Monday, March 31, 2014
For those living in a cave, Bitcoin is the world's most popular digital currency. Transactions made with Bitcoins happens with no middlemen – meaning, no governments or banks. There are no fees and transactions can be completely anonymous. However, the IRS recently announced that it will treat Bitcoin as property, not a currency, for tax purposes:
The U.S. government will treat Bitcoin as property for tax purposes, applying rules it uses to govern stocks and barter transactions, the Internal Revenue Service said in its first substantive ruling on the issue.
Today’s IRS guidance will provide certainty for Bitcoin investors, along with income-tax liability that wasn’t specified before. Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of gross income for the coffee shop.
The IRS, faced with a choice of treating Bitcoins like currency or property, chose property. That decision could reduce the volume of transactions conducted with the virtual currency, said Pamir Gelenbe, a venture partner at Hummingbird Ventures, which invests in technology businesses.
“It’s challenging if you have to think about capital gains before you buy a cup of coffee,” he said.
Adena Rissman (Wisconsin), Jessica Owley (Buffalo), Barton Thompson (Stanford), and Rebecca Shaw (Environmental Defense Fund) have posted Adapting Conservation Easements to Climate Change (Conservation Letters) on SSRN. Here's the abstract:
Perpetual conservation easements (CEs) are popular for restricting development and land use, but their fixed terms create challenges for adaptation to climate change. The increasing pace of environmental and social change demands adaptive conservation instruments. To examine the adaptive potential of CEs, we surveyed 269 CEs and interviewed 73 conservation organization employees. While only 2% of CEs mentioned climate change, the majority of employees were concerned about climate change impacts. CEs share the fixed-boundary limits typical of protected areas with additional adaptation constraints due to permanent, partial property rights. CEs often have multiple, potentially conflicting purposes that protect against termination but complicate decisions about principled, conservation-oriented adaptation. Monitoring is critical for shaping adaptive responses, but only 35% of CEs allowed organizations to conduct ecological monitoring. Additionally, CEs provided few requirements or incentives for active stewardship of private lands. We found four primary options for changing land use restrictions: CE amendment, management plan revisions, approval of changes through discretionary consent, and updating laws or policies codified in the CE. Conservation organizations, funders, and the IRS should promote processes for principled adaptation in CE terms, provide more active stewardship of CE lands, and consider alternatives to the CE tool.
Friday, March 28, 2014
The NY Times has a big exposé on the pitfalls of reverse mortgages:
Ms. Santos, 61, along with a growing number of baby boomers, is confronting a bitter inheritance: The same loans that were supposed to help their elderly parents stay in their houses are now pushing their children out. “My dad had nothing when he came here from Cuba and worked so hard to buy this house,” Ms. Santos said, her voice quivering.
Similar scenes are being played out throughout an aging America, where the children of elderly borrowers are learning that their parents’ reverse mortgages are now threatening their own inheritances. Reverse mortgages, which allow homeowners 62 and older to borrow money against the value of their homes that need not be paid back until they move out or die, have long posed pitfalls for older borrowers.
Now many like Ms. Santos are discovering that reverse mortgages can also come up with a harsh sting for their heirs. Under federal rules, survivors are supposed to be offered the option to settle the loan for a percentage of the full amount. Instead, reverse mortgage companies are increasingly threatening to foreclose unless heirs pay the mortgages in full, according to interviews with more than four dozen housing counselors, state regulators and 25 families whose elderly parents took out reverse mortgages.
Darien Shanske (UC Davis) has posted Revitalizing Local Political Economy Through Modernizing the Property Tax (Tax Law Rev) on SSRN. Here's the abstract:
As the Great Recession dramatically illustrated, state and local governments need a more stable revenue source. Accordingly, states and localities as diverse as Texas and San Francisco, are experimenting with new kinds of taxes. However, there has been essentially no experimentation with the oldest and most traditional local tax, namely the tax on real property.
This blindness to the property tax is unfortunate for many reasons, including that the property tax is both relatively efficient and stable compared to the other taxes available to states and localities. Of course, it is possible that the property tax has been ignored because, despite its merits, it has structural weaknesses that cannot be reformed. For instance, property tax liability is based on the value of the property and not on the income of the owner, which means that property taxes can impose great burdens on taxpayers on a fixed income. Furthermore, property taxes are typically collected once or twice a year, which imposes a significant obligation on taxpayers to budget correctly.
