PropertyProf Blog

Odinet on Virtual Property and Secured Credit

Chris Odinet (that's me!) (Southern) has posted BitProperty and Commercial Credit (Washington University Law Review) to SSRN. Here's the abstract:

In the past several years the growth of virtual property in today’s economy has been explosive. The everyday use of virtual assets ranging from Twitter and Facebook to YouTube and virtual world accounts is nearly absolute. Indeed, by one account Americans check social media over 17 times per day. Further, a growing number of savvy virtual entrepreneurs are reporting incomes in the six and seven figure range, derived solely from their online businesses. Nevertheless, although the commercial world has come to embrace these newfound markets, commercial law has done a poor job of keeping up. Scholars have argued that laws governing everything from taxation, to bankruptcy, to privacy rights have not kept pace with our ever-changing virtual world. And nowhere is this truer than in the law of secured credit. Doubtlessly virtual property has come to represent significant wealth and importance, yet its value as a source of leveraged capital remains, in large part, untapped. This unrealized potential is not without good reason; the law — specifically Article 9 of the UCC and the law of property more broadly — suffers from a number of deficiencies and anomalies that make the use of virtual property in secured credit transactions not only overly complex and expensive, but almost entirely untenable. This Article shines light on these shortcomings, and, in doing so, advances a number of guiding principles and specific legislative recommendations, all geared toward a reformation of the law of secured credit in virtual property.

Alexander on American Property Law Doctrine

Gregory Alexander (Cornell) has posted Five Easy Pieces: Recurrent Themes in American Property Law (University of Hawaii Law Review) on SSRN. Here's the abstract:

The title of my article, "Five Easy Pieces," may not resonate with those of you who are too young to remember Jack Nicholson as a budding young movie star cut out of the James Dean mold. For those who do remember, it is, of course, the title of one of Nicholson's early (and, to my mind, greatest) movies. Jack's five easy pieces were piano pieces, easy for him to perform, less so for others. There was a certain irony about the word "easy" in the title. The irony lay not only in the fact that just about everyone else consider those pieces difficult, but, more deeply, because those piano pieces were the only pieces of the life of Bobby Dupea, the character whom Jack portrayed, that were easy for him. Life as a whole, the big picture, was one great, almost impossible challenge for him.

My five easy pieces have their own ironic twist. They are rather different but equally challenging in their own ways that first-year law students here will readily recognize. My pieces, this piece, is really aimed at them. The pieces I will discuss are five recurrent themes in American property law, leit motifs, to continue the metaphor from the Nicholson movie, that run throughout American legal doctrines. These themes provide a way of structuring all of property law, adding coherence to what so often appears to law students as an unintelligible rag-tag collection of rules and doctrines that defy any attempt to construct an overarching framework for analysis. I have given five simple labels to these recurrent topics: "conceptualizing property," "categorizing property, " "historicizing property," "enforcing property," and "de-marginalizing property." We begin with how we conceptualize property.

Davidson & Infranca on the Sharing Economy

Nestor Davidson (Fordham) & John Infranca (Suffolk) recently posted The Sharing Economy as an Urban Phenomenon (Yale Law & Policy Review) on SSRN. Here's the abstract:

Seemingly overnight, companies like Uber, Lyft, Airbnb, WeWork, Taskrabbit, Shyp, and many others have transformed transportation, accommodations, personal services, and other sectors. The evolving regulatory response to this “sharing economy” presents an intriguing puzzle. Where telephone, broadband, early Internet companies, and similar previous technologies were shaped by battles with federal regulators, the fate of sharing enterprises is playing out in front of taxi and limousine commissions, zoning boards, and city councils. 

The reason for this atypical dynamic, this Article argues, is that — unlike prior technological disruptions — the sharing economy is fundamentally an urban phenomenon. The platforms that enable sharing leverage or confront conditions of density, proximity, specialization, and even anonymity that mark city life. And many sharing companies flourish through a kind of regulatory arbitrage that finds value in frictions and barriers generated by urban regulatory regimes. 

A fascinating experimentalist dialectic is emerging from the resulting decentralized regulatory landscape. Local economic, political, legal, and social conditions are generating regulatory responses that range from full embrace to open hostility. And sharing enterprises are responding by adjusting their business models and reconciling in various ways to these regulatory constraints. These compromises are generating creative solutions to balancing innovation and public welfare. 

The interaction between urban governance and the sharing economy, however, flows both ways. Local governments are being pushed to be more transparent about their policy interests, creating spillover effects in regulatory regimes beyond the sharing economy. And the sharing economy is transforming cities themselves. The shift from ownership to access is altering development and mobility patterns as traditional links between transportation, housing, and labor markets and the shape of metropolitan space morph. 

By framing the sharing economy as an urban phenomenon, this Article sheds important new light on a rapidly emerging scholarly discourse. To date, scholars have failed to recognize the sharing economy’s deep reliance on the urban fabric and its potential to mold that fabric. Understanding this relationship will also lead to better calibrated regulatory responses that reflect the sharing economy’s holistic impact on cities. Equally important, it will firmly ground our understanding of the sharing economy in its urban birthplace as it matures.

The Takings Clause and the Contracts Clause: Friends or Foes?

I’ve been doing a lot of research lately on how property law and the law governing debt recomposition interact—specifically in the context of the Puerto Rican debt crisis. Two major concepts that keep coming up in my research are the Takings Clause and the Contracts Clause.

Property law professors routinely teach eminent domain and Takings Clause concepts in class. In fact, it’s rare to attend a property law conference these days without at least several panels being devoted to such topics. But, I’ve not spent much time thinking about the Contracts Clause—or how it’s different from/similar to the Takings Clause.

