PropertyProf Blog

The Great Senior Sell Off

What happens when all those aging baby-boomers finally decide to sell their large homes and move into smaller properties (or retirement communities)?  Arthur Nelson, director of the Metropolitan Research Center at the University of Utah, sees a looming disaster:

“They will want to sell their homes, and they’re hoping there are people behind them to buy their homes,” says Nelson . . . He expects that in growing metros like Atlanta and Dallas, those buyers will be waiting. But elsewhere, in shrinking and stagnant cities across the country, the story will be quite different. Nelson calls what’s coming the “great senior sell-off.” It’ll start sometime later this decade (Nelson is defining baby boomers as those people born between 1946 and 1964). And he predicts that it could cause our next real housing crisis.

Roughly 7 percent of over-65 households move each year, and as people get older, their likelihood of moving from owning to renting gets higher and higher (it’s about 79 percent for households over 85). By 2020, there were will be around 35 million over-65 households in the U.S. That year, Nelson calculates, seniors who would like to become renters will be trying to sell about 200,000 more owner-occupied homes than there will be new households entering the market to buy them. By 2030, that figure could rise to half a million housing units a year. “Between changing preferences and declining median household income because of poor education – because we’re not willing to spend money on education,” Nelson says, “that means we can predict the next housing crash, and that’ll be in about 2020.”

Owley on Keeping Track of Conservation

Jessie Owley (Buffalo) has posted Keeping Track of Conservation (Ecology Law Quarterly) on SSRN.  Here's the abstract:

Throughout the world, governments require land protection in exchange for development permits. Unfortunately, oftentimes scant attention has been paid to these land protection programs after development. Agencies and permit applicants agree on mitigation rules, but there appears to be little follow-up. When we do not know where conservation is occurring and cannot determine the rules of mitigation projects, the likelihood that they will be successful or enforced diminishes. I journeyed to California in search of answers by tracing four mitigation plans associated with the Federal Endangered Species Act. While I anticipated some difficulties, the tale is more alarming than expected. The government entities involved struggled to locate and understand the permits themselves, let alone the details of the compensatory mitigation projects. A common land protection tool in this context is the conservation easement. These exacted conservation easements exchange public goods for private gain. Attempting to locate and understand these mitigation easements revealed pervasive problems with tracking mitigation in the United States. The federal agencies had trouble finding and understanding records. The county offices charged with recording property restrictions often had inadequate records of land use restrictions. These challenges exacerbate the accountability and enforceability concerns already associated with mitigation programs. Such uncertainty calls into question this method of environmental conservation. This Article highlights pressing concerns with our current mitigation paradigm and calls for reform of federal programs through promulgating new regulations and updating agency guidance. Furthermore, this project calls upon citizens and researchers to turn their eyes to mitigation programs generally and to question whether such programs truly compensate for the environmental harms they facilitate.

Barros Named Dean at Toledo

It fills me with joy to report that Ben Barros, founder of this blog, will become The University of Toledo College of Law’s next dean.  Hearty congratulations to Dean Barros.  Well earned. 

Toledo's press release is here.

Chen on the Evolution of Property Rights in China

Weitseng Chen (Singapore) has posted Arbitrage for Property Rights: How Foreign Investors Create Substitutes for Property Institutions in China (Washington International Law Journal) on SSRN.  Here's the abstract:

This article revisits the prevailing wisdom regarding property rights based on empirical research on the behavior of foreign investors in China. The Property Law did not exist in China until 2007 — four years after China replaced the United States as the most popular foreign direct investment destination worldwide. This seems to contradict the conventional wisdom about the indispensable role of property rights in economic growth. This article argues that China’s experiences in fact do not overrule the orthodox view, but rather shed light on the evolution of the regulatory property regime. Property rights still matter in China, but the structure of property institutions deviates from conventional configurations. Focusing on land tenure, this article demonstrates an institutional substitute strategy adopted by foreign investors to fulfill their institutional needs. This article also identifies the specific forms of substitutes for property rights and conceptualizes two general approaches to establishing such substitutive property institutions — the contract and corporate law approaches. The findings show that the bifurcated notions of “formal/informal” or “property/non-property” institutions cannot characterize the dynamic evolution of property rights in China. Unlike the image conveyed by informal institutions, foreign investors do not operate their businesses under the shadow of law but beyond the shadow of law by piggybacking on various regulatory regimes and areas of law. Nonetheless, the institutional substitute as a development strategy may facilitate economic growth but will not be sustainable in the long term if it fails to address structural problems caused by accelerating changes in market conditions.

Why Didn't the Germans Bomb Big Ben During WWII?

Short answer: They tried but luck intervened. 

Quora has a longer take on the mechanics of WWII bombing.  The rub:

At the time of the Blitz, the Germans, like every air power, did not have the ability to specifically target key buildings through high-altitude bombing raids, which were themselves necessary to hit valuable targets in order to avoid intense anti-aircraft fire. That combination of factors resulted in the reliance on city-flattening, strategic bombing raids: Just drop a bunch of bombs from where the guys on the ground can't hit you and hope for the best.

Wiseman on the Oil and Gas Commons

Hannah Wiseman (Florida State) has posted Coordinating the Oil and Gas Commons (BYU Law Review) on SSRN.  Here's the abstract:

Oil and gas development involves many configurations of property rights and regulations that lead to commons-type challenges. Numerous mineral owners have rights to drain oil and gas from shared underground reservoirs, and mineral owners in many states may use the surface to access minerals without paying surface owners any damages. These mineral owners also use underground resources in a manner that precludes or enhances certain future subsurface uses, such as natural gas and carbon dioxide storage, geothermal development, or other mineral development. Drilling an oil or gas well can also prevent future surface use — for example, many municipalities in Texas prohibit building on top of or within a certain number of feet of an abandoned well. Yet potential future surface and subsurface users often have no voice in the decision to drill. Within the regulatory sphere, local, state, regional, and federal governments have some voice in oil and gas governance, yet none exercise full regulatory authority over the externalities caused by this development, leading to a type of regulatory commons in which numerous actors have partial control over a regulated activity but leave certain gaps.

This Article explores this complex array of rights and regulations from a commons-based perspective and suggests solutions. To allow oil and gas development while avoiding inefficient externalities, more types of property owners should have individually-defined rights to the subsurface resource and should be able to negotiate with mineral owners; surface owners should receive damages for mineral owners’ use of the subsurface; or the rule of capture, which allows for rapid extraction of oil and gas from a common pool and potential over-use of valuable land at the surface, should be modified. In the regulatory sphere, the Article suggests that local, state, regional, and federal actors all need a say in the regulatory process — thus pushing back against the trend to preempt local involvement — but that the federal government should play more of a coordinating role, identifying gaps that need filling.

Is Title Insurance a Scam?

The New York Times details the battle over the industry's shenanigans:

It is no secret . . . that many borrowers are overcharged for title insurance. In 2007, the Government Accountability Office warned that the price of title policies was inflated by lack of competition in the title-insurance market, as well as apparently illegal kickbacks paid by title agents to realtors, mortgage brokers, loan officers and others who sent business their way.

The 2010 Dodd-Frank law called for cleaning up title insurance, and, in 2014, regulators from the Consumer Financial Protection Bureau issued a rule to carry out the law. Basically, the rule created a safe harbor from liability for regulatory violations, but only for loans with closing costs of less than 3 percent of the total loan, including fees to title companies affiliated with lenders. In effect, the rule uses market incentives to limit title costs by offering lighter regulation in exchange for keeping costs down.

Congress is resisting. A bipartisan majority in the House recently passed a Republican bill to exclude title fees from the calculation that determines the level of regulatory scrutiny. The White House has threatened a veto. But, in the Senate, Republicans could add the bill to other legislation that Democrats may want.

