Author: Mark Edwards

23

Evicting the Blameless Tenant

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One of the most pernicious effects of the mortgage crisis has been the eviction of blameless tenants. Leases are usually terminated by foreclosure. Tenants who have never missed a rent payment, and who have no idea that their landlord has not been applying rent payments to their mortgage obligations, suddenly face eviction — often with no notice.

It is difficult to overstate the trauma of the eviction. Tenants are not only turned out into the streets. Often their personal property is put on the curb or thrown into dumpsters. They don’t just lose their homes — they can lose everything they own. Passing rainstorms or scavengers can turn a lifetime’s worth of work into nothing. Children in particular can be traumitized by seeing parents rendered powerless, by losing their possessions, and by the fear of the unknown. Violence is a constant threat.

The problem is so pervasive, and so normatively objectionable, that county sheriffs upon whom the burden of eviction falls have been refusing to carry out the evictions under some circumstances. Most famously, Thomas Dart, the sheriff of Cook County, Illinois, unilaterally imposed a moratorium on the eviction of renters in foreclosed properties, over the howling objections of the banks.

I have written previously, and am writing still, about what happens when legal institutions face a divergence between the legality and social acceptability of behavior. Generally, institutions of enforcement don’t enforce the law; they enforce the limits of acceptable deviance around the law (think speed limits). When they are called upon to enforce the law in a manner that conflicts with standards of social acceptability, it is often the institutions that give way rather than the standards.

It is heartening, therefore, but not entirely surprising, to see that the now re-nationalized Fannie Mae has decided to stop evicting tenants in foreclosed properties.

Fannie Mae has urged private mortgage holders to follow suit, but has met with little enthusiasm. Banks don’t want to become property managers. They want to sell foreclosed properties as quickly and cleanly as possible.

But the question we should be asking is, between the lender and the tenant, who should bear the risk that a rental property will be foreclosed upon?

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7

Paradine, WTC, and the beauty of property and contract

One of my most vivid memories of my 1L year was being called upon to present Paradine v. Jane in my property class. I had escaped my stern professor’s lottery system for almost the entire semester. Nervously briefing the case, I discovered that it was (a) written in clipped, indecipherable, Shakespearian English and (b) about as relevant to my life as the second law of Hammurabi. Naturally, I was called upon to explain it.

As I stumbled through it, my classmates giggled at the absurdity of the facts. For those who don’t remember, the facts are these: in 1642, Jane had leased land from Paradine, with rent owing at “the four usual feasts.” Shortly thereafter, the land was occupied by an army that had “invaded the realm,” commanded by the ruthless Prince Rupert. Jane did not regain possession of the land for 3 years. When he regained possession, Paradine sued him for back rent. Jane refused to pay, arguing that he was not liable for rent for land he couldn’t use and possess through no fault of his own.

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The court found for Paradine, holding that the lease included an implied covenant to pay rent, come hell, high water, or invading princes. The court reasoned that Jane could have avoided liability under such circumstances by contracting to avoid it; that risk allocation was presumably reflected in the price of the lease; and that since Jane stood to take the upside of unanticipated profits, he must also assume the downside of unanticipated losses. The case is often taught in contracts courses as an impossibility case, but the facts struck me as just a bit unlikely to resemble any issue I might confront in practice.

My doubts about the continuing relevance of Paradine v. Jane were erased by the attacks on September 11, 2001. On that day, a contemporary Prince Rupert attacked again. At the WTC, lessees were deprived of use and possession of land through no fault of their own, and would be for years. As in Paradine, the question arose: who should bear the cost?

Paradine and the WTC attacks are, I now believe, ideal vehicles for teaching several critical concepts about the roles property and contract law play in society.

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4

Henry Paulsen as Mary Bailey

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The disjointed and ad hoc reaction of the Bush administration to this mortgage crisis stands in stark and disappointing contrast to the systemic reaction of the Roosevelt administration to the last similar mortgage crisis. Henry Paulsen seems to have been assigned the role of Mary Bailey during the bank run scene from It’s a Wonderful Life: rushing into the room with a wad of cash, but with little thought of the future.

The Obama administration would be wise to approach the crisis much as the Roosevelt administration did – as a set of difficulties each requiring a specific institutional tool dedicated to its correction, which should function together as a whole to create a new (and hopefully this time, lasting) housing finance superstructure.