Let me make this a little more concrete [BEWARE: this is going to be long-winded] . . . the Supreme Court recently struck down Puerto Rico’s Recovery Act. For those who haven’t been following this as obsessively as I have, Puerto Rico has been going through a bit of a debt spiral of late (to the tune of about $72 billion). Rather than waiting for Congress to do something about it, back in June 2014 Puerto Rican lawmakers decided to take things into their own hands and passed something called the Public Corporation Debt Enforcement and Recovery Act. The new law essentially created a bankruptcy-like process for the island to restructure its debt (I am summarizing, of course. For a more in-depth discussion, the good folks over at CreditSlips have some great descriptions and analysis).

Naturally, the island’s bondholders didn’t greet this new law with open arms. A group of them quickly filed a lawsuit in late summer 2014 arguing that the Recovery Act was unconstitutional. They raised a number of claims, including that the Act was preempted by the U.S. Bankruptcy Code. Now, despite the way oral arguments seemed to go, on June 13, 2016 SCOTUS struck down the Recovery Act in Commonwealth of Puerto Rico v. Franklin California Tax-Free Trust et al., holding that it was preempted by the federal bankruptcy code (specifically, Section 903).

But the part that got me thinking didn’t have anything to do with the Bankruptcy Clause—instead, I got interested in some of the other claims that the bondholders made, but that were not decided by the Court. They asserted in their complaint that “The operation of the Act, as enacted by the Commonwealth and signed into law by the Governor, threatens to improperly impair Plaintiffs' rights . . .  in contravention to . . .  the Takings Clause, and the Contract Clause.” See Amended Complaint, Franklin California Tax-Free Trust et al., 2014 WL 4954576 (D. Puerto Rico) (Trial Pleading). So, basically, modifying the creditor’s debt would violate the Contracts Clause and the Takings Clause—so Puerto Rico can’t do it – because both constitutional rights apply—or something like that—Right?

THE CONTRACTS CLAUSE

The Contract Clause (Article I, Section 10, Clause 1) states that “[n]o state shall . . . pass any . . . law impairing the obligation of contracts . . . .”

By its very terms, it only applies to the states (i.e., feds, this isn’t a problem for you). The Contracts Clause has a storied history—ebbing and flowing from importance to obscurity. In the early days of the republic (often called the Critical Period, being that time during which the Articles of Confederation were in effect) it was precisely due to a fear of state governments interfering with the rights of creditors that the provision was ultimately included in the federal constitution. As background, after the American Revolution many citizens of the new country found themselves horribly in debt. As a result, various state legislatures began passing laws to ease their pain (which creditors didn’t like very much). Drafters of the constitution found these “invasions into the contracts of private parties” harmful to commerce and the general course of business so they decided to put a limitation in place. See Ogden v. Saunders, 25 U.S. 213, 354 (1827) (for some angry commentary by Chief Justice Marshall).  As with so many other provisions in the federal constitution, numerous state constitutions contain parallel contracts clauses as well.

THE TAKINGS CLAUSE

The Takings Clause (in the Fifth Amendment), on the other hand, provides that “private property [shall not] be taken for public use, without just compensation.”

Going back to the early days of the Republic, Thomas Jefferson and his buddies who were opponents of a strong central government advocated for the Bill of Rights (which contained the Fifth Amendment), but they weren’t the first to come up with the idea of protecting private property from the government. The Magna Carta had a similar idea going on, and the concept was already fairly prominent in various state constitutions during the period of the Articles of Confederation. 

Initially, the Takings Clause only applied to the federal government (i.e., states, not your problem). Chief Justice Marshall stated in Barron v. Mayor and City Council of Baltimore, 32 U.S. 243 (1833) that “The provision in the fifth amendment to the constitution of the United States, declaring that private property shall not be taken for public use, without just compensation, is intended solely as a limitation on the exercise of power by the government of the United States; and is not applicable to the legislation of the states.”

But that all changed with the ratification of the Fourteenth Amendment in 1868. In Chicago Burlington and Quincy R.R. v. City of Chicago, 166 U.S. 226 (1897) the Court stated: “‘Whatever may have been the power of the states on this subject prior to the adoption of the fourteenth amendment to the constitution, it seems clear that, since that amendment went into effect, such limitations and restraints have been placed upon their power in dealing with individual rights that the states cannot now lawfully appropriate private property for the public benefit or to public uses without compensation to the owner.”

To the point about the recomposition of debt, SCOTUS later developed the regulatory takings doctrine in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), which provides that the government need not physically dispossess a person from his property in order for a takings claim to be raised. Rather, the government could restrict or regulate the use of property to such a degree that the state action was tantamount to a physical taking.

THE CLAUSES WORKING TOGETHER (OR NOT)

So now, when a state government takes an action that causes an impairment or modification of a contract, an aggrieved party can asset claims under both the Takings Clause and the Contracts Clause. That got me wondering—are they really, practically different? Do they produce different outcomes? Are those outcomes consistent? Do courts do a good job (or even try) when it comes to differentiating between the two?

I’m still working on the answers to those questions, but what does seem clear to me is that there doesn’t appear to be very clean lines here. The law is a bit…well…cloudy.

Take the Contracts Clause, for instance. Contemporary cases have held that just because a law impairs a contact doesn’t necessarily mean that it’s prohibited. Cases like U.S. Trust v. New Jersey, 431 U.S. 1 (1977) and Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978) hold that this clause still has to be squared with “the inherent police power of the State to safeguard the vital interests of its people.” See Energy Reserves Group, Inc. v. Kan. Power & Light Co., 459 U.S. 400, 410 (1983). The Supreme Court noted in U.S. Trust that “an impairment may be constitutional if it is reasonable and necessary to serve an important public purpose.” So the prohibition isn’t all that prohibitive after all.