Yet there is no reason that the property tax needs to continue to be collected in much the same way as it was in the nineteenth century. Property taxes could be withheld from income just like income taxes, thereby making them easier to budget for. Furthermore withholding the property tax as part of a larger income tax system allows for the property tax to respond effectively to the cogent concern that taxpayers may not always have the income in a given year to pay their property taxes. Since the property tax and income tax systems would be integrated under my reform proposal, property tax liability could also be deferred (and perhaps forgiven) when the property tax liability grows to be too high as a percentage of income. Such a regime of incorporating income tax elements into the property tax would allow local taxpayers to respond directly to the relative merits of proposed public projects and services without concern for insuring themselves against future liquidity problems.
Thursday, March 27, 2014
Sarah Schindler (Maine) has posted Unpermitted Urban Agriculture: Transgressive Actions, Changing Norms, and the Local Food Movement (Wisconsin Law Review) on SSRN. Here's the abstract:
It is becoming more common in many urban and suburban areas to see chickens in backyards, vegetable gardens growing on vacant, forclosed-upon, bank-owned property, and pop-up restaurants operating out of retail or industrial spaces. The common thread tying all of these actions together is that they are unauthorized; they are being undertaken in violation of existing laws, and often norms. In this essay, I explore ideas surrounding the overlap between food policy and land use law, and specifically the transgressive actions that people living in urban and suburban communities are undertaking in order to further their local food-related goals. I assert that while governmental and societal acceptance and normalization of currently illegal local food actions is likely needed for the broader goals of the local food movement to succeed, there are some limited benefits to the currently unauthorized nature of these activities. These include transgression serving as a catalyst for change and as an enticement to participate.
Wednesday, March 26, 2014
The New York Times endorses (with a few caveats) China's plan to increase the number of its people living in cities by 2020:
the government has ordered up yet another migration that, it says, will further economic growth. The plan calls for expanding existing cities and for creating new towns and the housing, roads, rail lines and other public amenities that go with them. Addressing the frequent criticism that many new buildings are constructed poorly, the government has even promised to improve building standards as part of its plan. The overall goal is to increase the number of people living in cities to 60 percent by 2020.
But there are problems that the new plan hasn’t adequately addressed. One is the fact that local governments exercise great, even decisive, power over the lives of ordinary Chinese, requiring a hukou, or urban registration, of anyone who wants access to health, education and other public services. Just 36 percent of Chinese have a city hukou now, and rural migrants often find themselves denied services.
[...] Another set of problems has to do with farmers and their land. Because the Chinese government owns all the land, rural residents have only the right to use the plots that they farm and cannot easily sell or transfer those rights to other people. That keeps many farmers tied to their land. The government should make it easier for farmers to buy and sell usage rights in a transparent market.
Alexandra Klass (Minnesota) & Danielle Meinhardt (Minnesota) have posted Transporting Oil and Gas: U.S. Infrastructure Challenges (Iowa Law Review) on SSRN. Here's the abstract:
This article explores the history and geography of oil and natural gas to help explain why the U.S. physical and regulatory infrastructure for transporting these two similar types of energy resources to markets developed so differently. Notably, while interstate natural gas pipelines are reviewed and permitted at the federal level by the Federal Energy Regulatory Commission (FERC), interstate oil pipelines are reviewed and permitted almost exclusively at the state level. These regulatory differences, along with differences in the physical properties of the two energy resources, have resulted in very different energy transportation infrastructures and concerns for each resource. This inquiry is critical in light of the complete transformation of the U.S. energy economy over the past five years. Starting in 2009, hydraulic fracturing and horizontal drilling have allowed massive development of oil and natural gas in parts of the country that were not major oil and gas producers, and on a scale that could not have been contemplated less than a decade ago. This article concludes that the regulatory siting regime for oil pipelines at the state level and for natural gas pipelines at the federal level are generally both sufficient in their respective arenas to facilitate construction of new oil and gas pipelines when market forces allow. What is lacking however, are sufficient regulations or economic incentives under state or federal environmental laws to ensure that necessary natural gas transportation infrastructure is built in oil rich areas like North Dakota to capture the natural gas produced with oil. In the absence of such incentives, producers flare large amounts of natural gas into the atmosphere because of its relatively lower market value as compared to oil and the absence of gathering pipelines or other localized collection systems in producing areas. Likewise, the lack of oil transportation infrastructure in new producing areas has resulted in two-thirds of the oil produced in those regions traveling by rail instead of by pipeline, up from zero only a few years ago. This has resulted in high profile rail accidents leading to numerous deaths, explosions, and evacuations of towns. This article makes several proposals that draw on the complex history of transporting oil and gas in order to create a transportation infrastructure for the future that matches the realities of today’s new production technologies and geographies.