To contrast the Bush and Roosevelt approaches, it is useful to recall the ingenious public/private hybrid housing finance system the Roosevelt administration developed. Consider:

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6

Drop Everything and Emulate, III

Here’s a question I pose to my property students when we begin to study takings: is that property which the law declares to be property? Or, are there some things that can never be property, no matter what the law says?

It’s a simple question, but answering it has ripped entire nations into pieces, including the United States. It was U.S. Senator Henry Clay, arguing that abolishing slavery would be a massive taking that would require just compensation to the slave-owners, who said, “that is property which the law declares to be property.”

Once they realize the context of his statement, most students disagree with Clay. But that begs the next question: if the law doesn’t give us the final word on rights, including property rights, then what does?

I then take the opportunity to introduce them to a dapper young attorney who argued that that certain fundamental rights inhere in man – including property rights, and in particular the just allocation of property rights in natural resources.

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5

Don’t Blame Me: I Voted for Lizard People

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Given the enormous complexity of administering a state wide election, it is remarkable that we generally depend upon an army of volunteers — often elderly volunteers, at that — to get it done right on a single day (although early voting is changing that). The Florida fiasco in 2000 pulled back the curtain on our election adminstration wizardy, and revealed a lot of confused and bumbling people operating the machinery. Bush v. Gore was, in the view of Richard Posner, the Supreme Court’s awkward attempt to shut the curtain.

The truth is that in every election, some votes don’t count or are counted wrongly. Usually the margin between the candidates is greater than the margin of error. But when that was not true in Florida in 2000, and it was revealed that every doesn’t count, never had, and never would, the nation as a whole was shaken. The notion that every vote counts was so fundamental to our sense of political identity, that the revelation that it wasn’t true provoked a national identity crisis. A common, bewildered refrain of the time was, “Is this really America?”

Yes, it was. And is, as can be seen today here in Minnesota, where hand re-counting of 2.5 million ballots has begun in the race between Al Franken and Norm Coleman for U.S. Senate. As of this writing, the margin between them is approximately 160 votes.

Much has been written about the dangers of voter suppression, voter fraud, and potential election corruption.

A justifiably less discussed but still vexing problem, is the fact that some voters just aren’t very competent at filling out a ballot, while others are . . . welll . . . nuts. Minnesota’s ballot judges are going to have to try to determine the intent of these people, and it isn’t easy. Minnesota Public Radio has posted some ‘challenged’ ballots — ballots either Coleman or Franken want reviewed by ballot judges to try to determine the voter’s intent. Try it for yourself. Or, watch the recount live. But remember, whoever wins, don’t blame me: I voted for lizard people.

10

Drop Everything and Emulate, II

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This is Oliver Tambo, the second example of a lawyer whose story I like to introduce to my property students. They’ve heard of his more famous law partner, but few have ever heard of him. Here’s what I tell them:

Oliver Tambo was an attorney who helped lead the struggle against apartheid in South Africa. Because of that, he was forced to live in exile for 30 years. When he returned home, he played an important role in the decision to pursue peaceful reconciliation with, rather than vengeance against, his former oppressors.

Tambo had already joined the African National Congress before starting a little two-person law practice in the 1950s, but his experience in practice was critical to the dedication he felt to the struggle. His office was deluged with land disputes arising from a new government policy of taking land owned by Black African families and forceably relocating them to Bantustans, essentially desolate reservations for Black Africans.

He said:

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23

Killing for Leverage

The National Security Archive and Professor David Vladeck at Georgetown University Law Center have done us a great service in securing the release, at long last, of some of the Grand Jury transcripts in the Rosenberg case.

What the transcripts demonstrate is that the United States Department of Justice orphaned two young children because it lost a reckless gamble – and it deliberately used perjured testimony to do it.

Let’s back up. Julius Rosenberg was a spy in service of the Soviet Union. Anyone who denies that fact is deluded.

Julius Rosenberg recruited several others to obtain military secrets that he passed to the Soviet Union. His network passed important information about conventional weapons to the Soviets.

Julius’s wife, Ethel, knew that Julius was a spy. Ethel may have aided Julius in recruiting members of his network – there is some evidence that suggests she did — but there is little evidence that she was a spy herself.