In the context of the Takings Clause, courts have held that various government actions, despite limiting or restricting the use of property, nevertheless do not raise a takings claim. Regulations related to providing for the general welfare, for instance, are perfectly permissible. The court in Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 105 (1978) stated that where the government “reasonably conclude[s] that ‘the health, safety, morals, or general welfare’ would be promoted by prohibiting particular contemplated uses of land,” there is no requirement to compensate the owner. Joe Singer points out in Justifying Regulatory Takings, 41 Ohio N.U. L. Rev. 601 (2015) that:

Key examples of laws that promote the public welfare are zoning and environmental laws and consumer protection laws such as building codes. The Supreme Court has upheld against takings challenges laws that impose height limits and setback requirements, as well as zoning laws that segregate residential, commercial, farming, institutional, and industrial uses. The Court has upheld public accommodation laws and implicitly approved fair housing and employment discrimination laws. It has allowed minimum wage and maximum hours laws and workplace safety laws to operate without challenge.

Both clauses are, in a sense, concerned with protecting the sanctity of property rights (be they tangible—like land or personalty—or intangible—like those arising from a contract creating debt). One obvious difference is that with the Takings Clause it’s still possible for state governments to “take” property as long as they do so for a public purpose and just compensation is paid. Under the Contracts Clause, however, states are flat out prohibited from impairing a contract right. But, as indicated above, both of these commands can ring a bit hollow. States can pass laws that break contracts when it's “necessary and reasonable” and states can regulate property without causing a taking when its “justified.” And if a state is prohibited from impairing a contract, then can they just turn around and claim they're doing it under the Takings Clause? Can a public purpose be "necessary and reasonable" for Contracts Clause purposes and yet not "justified" for Takings Clause purposes? What about the other way around? Are these standards different or are they the same thing?

So what does all this mean for the distinction between the two? Can they always be raised together in the face of state action? What are the defining features/lines that make them wholly separate concepts—or is it better to think of them as being interlocking (like how Justice Kennedy describes the Equal Protection and Due Process Clauses in Obergefell v. Hodges)? I hope to formulate some answers to these questions (or at least sound a bit more like I know what I’m talking about) in the months ahead. Your thoughts are welcome and appreciated in the comments below.

Kids Learn the Darndest Things About Property Law

I am in recovery.

Recovery from spending two back-to-back weekends chaperoning eight-year-old girl sleepovers.

During the last weekend of April, I took my daughter and her Brownie Troop camping. Sure, thirteen little ones look cute standing on the dock making funny faces after fishing, but at 3pm when the heavens open and you are standing amid a rain storm with a group of screaming second graders, they are not quite as adorable. Or when 2am rolls around and the girls are like whac-a-moles—you get one in the tent in her sleeping bag and another one pops up. Again, not the precious angels shown here.

The next weekend (aka three days ago), my daughter had a sleep over to celebrate her eighth birthday. There were games, there were ice cream sundaes, there were high-pitched squeals. There was staying up until the wee hours of the morning to make sure the girls stayed down all night, and there was waking up before sunrise because, well, the girls were up and I like the downstairs of my house too much to let them have unsupervised control over it for any lengthy period of time.

While chaperoning these weekends of elementary school bliss, I realized that I could teach the better part of my 1L property class to the girls using the experiences they were having. It was a real life, in the moment type of class a la Jerry’s field class at the University of Idaho. It was, in the words of Tony the Tiger, grrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrreat.

I started at the very beginning, asking “what is property?” The girls looked at me like I was crazy, but then, so do my 1Ls when I ask the same question. Are your thoughts property? Is your persona property? Is your body property? All of these questions were dealt with during my chaperoning weekends.

8-year-old #1: (high-pitched yelp) She’s touching me! She’s touching me!
8-year-old #2: (higher-pitched yelp) She started it! She touched me first!
Me: (after drinking a sip of beer) Everyone keep your hands to yourself. Your body is yours, though we don’t want to call your body your “property” as that has negative connotations. But you have full rights to exclude everyone else from your body, unless parts of your body or organs have been removed, in which case you have no rights to them. See Moore.
8-year-olds #1 and #2: (looking at me like I have two heads) Huh?
Me: Well, you see there was a guy in California . . . . (8-year-olds run off, having forgotten what they were fighting about and now sharing the common thought that I’m nuts, not unlike my 1L property students)

Next, I taught about the Tragedy of the Commons.

Me: (putting out four large, family-sized bags of potato chips that were sufficient to feed an army) Snack time!
All 8-year-olds: (gulping down chips like they have not been fed for days) Gimme! She got more chips than I did! (munch, munch, munch) I want more! (smack, smack, smack)
Me: Sigh. (drinks longer sip of beer) I will divide the chips into even amounts for you, otherwise you will overconsume the chips out of fear that someone else will get your chips, thereby depleting all of our chips, and leaving us with no more snack time resources. This is a good time for me to tell you a story. Gather ‘round everyone for a cattle-grazing tale by a man named Garrett Hardin . . .
My 8-year-old: (whispering) Mom, please don’t embarrass me.
Me: Siiiiiigh. (opens another beer)

Then we moved into what makes up the proverbial bundle of sticks of property rights by first looking at the right to exclude.

8-year-old #1: (in a whining voice because she has a belly ache caused by overconsuming chips) She’s laying on my sleeping bag and pillow!
8-year-old #2: (in an equally whiny voice) I like yours more than mine. Let’s trade.
8-year-old #1: I want mine! Make her give me mine!
Me: Everyone has to use their own sleeping bag. No one touch other people’s stuff. Your sleeping bag is your own personal, private property so you have the ability to exclude everyone else from your sleeping bag.
8-year-old #1: (whispering in my 8-year-old’s ear) What is your mom talking about?
My 8-year-old: (opens her eyes wide, glaring at me with that “please be quiet” look) Mooooooom!

Having multiple kids sleeping in the same tent naturally leads to a discussion about the right to include.