Ziff on Specific Performance in Canada

Bruce Ziff (Alberta) has posted Death to Semelhago! (Dalhousie Law Journal) on SSRN.  Here's the abstract:

In the 1996 decision of the Supreme Court of Canada in Semelhago v. Paramadevan, Justice John Sopinka stated that it is longer appropriate to assume that specific performance will issue as a matter of course to enforce a contract for the sale of land. Before performance will be ordered, it must be proven (and not assumed) that common law damages for breach of contract will not suffice to do justice. In this article, the Semelhago decision and the case law generated in its aftermath will be reviewed, and the policy arguments pertaining to the current law addressed. In short, it will be argued that the Semelhago dictum should be rejected.

Are We Ready for National Minimum Urban Density Standards?

Eliot Allen thinks it's time for a serious federalization of land use law:

In the face of global water and climate trends, it therefore seems reasonable to ask whether we can afford to let development density exacerbate conditions and limit our options for achieving greater resilience. Perhaps the time has come to discuss national minimum urban density standards. The rationale for minimum urban densities is simple: in locations where achievement of public policy depends on compactness, the capacity of a finite amount of land in a community is too valuable to use insufficiently, and doing so is detrimental for everyone.

Ramaekers on the Development of EU Property Law

Eveline Ramaekers (Oxford) has posted The Development of EU Property Law on SSRN.  Here's the abstract:

European Union property law is a quickly developing field of law. By studying the European acquis communautaire we can see that the contours of a European system of property law have slowly been emerging through legislation that incorporates property law rules and terminology. However, at the moment, EU property law is still very fragmented and has for a long time not been rooted in any clear policy or legislative agenda. It is important to study and further develop this field of law because it is seriously out of step with the development of European contract law and because national rules of property law as they currently stand could and do cause hindrances to free movement within the European internal market. This article sketches the existing European legislation concerning property law and provides a proposal for its future development. It thereafter highlights the most recent developments in EU property law, showing that the European legislature, the Court of Justice of the European Union (CJEU), academics, and practitioners are all increasingly paying attention to this exciting and challenging new field of law.

Stewart on Fracking in Ohio

Fenner Stewart (Calgary) has posted When the Shale Gale Hit Ohio: The Failures of the Dormant Mineral Act, Its Heroic Interpretations, and Grave Choices Facing the Supreme Court (Capital Law Review) on SSRN.  Here's the abstract:

As stories of signing bonuses and the promise of rich gas royalties spread through the local communities in Eastern Ohio, owning land was like owning a lottery ticket. For some, fortunes were made over night. For others, their land was not over the sweet spots of the shale plays. And for others still, what appeared to be their easy path to prosperity was blocked, much to their surprise and chagrin, by title ambiguities. It was at this point that Ohio’s dormant mineral rights became litigious, and the Ohio Dormant Mineral Act (ODMA) was scrutinized for the first time. In fact, to say that the ODMA was scrutinized may be an understatement, as local lawyers have commented: "The amount of litigation that has been generated involving Ohio’s DMA during the past three years [2011-2014] has rarely been seen with regard to a single statute."

Ohio’s Seventh District Court of Appeals recently attempted to remedy the ODMA’s ambiguities. The appellate court, however, may not have the final word on the matter. The Ohio Supreme Court will review a number of issues in the coming year, and there are still others which may ultimately need to be reviewed. In light of this, this article will evaluate the appellate court’s judgments. This study is confined to research the following issues: (1) whether all three appellant panels correctly determined that the 1989 version provides for automatic vesting; (2) whether the court in Eisenbarth correctly determined that the look-back period under the 1989 version is for a fixed twenty-year period; and (3) what is the proper interpretation and application of the title transaction savings event. This article will argue for automatic vesting, argue against a fixed look-back period, and finally, offer some guidance as to the application of the title transaction savings event.