Tuesday, March 25, 2014
It's no secret that a lot of people try to solve their legal problems with (free) Google searches rather than with (expensive) attorneys. Sometimes this works fine, but sometimes the internet makes mistakes. For example, in the property arena, laymen often turn to Google to figure out how to avoid the adverse possession of their land. The men and women who respond to these inquiries often get the law wrong or fail to understand the diversity of state rules. Most commonly, the experts state that a landowner can prevent adverse possession by sending a certified letter that grants the trespassers' permission to stay on the land for a limited time. The thinking behind this advice is that such a letter will defeat any claim that the trespassers' possession is hostile (one of the standard requirements for adverse possession).
Benny Kass who writes a real estate column for the Chicago Tribune (and who I generally really like) provides a recent example of this advice:
You have asked what to do to protect yourself. First, perhaps your neighbors would like to buy that plot of land. If not, I would send them a nice letter telling them that you are aware their property is encroaching on yours, but that you are giving them permission to use it. Such permission will cancel any claim of hostility. If you want to keep peace with your neighbors, however, I would first invite them over for a drink and explain that you will send them a letter about the property.
The problem is that this just isn't the law in a lot of places. Sending a letter, without more, doesn't stop the statute of limitations from running. The Court of Appeals of Kansas does the heavy lifting for me:
Although no other Kansas case directly addresses the issue, other states have examined the effect of letters on the statute of limitations for adverse possession. In one Connecticut case, Woycik v. Woycik, 13 Conn.App. 518, 537 A.2d 541 (1988), the true owners' attorney sent a demand letter to the adverse possessors and requested that a metal shed be removed from the disputed property. The appellate court there equated a demand letter with oral notice, especially given that the act of sending a letter did not allow the true owner to interrupt the adverse possessors' control of the land. 13 Conn.App. at 525–26. Similarly, in Oklahoma, the trustee of the trust that owned the disputed land wrote a letter to the adverse possessors and assured them “that he ‘intend[ed] to preserve his interest in the property and [would] vigorously defend’ “ against suits related to the land. Flagg v. Faudree, 269 P.3d 45, 50 (Okla.Civ.App.2011). Aside from the letter, however, the trustee never acted to oust the adverse possessors. The Oklahoma Court of Civil Appeals found that “a letter notifying the occupant that title is held by someone else is insufficient to interrupt adverse possession.” 269 P.3d at 50.
(Yan Wang v. Reece, 2013 WL 6726148) The Kansas court goes on to agree that "demand letters alone are insufficient to toll the statute of limitations." Lawyers 1, Internet 0.
David Reiss (Brooklyn) has posted An Overview of the Fannie and Freddie Conservatorship Litigation (J. of Law & Business) on SSRN. Here's the abstract:
The fate of Fannie Mae and Freddie Mac are subject to the vagaries of politics, regulation, public opinion, the economy, and not least of all the numerous cases that have been filed in 2013 against various government entities arising from the placement of the two companies into conservatorship. This short article will provide an overview of the last of these. The litigation surrounding Fannie and Freddie’s conservatorship raises all sorts of issues about the federal government’s involvement in housing finance. These issues are worth setting forth as the proper role of these two companies in the housing finance system is still very much up in the air. The plaintiffs, in the main, argue that the federal government has breached its duties to preferred shareholders, common shareholders, and potential beneficiaries of a housing trust fund authorized by the same statute that authorized their conservatorships. At this early stage, it appears that the plaintiffs have a tough row to hoe.
Monday, March 24, 2014
Bloomberg chronicles the budding property empire of Amancio Ortega, the founder of Zara retail stores:
Amancio Ortega Gaona, already the world’s fourth-richest person based on the success of his Zara fashion retail stores, has quietly amassed a real estate empire worth as much as $10 billion and is emerging as a formidable competitor for prime properties from London to Beverly Hills.
Relying on all-cash offers, he has outbid the world’s biggest institutional funds and professional property investors, such as Tishman Speyer Properties LP.
[...] Ortega’s personal real estate portfolio may be closing the gap with Donald Bren, chairman of Irvine Co. of southern California, often cited as the world’s wealthiest real estate investor. Bren’s properties are worth $14.4 billion, according to the Bloomberg Billionaires Index.
[...] At least two of Ortega’s London properties are owned through Luxembourg entities, which he inherited from the previous owners, records show. Using subsidiaries in Luxembourg, which has lenient capital gains tax rules, is a common tactic among investors.