8-year-old #1: (tears streaming down her face) They won’t (sob) let me (sob) in the tent!
Me: Everyone in the tent come out.
Three girls come out, looking sheepishly.
Me: You can’t exclude anyone from the tent. Everyone gets the right to use the tent. The tent is like a public thing or a quasi-public thing. Everyone has a right to . . .
8-year-old #1: (no longer crying) Do y’all want to go fishing?
All 8-year-olds: YAY! (they run off)
Me: Sigh. (shotgun second beer)

Fishing brings us to a lesson in the rule of capture.

8-year-old #1: I caught a fish! I caught a fish! I caught a fish! (waiving around a fishing rod with a small bass hanging on the end, still stuck on the hook)
Me: Hold still and let me take the fish off the hook. (insert mild expletives under my breath as I get stuck by the hook while removing the fish) There! (throw the fish into the bucket that is holding all of the fish)
8-year-old #2: Ooooh! I want your fish! (sticks hands in the bucket)
8-year-old #1: She’s touching my fish!
Me: Don’t bother the fish. That’s her fish because she caught it. When you capture something that is a res nullius, like a wild bass, it becomes yours under the rule of capture. The rule of capture is really fascinating because . . .
8-year-old #3: We’re catching tadpoles over here!
8-year-old #1 and 2: FUN! (recently caught fish is dropped on the ground and jumps around, finding its way back into the lake before I can grab it)

Catching tadpoles with nets allowed for a lesson in future interests and, shocking as it may be, the RAP (or at least the fundamental ideas behind the RAP).

8-year-old #1: (to 8-year-olds #2 and 3) You can use the net now, but after y’all use it, you have to give it back to me.
8-year-old #4: I want a turn!
8-year-old-#1: I gave the net to 8-year-olds #2 and 3 and then I get the net back.
8-year-old #4: (looking at me) She won’t let me have a turn!
Me: (looking at 8-year-old #1) You can’t control who uses the net that long after it’s been in your possession. You can only control the use of the net for 21 minutes after your possession of it because otherwise you would be exercising too much long-term control over the net and for the good of all of us on this camping trip, we want the net to be more transferable and usable by lots of different people so . . .
8-year-old #2: People are going hiking! Let’s go! (drops net into the lake such that I have to wade in to grab it)

Eventually, the fishing, tadpole-hunting, and hiking came to an end and we commenced roasting weenies and s’mores. I brought with us some long roasting sticks and put them out for the girls to use, which prompted a good discussion on adverse possession.

8-year-old #1: (tugging on my shirt while pointing at essentially all of the other 8-year-olds) She took my roasting stick!
Me: (thinking “why did I agree to be the Brownie Troop leader?”) Are you sure it was yours?
8-year-old #1: (confidently) Yes! (pointing aimlessly at the table behind her) I put my stick on this corner of the table three hours ago and told everyone not to touch it, but she (again, pointing at the collective group) picked it up and has been using it to roast two hot dogs and four marshmallows.
Me: (taking a deep breath) She’s been possessing the stick for a pretty long time. I think the stick is now hers. After you adversely, physically, openly possess property for a long enough period of time, that property becomes yours.
8-year-old #1: That’s not fair.
Me: I know it seems unfair, but there are a lot of reasons we say the adverse possessor gets the property. It requires you, the true owner, to pay attention to your marshmallow roasting stick instead of just leaving it, unattended on the table. It creates stability in title so 8-year-old #2 eventually can be confident the roasting stick she’s using is hers and won’t be taken away. It encourages her to use the roasting stick and develop it, shape it, bend it, into the best roasting stick she can make . . .
8-year-old #1: Chocolate!!!! (runs off when a new box of Hershey chocolate bars is opened)
Me: Sigh. (realizes beer is not strong enough so opens up flask of bourbon)

Finally, we all learned about the virtues of easements.

Me: Okay girls, everyone get in their sleeping bags and close their eyes. It’s time to go to sleep.
8-year-old #1 moves her sleeping bag to be right in the pathway I’ve created for the girls to exit the tent
Me: Put your sleeping bag back where you had it. We need to leave a pathway for folks to get out of the tent.
All 8-year-olds in unison: (in a voice that says “I’ll do anything to stay awake a little longer, even listen to your crazy lectures”) Why?
Me: Well, someone may need to potty in the middle of the night, so we need to have an easement so y’all can exit the tent. When you have an easement, you cannot block the use of that easement because . . .
All 8-year-olds: Zzzzzzzzzzzzzz.

There you have it. Property 101 through the eyes of an 8-year-old. We didn’t quite cover everything—I haven’t yet figured out how to work mortgages into the conversation—but we covered a lot. The conversations didn’t go exactly as I’ve described above. The girls were not nearly this whiney, in fact they were all actually pretty good, and while I'm not a particularly cool mom, I am a cool enough mom to not mention Garrett Hardin to my daughter’s friends. But all of the general activities described above did occur and the girls had a great time, which may be more than I can say for all of my 1Ls. Who knows, maybe they even took away a few lessons in property law.

Fitzpatrick on Overlapping Property Regimes

Daniel Fitzpatrick (Australian National University) has posted Fragmented Property Systems (University of Pennsylvania Journal of International Law) on SSRN. Here's the abstract:

This article considers fragmented property systems – the phenomenon of contested, separated or overlapping sub-systems within a national property jurisdiction. One example is circumstances of property despite law. Globally, as many as a billion people claim de facto property without recognition by law in urban informal settlements and agro-pastoral or forested areas. Another example is property without transition to law. Many households in the developing world regulate land markets through local mechanisms notwithstanding opportunities or requirements to use law. The article provides a conceptual frame for the emergence of property system fragmentation based on the private coordination of property relations. The article argues that fragmentation emerges in complex property systems where law attempts to displace property coordination mechanisms, but fails to induce a critical mass of property participants to alter coordination strategies. A focus on coordination provides a means to combine the methodological individualism of economic narratives with collective variables highlighted by other perspectives on property such as anthropology and complex systems theory.