Motorcycle Gangs Have Complicated Property Rules About Bottom Rockers

 

It turns out that the nasty shootout between two motorcycle gangs in Texas may have it's origin in a dispute over who controls certain "bottom rockers."  From an interview with a DEA agent:

What caused this shootout in Waco is the coveted bottom rocker. [...] So, I’ll try to explain this in laymen’s terms: When you watch Sons of Anarchy, they have those vests they wear that have what we call their colors. And on the back it shows their trademark, which is their symbol. And at the top, above the backpatch, is the name of the gang—and at the bottom is the state you’re claiming territory to. So the Bandidos have state claim to Texas. And they don’t allow any other motorcycle gang to be in that state and wear a Texas bottom rocker. They’ll allow some smaller motorcycle gangs to exist as long as they don’t wear that Texas bottom rocker. And what happened here was, the Cossacks have been around since 1969, the Bandidos since 1966. The Cossacks always stayed out of being a motorcycle gang, but they’ve been growing in numbers, and becoming more and more hardcore. So they decided that they were going to wear the Texas bottom rocker—which is telling the Bandidos that they believe that this is their territory, and they’re willing to die for that claim.

For more on colors, one-piece patches v. three-piece patches, and the differences between a riding club and a motorcycle club, see here.

Lee on Privatized Public Housing

Jamie Lee (Baltimore) has posted Rights at Risk in Privatized Public Housing (Tulsa Law Review) on SSRN.  Here's the abstract:

Traditional public housing is dwindling. Federal policy has increasingly encouraged privatization, shifting stewardship of public housing out of the hands of government and into the hands of private, for-profit companies. Privatization in this context has both benefits and risks. A particularly compelling area of study is the attempt by lawmakers to conscript private contractors into serving public policy goals. Private landlords are obligated not merely to provide housing, but to conduct themselves in ways that promote the interests of vulnerable people. The case of public housing suggests that legislative mandates and contractual obligations are not enough to assure this outcome, and must be accompanied by a commitment to vigorous monitoring and enforcement.

Ilya Somin's New Book on Kelo

The author previews his new book and explains why he wrote it.  The gist:

Although I don’t have survey data on this, my impression is that law professors probably support the result in Kelo by almost as lopsided a margin as the general public opposes it. The decision is also overwhelmingly endorsed by left-of-center federal judges (though some liberal state judges differ), and by many government officials and urban planners. Having previously written a book about the dangers of political ignorance, I recognize that having majority public opinion on my side does little to prove my position correct. When experts disagree with the public, we should take seriously the very real possibility that the group with greater knowledge of the subject is right. One of the main purposes of The Grasping Hand is to explain why dominant view among my fellow academic experts is wrong – not only from the standpoint of my own preferred approach to constitutional theory, but from that of a variety of widely accepted versions of both originalism and living constitutionalism.

Ryan on the Public Trust Doctrine and Mono Lake

Erin Ryan (Lewis & Clark) has posted The Public Trust Doctrine, Private Water Allocation, and Mono Lake: The Historic Saga of National Audubon Society v. Superior Ct. (Environmental Law) on SSRN.  Here's the abstract:

This article tells the epic tale of the fall and rise of Mono Lake — the strange and beautiful Dead Sea of California — which fostered some of the most important environmental law developments of the last century, and which has become a platform for some of the most potentially important developments in the new century. It shares the backstory and legacy of the California Supreme Court’s famous decision in National Audubon Society v. Superior Court, 658 P.2d 709 (Cal. 1983), known more widely as “the Mono Lake case.” Inspired by innovative legal scholarship and advocacy, the decision spawned a quiet legal revolution in public trust ideals, which has redounded to other states and even nations as far distant as India.

