clowney 

(HT: Brian Frye)

Singer on The Rule of Reason in Property Law

Joseph Singer (Harvard) has posted The Rule of Reason in Property Law on SSRN.  Here's the abstract:

Property rights cannot work if they are not clear, and scholars generally assume that the best way to attain this goal is to define property rights by relatively rigid rules. However, recent evidence suggests that the intuitive view may be mistaken. The subprime crisis shows that clear rules do not produce clear titles if owners do not follow those rules. And during the twentieth century property law moved dramatically away from rigid rules toward flexible standards. Standards turn out to be crucial to property law, as well as increasingly important in property doctrine.

Empirical evidence and historical experience alike demonstrate that rules cannot be applied without being supplemented by standards to determine the scope of those rules. Conversely, standards achieve predictability through core exemplars, precedent, and presumptions. Thus rules and standards are less distinct from each other than one might imagine. Standards perform crucial functions for property law. They perform systemic functions to shape the infrastructure and the outer contours of the property system by (1) setting minimum standards compatible with the norms of a free and democratic society, (2) protecting the justified expectations of consumers, and (3) responding to externalities and systemic effects of the exercise of property rights. Standards also determine the scope of property rights by (4) distinguishing cases; (5) resolving conflicting norms; (6) excusing mistakes; (7) escaping the "dead hand" of the past; and (8) deterring the "bad man" from abusing property rights.

Steve Clowney

Rethinking Laws Permitting the Sale of Human Remains

I'm putting the finishing touches on my article proposing a limited property interest in human remains.  As I've presented this paper to various groups over the past year, one critique I've often received is that granting a property interest in human remains will lead to the commercialization of those remains.  I just posted a piece on Huffington Post which addresses that critique, and points of the amazing array of human remains for sale on the Internet.  On Ebay, you can currently pick up a set of human ribs for $20.50 (after six bids), an articulated hand for $142.50 (after 14 bids), a complete spine with pelvis bone for $300, a skull for $1300, or an entire human skeleton (including a display case) for the "Buy It Now" price of $1900.

Tanya Marsh

China's Population is Really Large, Ctd.

The blog has touched on this before, but it's just staggering how fast China's cities are growing.  This week NPR chronicled the popluation explosion that's occuring in China's inland cities.  Chongqing has over 14 million people.  Chengdu is over 11 million. Wuhan has over 10 million residents (That's larger than New York).  The story is one more reminder that the future of urbanism is Chinese.

NPR Story on Wuhan

Steve Clowney

(Photo: Wuhan, China)

Does Sprawl Cause Municipal Bankruptcies?

An article at CNN looks at the cost of American land use decisions.  The piece makes the claim that sprawling development patterns have pushed some cities into bankruptcy by making it more difficult for them to pay their bills:

The way in which we plan and build our towns and cities has a direct impact on how well they do. Financial resiliency and prosperity is woven into the very fabric of cities. Where businesses go, where houses go, where roads go, where sidewalks go, where farms and natural spaces go – all of these things collectively affect a community’s economic performance and the cost of providing services there. Put things closer together, the services cost less. Put things farther from each other, the services cost more for the jurisdiction and its taxpayers. But in the case of many American towns and cities, we haven’t always planned and built in this fiscally conservative way – and that’s one of the biggest reasons why cities are struggling today.

Steve Clowney

Gulasekaram on Border Fences

Pratheepan Gulasekaram (Santa Clara) has posted Why a Wall? (Irvine Law Review. 147) on SSRN. Here is the abstract:

Initiated with Operation Gatekeeper in the early 1990s, and extended with significant funding by the Secure Fences Act in 2006, the United States has committed itself to physical fortification of its border with Mexico. The stated purpose of the border fence is to eliminate unlawful entry into the United States. Yet, since the initiation of the border fence project, critics and empirical researchers have found the fortification, at best, to be costly and ineffectual in accomplishing its stated goals; at worst, they argue it causes significant death without any deterrence. In the face of this critique, this article theorizes the creation and persistence of a border wall, arguing that several factors unrelated to actual deterrence inexorably provoke the building of a physical border barrier. After first describing the powerful cost-benefit case establishing the disutility of a border fence, the article explains the underlying forces that render such critiques unpersuasive. Instead, the article presents alternative rationales for border wall construction based on incentives for national lawmakers and the federal government that are only marginally related to actual elimination of unlawful entry.