Adverse Possession, Takings and the State

William Marra, Harvard Law School, has posted Adverse Possession, Takings, and the State on SSRN.

Here's the abstract:

Normally, the government may not seize private land without paying for that land. Yet it turns out that governmental bodies sometimes avail themselves of the laws of adverse possession, taking title to private land without paying the landowner. This phenomenon, largely ignored by the scholarly literature, raises two questions. First, should the government be allowed to adversely possess land in the same manner as private individuals? Second, when the government commits adverse possession, does this constitute a constitutional “taking” that requires the payment of just compensation? These two questions are of practical importance because they affect the resolution of numerous property claims, and they are of theoretical significance because they implicate both the appropriate scope of private property rights and the proper relationship between the individual and the state. Part I provides an introduction to adverse possession, and Part II studies the law of government adverse possession, detailing how nearly every jurisdiction permits the government to adversely possess private land in the same manner as private individuals. But as Part III demonstrates, government adverse possessors are not similarly situated to private adverse possessors, and the laws of adverse possession are built on a trio of assumptions — that the landowner has a property rule entitlement to her land, that the trespasser develops robust reliance interests, and that society’s primary interest is in quieting title — that do not necessarily hold when the government is the adverse possessor. Part IV concludes that because the current rules of adverse possession incentivize government trespass upon private land, special rules should apply to the government. When the government adverse possessor trespassed in good faith, a longer statute of limitations should apply; when the government trespassed in bad faith, it should be entirely denied the right to adverse possession. One quick fix to the problem, proposed by a federal court and endorsed by some commentators, is to call government adverse possession a constitutional taking and require the state to pay just compensation. Part V explains that the problem cannot so easily be wished away, and contends that the text of the Constitution, its history, and Supreme Court precedent all suggest that government adverse possession is not a taking. The solution to the problem presented by government adverse possession rests in righting property law, not distorting constitutional law.

By way of comparative comment:

• It is interesting how "takings" issues are such a significant part of constitutional discourse in the US, and in my nearer neighbour, Australia.  New Zealand, without a formal written constitution, and without any "takings" provision, is in a different world in this sense.  I have recently been exploring how the absence of this regime makes it easier to "propertise" resources (and also regulate them without having to worry about compensation issues) for a forthcoming article for the New Zealand Universities Law Review.
• Adverse possession was a part of my NZ Land Law course, as it remains part of US property courses.  In New Zealand the law is statute based, and there would be very few adverse possession cases in New Zealand: one of the recent ones concerned a fairly isolated block of farm land with a fence in the wrong place (rather than the "squatter's rights" (of an abandoned house, for example) I imagined at law school).
• Marra hasn't steered away from takings.
• An empirical study of adverse possession (comparative, Commonwealth or otherwise) would seem to deserve attention.
• 

Thomas Gibbons

"Property Law" at law school

I didn't take a course in "Property" in my New Zealand LLB; rather, I took courses in "Land Law" and "Equity and Succession".  Some thoughts:

* The basis of Land Law was the Torrens system and issues around indefeasibility, though of course estates in land, the relationships of landlord/tenant and mortgagor/mortgagee, easements, adverse possession, etc were part of the paper.

* Equity and Succession covered trusts, wills, and equitable jurisdiction (though in NZ, common law and equity are in a single court system - and some would say are "fused", at least to some extent).  This also considered realty vs personalty.

* Personal property and intellectual property were generally part of optional courses.

What this means is that the rule against perpetuities was part of Equity, rather than "Property" (and in New Zealand we have a Perpetuties Act, which generally makes things much easier).  It seems to be an obsession of US teachers (and students) of "Property"!

The failing of this system, however, was the lack of an overview of "Property" as a whole.  It is one thing to learn about land registration, estates in land, trusts, and so on - but quite another to miss out on "what is property?" (particularly given my earlier comments on the lack of graduate law courses in property).  On the other hand, that has had the benefit of discovering Rose, Heller, Gray, Merrill and Smith by reading them, rather than being taught them - which might be the best way to learn.

But what do the Americans think - is the rule against perpetuities here to stay in the first-year Property course?  Does it belong somewhere else? Will the first-year Property course itself remain in its current (varied) forms?

Thomas Gibbons

Property Rights

"Property rights" is a phrase more often treated normatively than positively.  "Property rights" are often seen as something essential to a modern economy and/or economic development.  But less of the literature makes an effort to define what property rights actually are.

Which is interesting, as both parts of the term - the word "property" and the word "rights" are often contested terms.  It seems they can each be extensively debated on their own, but once we put them together, no debate is needed: we have a clear, monolithic, normative phrase.

I disagree.  But do others?  And if you disagree, what is the best working definition of "property rights" that you have seen?

 

 

 

Beyond Blackacre: Blueunit?

Carol Rose has written:

“What is the symbol for property? It is easy to answer that land is that symbol…but why is land – immovable, enduring land – the central symbol for property?  Why not, say, water?  Water, after all, is in fact the subject of important and valuable property rights, and, indeed, concerns about water can substantially modify the rules about land.  If water was our chief symbol of property we might think of property rights - and perhaps other rights – in a quite different way.  We might think of rights literally and figuratively as more fluid and less fenced-in; we might think of property entailing less of the awesome blackstonian power of exclusion and more of the qualities of flexibility, reasonableness and moderation, attentiveness to others, and cooperative solutions to common problems.  Those qualities are in fact even a part of landed property – as in nuisance law – however little the symbol of landed property may suggest”. (Carol M Rose “Property as the Keystone Right?” (1996) 71 Notre Dame L Rev 329 at 351 – the New Zealand way of referencing!)