Julius and Ethel were both executed for a particular act of espionage: providing the Soviets with technical secrets about the manufacture of atomic weapons. Julius may have done it; we won’t know until all of the grand jury transcripts are finally released. Ethel did not. We know that, because the grand jury transcripts reveal that the one piece of evidence that tied Ethel to the crime was manufactured. It was a lie.

And the Justice Department knew it.

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2

Drop Everything and Emulate

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My kids’ school had a program called “Drop Everything and Read.” The idea was that no matter what else was on the agenda, every once in a while the kids just stopped what they were doing and made time to actually read (I told my kids that in my rough school, I followed a program called Drop Everything and Run). The point was to prevent them from losing sight, amid the constant hustle and bustle of school, of the joy of learning and storytelling.

Law students often lose sight, amid the alternating grind and panic, of what they might be able to do with a law degree some day. I like to think we’re training them to be wise counselors, people to whom others turn for guidance when the going gets rough. But how do we show them that?

It seems to me that it’s worthwhile, every now and then, to drop everything and talk about some ordinary lawyer who, when history conspired to give them a choice between trying to help people who needed it, and turning away, chose to try. I think of it as “Drop Everything and Emulate.”

The criteria are that the lawyer must be either someone they’ve never heard of who tried like hell to help when needed, or someone who did great things, whom they never realized was a lawyer. And, there must be a tie-in with whatever we are studying at the time.

Last year, I chose the the 75th anniversary of the ‘Reichstag Fire’ Decree of February 28, 1933, to introduce my students to a lawyer named Hans Litten. We were studying zoning and takings at the time. Here’s what I told my students:

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0

A Great Listen

Making my debut on Concurring Opinions this week has its risks. Depending on what happens tomorrow, my entries are either going to read like sweet nothings from Norman Vincent Peale, or a serialized suicide note. I’ve been obsessed with this election. I feel like I’ve scratched the electoral map into my own cheek.

In part, that’s because Minnesota has been wing-nut central in the 2008 elections – or at least it was until Ashley Todd put Pennsylvania in play. Sure, we haven’t had any hoax mutilations, but we’ve had:

Detentions of journalists during the Republican convention (eat your heart out, Beijing!)

Sarah Palin’s greatest shopping spree (who knew we had $75k worth of inventory?)

• The emergence of Al Franken as a serious candidate

• The emergence of Michele Bachmann as a serious lunatic

• Three little, permanently mortifying, words: “He’s an Arab.”

Minnesota has a reputation for niceness and understatement, but if you consider its political history, it’s not that surprising that it’s a little volatile. This is the state that gave the world Gene McCarthy and Paul Wellstone, but also Jesse Ventura and Michelle Bachmann.

One struggle for those of us who are history buffs is to convince our students that history did not begin with the emergence of Facebook. I think that to put this Presidential campaign in its historical perspective, it is necessary to know a little about birth of the Southern Strategy in the transformative campaign of 1968. With that in mind, I’ve suggested that my students give an ear to the outstanding American Radio Works documentary, Campaign ’68: The Dawn of a Conservative Era. You can listen at the website.

7

Nightmares, Norms and Negative Equity

Thanks, Sarah, Dan, and everyone at Concurring Opinions for inviting me to guest blog.

For a Property professor, these are riveting times. The mortgage nightmare continues. As in much of the country, here in Minnesota, thousands of houses stand vacant and decaying. Parts of Minneapolis have been devastated. But the problem may have crested in the cities.

Not so in the suburbs. Five-year subprime ARM loans that were originated in 2004 and 2005, when McMansions were popping up in suburbs like dandelions in my lawn, are not due to re-set their rates until 2009 and 2010. If home values haven’t improved by then, many of those borrowers will have negative equity – that is, they’ll owe more than their homes are worth. That means they’ll be unable to re-finance for as much as they owe, because lenders won’t lend more than the house is worth.

Legal and economic institutions seem at a loss to cope with the crisis, but not for want of trying. There are lots of plans out there, but none seems satisfying. From an academic’s standpoint, it’s fascinating. Rational choice, on the one hand, and norms of fairness, on the other, are interacting in odd and sometimes surprising ways.

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