The Mono Lake dispute pitted advocates for the local ecosystem and community against proponents of the continued export of Mono Basin water to millions of thirsty Californians hundreds of miles to the south. The controversy itself spanned decades, but the story leading up to the litigation stretches back more than a hundred years, adding depth and dimension to the tale that is easily missed on a casual reading of the Audubon Society decision itself. It is a case study on the challenges and possibilities for balancing legitimate needs for public infrastructure and economic development with competing environmental values, all within systems of law that are still evolving to manage these conflicts. And at this particular moment in time, commemorating the hundredth anniversary of the Los Angeles Aqueduct that would threaten the lake and the twentieth anniversary of the State Water Board’s ultimate decision to save it, the Mono Lake story is especially worth revisiting.

Part II introduces the main cast of characters in the Mono Lake story, starting with the public trust and prior appropriations doctrines around which the legal controversy unfolds. Part III introduces the three places at the center of the drama — Los Angeles, the Owens Valley, and the Mono Lake Basin — in recounting the history of the Californian water struggles leading up to the Mono Lake case. Part IV discusses the Audubon Society litigation itself and its aftermath, reviewing the court’s conclusion and the subsequent decision by the California Water Resources Control Board implementing the judicial directive. After analyzing the most important doctrinal developments in the opinion, it discusses subsequent critiques and new developments in public trust law.

Part V concludes with parting reflections about important questions that the Mono Lake story leaves us to ponder, including whose interests count when we talk about the “public” trust, how they differ from aggregated private interests, and which to account for when balancing the economic, cultural, and environmental considerations in public trust conflicts. It considers the extent to which the doctrine creates substantive or procedural obligations, and the responsibilities of different legal actors and institutions in implementing them. The contested answers to these questions are what make the public trust doctrine so fascinating, so powerful, and so critical as we continue to confront the inevitable crises between competing natural resource values.

Most Property Casebooks Cost About $200

Here's a quick look at the current pricing of some leading property textbooks (all prices for new books from Amazon):

1.  Dukeminier & Krier (8th edition): $195

2.  Singer (6th edition): $202

3. Sprankling and Coletta (2nd edition): $169

4.  Merrill & Smith (2nd edition): $195

5.  Kurtz & Hovenkamp (6th edition): $181

6.  Nelson & Whitman (4th edition): $210

Saxer on Exactions After Koontz

Shelley Saxer (Pepperdine) has posted When Local Government Misbehaves (Utah Law Review) on SSRN.  Here's the abstract:

In this article, Dean Saxer examines the Supreme Court’s decision in Koontz v. St. Johns River Water Management District. In that land use case, the Court held that proposed local government monetary exactions from property owners to permit land development were subject to the same heightened scrutiny test as imposed physical exactions. The Court left unanswered the question of how broadly this heightened scrutiny should be applied to other monetary obligations imposed by the government. Saxer argues that “in lieu” exactions that are individually assessed as part of the permitting process should be treated differently than the impact fees that are developed through the legislative process and are applied equally to all developers without regarding to a specific project. Accordingly, Koontz’s application should be limited to “the special context of land-use exactions” rather than be extended to all regulatory monetary obligations.

Saxer begins by identifying the various levels of scrutiny applied to land use decisions and shows how these levels are designed to prevent the abuse of power, particularly when actions are exercised at the individualized level. She concludes by suggesting that exactions that result in a permanent physical occupation of real property should be subject to heightened scrutiny. However, only administrative, individualized, monetary exactions, designed to replace a physical exaction, such as the kind involved in Koontz, should be subject to heightened scrutiny to control the potential for abuse. Legislatively-determined monetary conditions such as impact fees, but not taxes, should be subject to review under state law standards, which range from a reasonableness test to more stringent tests under statutory or judicial determinations. In the absence of a state standard of review, legislatively-enacted impact fees challenged in federal court should be analyzed under the standard rational basis test for land use regulation.

Can a Land Tax Fix Problems of Inequality?