We might ask – is Rose’s view of land itself too monolithic a symbol?  “Land” means very different things in different contexts and at different times.  “Land” includes vast areas of farmland; various types of estates and interests; smaller blocks; and sometimes, buildings.  We might pause to reflect that the common example of “land” is a piece of land known as Blackacre.  But, why Blackacre? Why not Greenlease or Blueunit?  In fact, developments in the law of subdivision and land use, and the widespread development of “common interest communities” mean that Blueunit is – now and in the future – likely to be a far more important area for study than Blackacre.

For what of Blueunit?  The bundle of rights attaching to Blueunit will be very different from the bundle of rights attaching to Blackacre.  The type of exclusionary rights attaching to Blueunit will be different to those applying to Blackacre.  Simple factors such as the proximity of Blueunit A to Blueunit B; the fact that Blueunit A and Blueunit B may share a boundary that is a party wall; the fact that Blueunit A and Blueunit B may have to share payment for repair of a roof of a building which is not part of either of their but of other units within an apartment building; the fact that Blueunit A and Blueunit B may vote together or against each other in their owners’ corporation or body corporate.  The owners of units may be neighbours in much more of a sense than the owners of "acres".

Blueunit needs much more attention.   

Thomas Gibbons

Henry's Myth

One of the benefits of a blog (I am told) is the chance to introduce topics and ideas I know I'll never have the chance to turn into full articles.  Here is the first - an abstract of the beginning of a response to Henry Smith's "Property as the Law of Things":

http://lawprofessors.typepad.com/property/2012/03/smith-on-property-as-the-law-of-things.html

"Henry’s Myth; or, The Baby, the Bathwater, and the Bundle of Rights

Professor Smith’s recent article “Property as the Law of Things” (2011) 125 Harv L Rev [forthcoming] argues that the legal realists’ notion of property as a “bundle of rights” should no longer be considered useful to property lawyers and jurists.  This paper argues otherwise, pointing out that (a) Smith has misrepresented the intellectual origins of the idea of property as a bundle of rights; (b) the “bundle” is more appropriately seen as a metaphor, rather than a description, and Smith has misrepresented this metaphor;  (c) Smith’s new “modular architecture” metaphor bears more resemblance than Smith will admit to the idea of the bundle; and (d) there remain a number of examples for which the bundle of rights is a better analogy than modular architecture.  This paper criticises the notion that the bundle of rights metaphor must give way to a modular architecture analogy as “Henry’s myth”, and concludes that we should not too easily abandon an enduring metaphor like the bundle of rights without being aware of what else might be lost: the bundle of rights remains something of a “baby” within the bathwater of property law theory."

Mostly, I think, it is just a good title.  It begins from an assessment that Smith - and others - treat the "bundle" as a realist idea, when the phrase significantly pre-dates the realists and the legal realist movement.  Further, a bundle is something we can picture quite well - "agenda setting" (as per Katz) or "modular architecture" less so.  That said, the abstract is less nuanced than an article would be (as Smith's article is itself more nuanced than its title).

Comments welcome, but as I said, it's not likely to be something I have time to turn into a proper article, so as much as anything, I hope perhaps someone else can pick up on it. 

Thomas Gibbons

Introduction

Hello All,

Steve's introduction probably says it all, though it should have been "Australasian law journals (mostly NZ really)".

My recent work has appeared (or is forthcoming) in a balance of professional and academic journals - first point of comparison: New Zealand essentially doesn't have student-edited law reviews.  There are what you might call "bar journals" (mostly for the profession) and "refereed journals" (which are refereed, generally on a blind peer-review basis).  Some journals are student-edited in the sense of citation-checking, etc, but most publication decisions are made by faculty members. 

My forthcoming academic articles are on "property rights in resource consents: some thoughts from law and economics" and a "response" article on issues with remedial schemes for leaky buildings, taking into account ideas from gridlock and the role of morale in property rights.  Professional articles have been on body corporate AGM's (governance of common interest communities, sort of), and management agreements for bodies corporate (management of common interest communities, sort of).

My interest in unit titles deserves a bit of an introduction.  These are called "strata titles" in Australia, and the nearest US comparison is probably with condominiums, but NZ law has become particularly prescriptive and is probably less flexible than US law in this area.  I hesitate to use the phrase "common interest communities" because unit titles are a particular type of title/ownership/governance - very different to say a fee simple subdivision, even though in particular instances both/neither may relate to gated communities, or private infrastructure, etc.  A recent book with an NZ connection has used the term "Multi-Owned Housing", but I don't think that is quite right either, because many of the unit titles issues relate to mixed-use developments (commercial, residential, retail, etc).

I am particularly interested in the intersection (good academic word) of unit titles with administrative law, company law, and broader ideas of property theory.

Finally, my "day job" is as a director (aka partner, but we incorporated pursuant to an NZ law change) of a mid-size law firm.  My practice covers both company/commercial and property law, as well as the management and other responsibilities of being in this role. 

Also, I am guest lecturing securities law at the University of Waikato this semester.  Interestingly (by way of comparison) NZ is seeing a complete overhaul of securities law after the GFC - but property law is essentially untouched (no greater regulation of mortgagees, foreclosure, etc).

That's enough introduction for now.  Other posts will hopefully be more substantive.