The article then highlights the importance of the wall’s physicality, explaining how its existence alters immigration enforcement and migration discourse in politically, culturally, and legally significant ways. Fundamentally, the border wall naturalizes and normalizes the idea of a national border, thereby facilitating harsh enforcement strategies. Meanwhile, its presence helps generate even more undocumented presence within the country, rendering the wall not only an apparent solution to a perceived problem, but constitutive of the problem itself. Finally, the article queries whether the existence of the border fence at our current historical moment portends the weakening of nation-state boundaries. A physical border barrier, counterintuitively, may be the harbinger of diminished sovereign power, serving more as a warning to the walled-in citizenry of the constructing nation than to putative migrants on the outside.

Steve Clowney

Is Generation Y Getting a Massive Wealth Transfer in the Form of Cheap Mortgages?

Karl Smith makes the case the young folks who recently bought homes will end up in a terrific financial position after the economy recovers:

Something which I don’t see talked about anywhere but I am pretty sure will be a significant story over the next decade or so is the massive wealth transfer now occurring in the United States towards the young middle class and the young upper middle class in particular. [...]  The young middle class is incurring long term debts at extremely low interest rates, this includes education and housing debts. [...] Not, only are we talking about being mortgage free at 52, but mortgage payment as a fraction of income should decline to a basically nominal cost around age 40.

One thing I wish Smith had explored is the long-terms effects of these super cheap mortgages on labor mobility.  If interest rates ever normalize, it's easy to forsee a lot of people staying in jobs and locations they don't really like in order to hang on to their 3.1% mortgages.

Steve Clowney

Mossoff on The Trespass Fallacy in Patent Law

Adam Mossoff (George Mason) has posted The Trespass Fallacy in Patent Law on SSRN.  Here's the abstract:

The patent system is broken; so says the popular press, tech commentators, legal academics, lawyers, judges, and just about everyone else. One common refrain is that patents fail as property rights because patent infringement doctrine is not as clear, determinate and efficient as trespass doctrine is for real estate. This essay explains that this is a fallacious argument, suffering both logical and empirical failings. Logically, the comparison of patent boundaries to trespass commits what philosophers would call a "category mistake." It conflates the boundaries of an entire legal right (a patent), not with the boundaries of its conceptual counterpart (real estate), but rather with a single doctrine (trespass) that secures real estate only in a single dimension (geographic boundaries). Estate boundaries are defined along the dimensions of time, use and space, as reflected in numerous legal doctrines that secure estates, such as adverse possession, easements, nuisance, restrictive covenants, and future interests, among others. The proper conceptual analog for patent boundaries is "estate boundaries," not fences. Empirically, there are no formal studies of how trespass or even estate boundaries function in litigation; thus, complaints about the patent system’s indeterminacy are based solely on an idealized theory of how trespass should function; it's the nirvana fallacy. Furthermore, anecdotal evidence and related studies suggest that estate boundaries are neither as clear nor as determinate as patent scholars assume it to be. In short, the trespass fallacy is driving an indeterminacy critique in patent law that is both empirically unverified and conceptually misleading. Until the indeterminacy critique is properly modeled and grounded in facts, legislators and courts might want to pause before continuing to make fundamental structural changes to the American patent system.

Steve Clowney

Map of the Day: Segregation by Income in America

John Infranca, guest-blogging at Land Use Prof, highlights a series of maps of residential income segregation in the ten largest U.S. metro areas. 

John also notes that The Pew Research Center has concluded that residential segregation by income has increased across the U.S. over the last thirty years.  Twenty-seven of the 30 largest metro areas reported a jump in residential segregation.  The Center's report ties the increase in residential segregation to the broader problem of income inequality and affirms that segregation by income remains "less pervasive than residential segregation by race.""

Steve Clowney

Nussbaum on ADR’s Place in Foreclosure

Lydia Nussbaum (Baltimore) has posted ADR’s Place in Foreclosure: Remedying the Flaws of a Securitized Housing Market on SSRN.  Here's the abstract:

Millions of Americans lost their homes during the foreclosure crisis, an unprecedented disaster still plaguing local and national economies. A primary factor contributing to the crisis has been the failure of conventional foreclosure procedures to account for the new realities of securitization and the secondary mortgage market, which transformed the traditional borrower-lender relationship. To compensate for the shortcomings of conventional foreclosure procedures and stem the tide of residential foreclosure, state and local governments turned to ADR processes for a solution. Some foreclosure ADR programs, however, have greater potential to avoid unnecessary foreclosures than others. This article comprehensively examines the key components of foreclosure ADR programs and presents best practices for governments seeking to utilize ADR as a tool to mitigate the foreclosure crisis and re-energize the economy.

Steve Clowney