Slate brings the ideas of Henry George to the fore:

To see a good argument for a land tax, look to any high-cost city where the tax code penalizes construction and rewards speculation, encouraging landowners to keep land vacant. On West 29th Street in New York City, two blocks east of the High Line and a couple of blocks from Macy's, Edison ParkFast charges drivers $40 to park for a day in its vacant lot. That may be a lot to pay for parking, but it’s not an impressive haul for 180 square feet of earth in Midtown. Yet the annual property taxes for this asphalt parcel amount to just $9,404. Parking just one car each day of the year would more than foot the bill. The seven-story building next door, by contrast, pays more than $250,000 in taxes each year.

So what would actually happen if we taxed land instead of buildings? Unfortunately, the various American experiments in Georgism don’t tell us everything we’d want to know about how it might play out in society writ large. Still, there are lessons to be learned from places like Fairhope, Alabama, a charming town on the Eastern Shore of Mobile Bay. Home to the nation’s oldest and largest single-tax colony, Fairhope has waved the Georgist flag from its scenic, public bluffs for more than a century. Its evolution offers a glimpse of a world in which a different approach to tax law radically reshapes the structure of a society—and shows how implementing a land tax in isolation can be frustrated by the layered burden of state and federal laws.

Lynch on Fracking & Takings

Kevin Lynch (Denver) has posted Fracking/Takings (Cincinnati Law Review) on SSRN.  Here's the abstract:

As the use of fracking has spread during the recent oil and gas boom, inevitable conflicts have arisen between industry and its neighbors, particularly as fracking has moved into densely populated urban and suburban areas. Concerned over the impacts of fracking – such as risks to health and safely, diminished property values, air and water pollution, as well as noise, traffic, and other annoyances – many people have demanded a government response.

Government regulation of fracking has struggled to catch up, although in recent years many state and local governments have taken steps to reduce the impacts of fracking in their communities. This article focuses on government restrictions in New York and Colorado, two of the key battlegrounds in the fight over fracking. New York recently prohibited fracking across the entire state, after several towns had enacted their own bans. In Colorado, the people have used the ballot initiative process to enact restrictions on fracking directly.

The industry has responded not only with public relations spending to improve the fracking’s damaged reputation, but also legal challenges to these efforts to rein in oil and gas development. In addition to suing local governments, often arguing they do not have authority to regulate fracking, industry threatens to bring costly takings claims for compensation due to alleged economic harms.

This Article examines the numerous legal and factual issues that should make it difficult for industry to succeed on fracking/takings claims. First, regulation of fracking, even including outright bans, can almost always be defended as necessary to prevent a nuisance or other background principle of law that justifies government regulation. Even if a nuisance defense could be overcome, industry would have difficulty proving that regulation has destroyed all economic value in their property, unless courts take a narrow view of property that would highlight the arbitrary nature of the “denominator problem.” When fracking/takings claims are considered under the default balancing of the Penn Central case, takings are unlikely to be found except in rare outlier cases. Finally, because requiring governments to pay compensation in fracking/takings cases would likely create a windfall for industry, particularly if the oil and gas eventually is extracted in the future, courts should resist the temptation to rule against government restrictions to protect public health, safety, and the environment.

What Happens If You Build a Utopia and No One Shows Up?

The New York Times details the story of Michael Colby and Donald Graves, who tried to build a modern Utopia in Central Pennsylvania.  Things didn't exactly go according to plan:

The 25 buildings that dot the landscape are mostly dormant, save for Zephram’s house and Johannes’s house. The two have been living separately, so to speak, for a decade, individual housing being an unlooked-for boon when their commune went to pieces and they ceased to be a couple.

They’ve sold most of their antique tools, save for a handful, which they’ve added to the collection of furniture, housewares, paintings, textiles and other Pennsylvania Dutch relics they’ve amassed over the years. The two have turned the whole lot — thousands of artifacts — into a museum, filling the cavernous barn where they spent their first winter with exhibits.

They’ve written a memoir, tragicomic, of course, and are looking for a publisher.