Thomas Gibbons

 

Mossoff on Locke’s Labor Theory and Intellectual Propert

Adam Mossoff (George Mason) has posted Saving Locke from Marx: The Labor Theory of Value in Intellectual Property Theory (Social Philosophy & Policy) on SSRN.  Here's the abstract:

The labor theory of value is fundamental to John Locke’s justification for property rights, but philosopher Edwin Hettinger argued in an oft-cited article that it fails to justify intellectual property rights. In making this critique, though, Hettinger redefined Locke’s theory into a theory about proportional physical labor creating economic value, just as Robert Nozick, G.A. Cohen and other philosophers have done. In response to this strawman attack, this article describes Locke’s labor theory of value and how Locke himself applied it to intellectual property rights. It does so by analyzing the actual text of the Second Treatise, including many forgotten or neglected sections, and by integrating Locke’s property theory within the context of his natural law ethical theory, as presented in An Essay Concerning Human Understanding and in other works. In its proper context, Locke’s concept of labor refers to production, which is both an intellectual and physical activity. His concept of value refers to what serves the flourishing life of a rational being, which is a conception of the good that is more robust than merely physical status or economic wealth. Locke’s own text and philosophical arguments answer the absurdities imposed on him by Hettinger, Nozick, Cohen and others. Even more important, understanding his labor theory of value explains why Locke expressly approves of inventions in his property theory and why he explicitly argues that authors have property rights (copyrights) in their writings, which are arguments that are seemingly lost on his modern critics.

Steve Clowney

Munzer on the Bundle of Sticks

Stephen Munzer (UCLA) has posted A Bundle Theorist Holds On to His Collection of Sticks (Econ J. Watch) on SSRN:

For nearly a century, most persons who have studied or written about property have conceived of it as a bundle of rights or, colloquially, as a bundle of sticks. In the mid 1990s, several philosophically minded academic lawyers questioned whether property should be thought of as a bundle at all. The impact of their work is reflected in Merrill and Smith (2007), a highly regarded and intellectually challenging casebook used in many U.S. law schools. Merrill and Smith emphasize that property is centrally a right to exclude and is generally held in rem, that is, is good against all the world. They find bundle theories of property defective for various reasons. This essay argues to the contrary. There are solid grounds for holding on to at least some bundle theories, which facilitate the careful analysis of the complexity of property. Moreover, Merrill and Smith’s criticisms are often misguided or ineffective. Lastly, their account gives an overly simple picture of property and views property law as a more unified subject than it actually is.

Steve Clowney

Property: A Bundle of Rights?

Econ Journal Watch has a fantastic mini-symposium titled Property:  A Bundle of Rights?  Here's the description:

Lawyers and social scientists often describe property as a “bundle of rights.” What are the connotations of “bundle”? What features of property does the “bundle” talk obscure or even deny? What are its political consequences?

In the past 15 years, the “bundle of rights” view has been provocatively challenged, notably by James E. Penner, Thomas W. Merrill, and Henry E. Smith. This symposium brings the challenge to the fore, as these leading critics elaborate the core points of contention. They are joined by three younger critics of the “bundle” view [Eric Claeys, Adam Mossoff, and Larissa Katz], each with a fresh perspective.

Two eminent legal scholars, Richard A. Epstein and Stephen R. Munzer, take up the challenge. Each mounts his own defense of “bundle of rights” theory. Another renowned property scholar, Robert C. Ellickson, weighs in and stakes out a middle ground. 

Check it out!

Ben Barros

[Comments are held for approval, so there will be some delay in posting]

Rahmatian on Dematerialized Property

Andreas Rahmatian (Glasgow) has posted two new articles on SSRN.  The first is Intellectual Property and the Concept of Dematerialised Property:

A property right (ius in rem, real right) is an abstract legal concept which relates to an object, referred to as “thing” or “res,” or imprecisely, but commonly, “property.” This object of property is a product of legal categorisation; it may be represented by a physical thing or it can be an abstract legal creation itself, as is the case with an intellectual property right. In any event, for the law the “property-object” (whether tangible, intangible or purely intangible) is the product of a legal conceptualisation. The law (private law) creates any res or thing, whether corporeal or not, through the legal concept of real rights. That enables legal recognition of the res in question. The material object (if there is one) only becomes a res in law if real rights are attached to it. Therefore, real rights and res are both “property”, and particularly with (purely intangible) intellectual property, property rights and property objects merge into one. The abstract conceptual res typically has a reifier to make it recognisable in the material world and for the purpose of social interactions. This reifier can be a corporeal object, in which case it is a direct reifier (a table being a direct reifier and incident of a res, chattel), but, for example in case of copyright, a chattel may act not only as direct reifier of the notional personal (moveable) property right (e.g. a canvas of a painting, the score of a symphony, the paper of a manuscript), but also as an indirect reifier of the notional copyright (artistic work, musical work, literary work). The chattel in question represents directly the personal/moveable property (but does not constitute it, because the res remains a legal concept), and, in addition, the chattel represents indirectly the copyright in the work which is expressed and recorded in the chattel in question (a painting, sculpture etc.).

The second is Introduction: Lord Kames and His Principles of Equity:

One should regard the Principles of Equity by Lord Kames (1696-1782) as a work of applied legal philosophy rather than black-letter law. It is secondary whether the law was exactly as stated in the Principles of Equity, especially as that would have been the legal situation 250 years ago anyway. What is relevant is that the book contains a logically organised and principled jurisprudential discussion of scenarios of conflicts and proposed solutions by the law of equity. One should be able to detect and develop a set of legal solution mechanisms, abstract paradigms of concrete legal rules which may serve as an inspiring force for real life solutions without slavish adherence to the model. The Principles of Equity fill the gap between the philosopher who is often creative but not meticulous, and the lawyer who is often meticulous but exegetic. Where the lawyer has to be meticulous and creative and needs the approach of an applied philosopher as well as a legal specialist, particularly in the role as a legal theorist or as a draftsperson of statutes and contracts, he or she will find an excellent teacher in Kames. His work shows that law is not rote learning of statutes and cases and their mechanical application, but a craft as a basis for the art of justice, a craft that should be rooted more in reason than in authority.