Inditex also uses tax-haven subsidiaries. As reported by Bloomberg News in February, the retailer has shifted $2 billion of profits into a low-tax unit in the Netherlands and Switzerland, helping cut its income tax bill around the world.
(HT: Tax Prof)
Shelly Kreiczer-Levy (Academic Center of Law - Israel) has posted The Informal Property Rights of Boomerang Children in the Home (Maryland Law Review) on SSRN. Here's the abstract:
Adult children living with their parents represent an increasingly common social phenomenon in the Unites States that challenges the boundaries of both the family and formal property rights. What is the legal status of adult children living with their parents? Do parents have any additional duties when they rescind permission for their child to live with them? Property and family scholars have not addressed this important issue. This article fills the void. Instead of treating people who live together as strangers, owing no legal obligations to one another, I argue that under certain conditions living with others creates a property community in the home. I call this community "home sharing". Thinking of living with others as a property community allows us to legally recognize the deep commitment between people who share a home. I urge scholars to reconsider the rule that allows an owner to unilaterally revoke permission to live in the home and argue that eviction law should stipulate additional responsibilities when the owner seeks to evict a cohabitee. I do not claim that the child should continue to live at home, but argue for remedies that recognize the child's voice, e.g., a duty to explain and justify the decision, to listen to the child's arguments, and the determination of a cooling-off period.
Friday, March 21, 2014
From the L.A. Times:
Those living in the Golden State shell out about $9,509 for state and local taxes, 36% more than the national average. New York residents pay $9,718, or nearly 40% more than what people pay on average in the country.
Wyoming imposes the lowest level of taxes on residents -- just $2,365, or 66% below the U.S. average. It is followed by Alaska ($2,791), Nevada ($3,370) and Florida ($3,648). [...]
Some Americans were also helped by states that levy no taxes in certain areas. Delaware, Montana, New Hampshire and Oregon charge no sales taxes. Texas and Alaska are among the seven states that impose no income taxes.
Hanoch Dagan (Tel Aviv) & Tsilly Dagan (Bar-Ilan) have posted Facilitating the Commons Inside Out on SSRN. Here's the abstract:
Commons property is a true challenge to the law, especially in a legal context that respects individual mobility, which is key to freedom and autonomy. While a tragedy of the commons is not inevitable, the sustainability – let alone flourishing – of the commons is far from obvious either. But the rewards of the latter trajectory are critical: a successful commons property can generate significant economic benefits, due to its intrinsic advantages of economies of scale, risk-spreading, specialization, and synergy. These benefits multiply in the context of social commons property regimes that function as the loci and engines of meaningful interpersonal relationships; indeed, they at times even become constitutive elements of commoners’ identities. This Essay explores examples of governance mechanisms for the collective management of resources as well as tax tools for collective production that can support the success of these social commons property regimes. These legal devices, which set (respectively) the internal rules of the game and provide external incentives, both counter the potentially destructive dynamics of the commons property and help preserve the noncommodified aspects of its owners’ community.
Thursday, March 20, 2014
Paul Waldman at the American Prospect:
Everyone knows that minority populations in America, particularly blacks and Hispanics, suffer from disproportionate levels of poverty. For the moment, we don’t have to go into why that is and what can be done about it. I just want to note something that seldom gets mentioned: the actual racial makeup of America’s poor. In fact, when I tried to find a chart laying it out to paste into this post, I couldn’t find one. So I took poverty data and population data and made one myself (this is as of 2012) … The point of this chart is that even though blacks and Hispanics are disproportionately poor, the largest group of poor people in America is … white people.
Despite that fact, when you say “the poor,” what pops into most people’s heads is an image of a black person, probably due in no small part to the fact that poverty in America is represented in the media as a largely black phenomenon (I’m not just saying that; there’s research backing that up).
HT: Daily Dish
Matthew Festa (South Texas) has posted Property and Republicanism in the Northwest Ordinance (Arizona State Law Journal) on SSRN. Here's the abstract:
Property rights were central to the political ideology of the founding era. The Northwest Ordinance of 1787 shows how the concept of property was part of both the liberal and the republican narratives of the revolutionary and constitutional eras. Conventional wisdom holds that property rights were key to the liberal argument, but that they must yield to the common good in the civic republican view. This Article shows that property was a key concept to both the liberal and republican ideologies at the founding by analyzing a critically important, but relatively neglected, founding document: the Northwest Ordinance.