Ben Barros

[Comments are held for approval, so there may be some delay in posting]

Rosenbloom on Local Governments and Common Pool Resources

Jonathan Rosenbloom (Drake) has posted New Day at the Pool: State Preemption, Common Pool Resources, and Non-Place Based Municipal Collaborations on SSRN.  Here's the abstract:

State preemption laws strictly limit local governments from regulating beyond their borders. In contrast, local governments face a broad spectrum of challenges which cannot be confined to municipal borders. These challenges freely flow in and out of many local jurisdictions at the same time. The juxtaposition of limited local government authority and multi-jurisdictional local challenges has the potential to create inefficiencies and to discourage local governments from seeking innovative solutions to the challenges they face. In an attempt to help local governments avoid these inefficiencies, this article investigates whether municipal collaborations can help encourage local governments to address broad-based environmental, social, or economic challenges notwithstanding state preemption laws. The article draws on 2009 Nobel Memorial Prize winner in Economic Sciences Elinor Ostrom’s work and applies it to a new context. Guided by Ostrom’s research on place-based, individual private sector collaborations, public sector municipal collaborations are envisioned as forming around common challenges, regardless of geographical location. The non-place based municipal collaborations are proposed as a rethinking of existing local government authority, and not a reallocation of authority from higher levels to the local level. They seek to capitalize on the power local governments already have without departing from existing legal paradigms.

The objective of the article is not to suggest one strategy over another or one level of government action over another, but rather to propose an additional forum for local governments to address pressing local problems. By changing the motivating factors and the perspective on local sovereignty, the article recognizes that some issues are best addressed through collaboration among municipalities.

Steve Clowney

The Ikea Effect and Locke's Theory of Property

Eric Johnson has a great post over at Prawfsblawg on John Locke and IKEA:

I'm reading Predictably Irrational a behavioral economics popularization by Dan Ariely. I was struck by how much Ariely's exposition of irrational human attitudes toward ownership tracks John Locke's theoretical justification for private ownership of property. Ariely writes:

[T]he more work you put into something, the more ownership you begin to feel for it. Think about the last time you assembled some furniture. Figuring out which piece goes where and which screw fits into which hole boosts the feeling of ownership. ... I can say with a fair amount of certainty that pride of ownership is inversely proportionally to the ease with which one assembles the furniture ...
(Predictably Irrational, p. 175)

Ariely calls this the "Ikea effect." For me, living with a bunch of furniture I got from Ikea about 10 years ago, I would say the Ikea effect is that the more time I wasted assembling the furniture back then, the greater is my present-day desire to destroy it with an aluminum baseball bat.

If Ariely/Locke is correct, why do I also have such mixed feelings about my IKEA furniture?  Is Ariely just wrong?  Is it because I know IKEA stuff is cheap and the self-assembly reminds me of that? 

I think it's that the dollars that I spent on my enormous recliner (I'm talking two cup-holder big!) are actually a better representation of my "labor" than the horrible hour spent putting together my latest Hoovelstrum.  I feel more invested in my fancy furniture because I know how many hours I had to work to be able to afford it.  

 

Steve Clowney

Robertson on Public Access to Private Land for Walking

Heidi Robertson (Cleveland State) has posted Public Access to Private Land for Walking: Environmental and Individual Responsibility as Rationale for Limiting the Right to Exclude (Georgetown Int'l Envtl Law Journal) on SSRN.  Here's the abstract:

Whether people have an independent right of access to walk on land they do not own is a question answered differently throughout the world, largely due to cultural, historical, and political variations amongst regions. In this decade, English citizens gained a legislated right to roam on privately owned land designated by the government for public access. The British government now designates land as access land by evaluating the nature of the land itself, not its ownership status. In Sweden, the right to roam on land owned by another has long been a deeply rooted cultural tradition, though not codified in law. Other countries have adopted variations of a right of access, while some, like the United States, continue largely to resist it, choosing instead to hold property owners’ right to exclude above a public right of access. This paper looks at some of the historical and cultural reasons countries have adopted, cherished, or rejected a public right of access to privately owned land. In particular, it focuses on the degree to which each culture values environmental and individual responsibility.

To do so, it considers the Scandinavian countries, with an emphasis on Sweden, where a public right of access is longstanding and cherished, and there is a corresponding deep respect for the environment and individual responsibility. It then considers England, which has moved decisively toward granting broader rights of access to certain types of land through legislation, grounding that expansion on the satisfaction of certain rules pertaining to environmental and individual responsibility. It also looks briefly at several countries in Europe,where environmental and individual responsibility, as well as other cultural factors, have supported expanded rights of access. Finally, it raises the question why the United States does not have, and will not likely achieve, a similar legislated or cultural right of access to private land for walking.

I saw Heidi give a version of this paper at ALPS and thought it was terrific.  I'm going to bring some of this research into my class this year.  In particular, I think her case study of Sweden provides a great counterpoint to the right to exclude cases in Dukeminier.

Steve Clowney

Dagan Pluralism and Perfectionism in Private Law

Hanoch Dagan (Tel Aviv University) has posted Pluralism and Perfectionism in Private Law on SSRN:

Many private law scholars strive to divine broad unified normative theories of property, contracts, torts, and restitution (or, at times, even of private law as a whole). These monist accounts suggest that one regulative principle guides the various doctrines of these complex legal fields or that, even if more than one value shapes a given field, there is one particular balance of such values that guides the entire terrain. Notwithstanding the intuitive appeal of such structural monism, this Essay calls for a pluralist turn in private law theory and argues that a structurally pluralist and moderately perfectionist understanding provides a better account of private law generally and of property law more particularly. The multiplicity and complexity implied in such an understanding are also normatively valuable for liberal private law and should facilitate a variety of social spheres embodying different modes of valuation.

Steve Clowney