The Northwest Ordinance -- one of the four most important American founding documents -- established governance in the unorganized territories of the new nation, and provided the blueprint for admitting new states to the union. A close reading of the Ordinance shows that it is fundamentally concerned with property rights, but is also thoroughly republican in character. It provides numerous rules about property ownership, in terms of inheritance, transactions, and political participation. It contains individual-rights precursors to the Constitution’s property clauses, including direct historical links to the Contracts Clause and the Takings Clause. It also envisions the role of property in an expanding republic. The property rights provisions in the Northwest Ordinance reflect a concern for not only individual liberty, but also for the promotion of the common good, through a virtuous society of individual property owners. The Northwest Ordinance shows that both the liberal and the republican narrative of the founding era rely on a fundamental consideration for individual property rights.
Tuesday, March 18, 2014
The Atlantic Cities Blog has a great write-up about the wealthiest neighborhoods in the country:
In large part, America’s wealthiest neighborhoods are its toniest suburbs. Many of them are even referred to by the country club that defines them – like Glencoe, Illinois’s Skokie Country Club, or Greenwich’s Stanwich Club, or Bethesda’s Burning Tree Club.
That said, a number of urban centers show up on the broader list and . . . their attractiveness for the richest Americans has grown substantially since 2000. [...] Significant chunks of Manhattan’s Upper East Side and Upper West Side, as well as Soho, Tribeca, Chelsea, the Village and Battery City Park in Lower Manhattan, number among America’s 1,000 richest neighborhoods. Two gentrified areas of Brooklyn, Cobble Hill and Dumbo, appear on the list too. Across the country, in increasingly pricey San Francisco, center-city neighborhoods like Balboa Terrace, Presidio Heights, Russian Hill, and Inner Richmond also number among the 1,000 wealthiest. [...]
America’s wealthiest neighborhoods are also concentrated in a relatively small number of metros across the country. (The table below shows the top dozen metros with the largest numbers of super-rich neighborhoods according to Highley’s analysis.) Nearly a quarter of them are in the New York metropolitan area. Another ten percent (102) are found in Greater Washington, D.C. The Bos-Wash corridor — including D.C., Baltimore, Philadelphia, New York, Hartford, Providence, Worcester, and Boston — accounts for 41 percent. On the West Coast, greater L.A. (including Orange County) is home to 9 percent, and the Bay Area as a whole (the Combined Statistical Area that includes Oakland and San Jose) accounts for another 6 percent.
For a more detailed analysis, see Stephen Higley's comprehensive report on America’s 1,000 richest neighborhoods. Higley put together his list using data from the American Community Survey, identifying contiguous block groups (a subdivision of census tracts) with a mean household income of $200,000 or more.
Joseph Singer (Harvard) has posted Property as the Law of Democracy (Duke Law Journal) on SSRN. Here's the abstract:
In both his article Property as the Law of Things and his prior work, Professor Henry Smith has revitalized property law theory by emphasizing the architectural role that property plays in private law and the ways in which modular property rights reduce information costs and promote both property use and transfer. I applaud Smith’s insistence that we focus on the systemic nature of property rights and the benefits of bundled entitlements. At the same time, it is important to understand the limitations of Smith’s analysis.
Property law goes beyond managing the complexity of human interaction. Property not only presents a coordination problem but also a constitutional problem. Many issues fundamental to property law systems require attention to the norms, values, and ways of life that a society embraces. The problem is not just how to grease the wheels of social interaction; the problem is how to determine the character of that interaction. Value choices must be made to determine what property rights can be created, how many owners we should have, who can become an owner, how long rights last, and what obligations owners should have. Because we live in a free and democratic society that treats each person with equal concern and respect, we must interpret the fundamental values of liberty, equality, and democracy to define the set of property rights that we can recognize.
Property law is not simply about best management practices or coordination in the face of scarcity. Democracies elect leaders who pass laws that establish minimum standards for social and economic relationships compatible with our justified expectations and our considered judgments about what it means to treat others with dignity and respect. Property law is not just a mechanism of coordination; it is a quasi-constitutional framework for social life. Property is not merely the law of things. Property is the law of democracy.
Monday, March 17, 2014
The N.Y. Times chimes in on the increasing battles over water in the West:
Actually, the laws that govern most of the West’s water seem tailor-made for fighting.
In many places, the rules for owning or using groundwater are still in flux: In Texas, landowners own the groundwater beneath their property, but a neighbor pumping groundwater from the same aquifer can siphon it away without penalty. The Arizona court battle over a proposed housing development hinges on the still-murky question of whether the state can allow the builder to pump groundwater that sustains a river that is under federal control.
In contrast, the prevailing law on rivers and streams is all too clear: The earlier someone stakes a claim on a stretch of water, the more bulletproof that owner’s right to it.