Archive for the 'Real Estate' Category

So How About that Wall?

President-elect Donald Trump made building a wall on the US-Mexico border a pillar of his campaign. Post-election interviews reveal he intends to keep and act upon this campaign promise. No matter one’s opinion on whether building such a wall is right course of action, there are many practical concerns to be addressed.

How Big and How Expensive will it be?

The US-Mexico border is 1,989 miles long and the President-elect has proposed 35-foot-tall walls. As far as cost, some good estimates can be made as US Customs and Border Protection already began building some fences in 2007 and the Government Accountability Office released a report on the costs and issues faced. The GAO reported that the amount of fence constructed already has cost up to $5 million per mile. Basic math then tells us that this could cost $10 billion just for a fence along the entirety of the border. However, the President-elect has promised a “wall”, this may prove to be even more expensive. Furthermore, the current work was done to tackle areas of public land first to avoid dealing with private land owners. Eventually, the government must either get permission to build across private land or take the land through a process called eminent domain.

How will the Government Get the Land?

TrumpCan the government really take land from private land owners? Yes, it can, both state governments and the federal government may do so. The Constitution specifically allows the government to do so as long as they pay fair market value for the land. That is, if the government wishes to seize the land and the owner refuses to sell it willingly the government may seize it against the owner’s wishes as long as the government pays fair market value.

Another requirement is the seized land must be used for some public purpose. This mean that eminent domain cannot be used to seize land for purely private purposes. For example, a state governor could not use eminent domain to seize land for their friend to build a private home on the land. On the other side, clearly public uses are easily approved, such as seizing land for public utility purposes like electricity poles and telephone cables. Many projects fall in the middle of this spectrum so the legitimacy of eminent domain is questionable in these areas. However, Supreme Court cases on this issue though have found this to be almost a non-issue. In particular, the Supreme Court case of Kelo v. City of New London rendered this issue almost unimportant. In Kelo, the city of New London, Connecticut wished to seize Ms. Susette Kelo’s home so that the headquarters of a private company could be built on the land. While Ms. Kelo asserted that this was a private use, the Supreme Court disagreed. The ruling in Kelo has set precedent that questionable eminent domain takings will usually be upheld by US courts.

Overall, a border wall would likely not encounter any issues with eminent domain. It’s clearly for a public purpose, national security and immigration. With this hurdle passed, the only issue would be fair market value for the land. US Customs and Border Protection has already estimated this cost to be about $800,000 per mile.

Is This Already Happening?

Yes, it is already happening. When US Customs and Border Protection began building these border fences in 2007 they needed some private land that is on the US-Mexico border. Many land owners willingly sold their land, while others chose to fight the taking in court. Unfortunately for the land owners, courts consistently ruled for the federal government. This very thing happened when US Customs and Border Protection needed Dr. Eloisa G. Tamez’s ancestral land to build a border fence. Dr. Tamez took the federal government to court. In 2013 a US court ruled that US Customs and Border Protection could take Dr. Tamez’s land that had been inhabited by her family since 1767. Dr, Tamez’s case is not unusual and similar incidents are very likely to occur if the President-elect carries out his campaign promise.

Is This Really Going to Happen?

It looks like the President-elect’s plan is entirely possible and plausible. The federal government would likely be able to acquire any border land it needs for the wall through eminent domain. The only hurdle would be the cost, which would have to be set aside by Congress. However, this likely will not be an issue either as Congress has consistently approved funding for border fencing and border patrols. Overall, if the President-elect decides the act upon this campaign promise there will be very little to stop him.

Take Trump Tower

With President-Elect Trump using Trump Tower as his base of operations for his transition team, 5th Avenue in Manhattan is swamped by police, secret service, and security guards. If the rumors that Trump plans to spend weekends at Trump Tower are true, than New Yorkers could face diverted traffic, rerouted subways, and a no-fly zone over the city for the next four years. Security concerns are also abound, as having the President live in a skyscraper in the city will be a magnet for terrorists and madmen alike.

So far, New Yorkers have had to contend themselves with protests and taking the Trump name off some buildings. However, there may be a legal option that New York could pursue that would save them from this nightmare: Take Trump Tower.

Eminent Domain

Eminent Domain should be a familiar term to the President-Elect. Mr. Trump has spent years abusing eminent domain, a process whereby government can seize private property for public use if the property owner is given just compensation. New York may have the opportunity to turn the tides on the alleged billionaire. 

Eminent domain requires that the government seize property for public use, such as a highway. New York requires a determination that a property is necessary for construction of a public improvement. Although the state could come up with a feasible “public improvement,”  like a public park or charity, here the mere act of taking the tower could also be considered a public use. Trump’s mere presence is congesting traffic and disrupting the local economy. Having Trump in New York on a regular schedule for the next four years would destroy any public use around Trump tower and potentially endanger the lives of many Americans.

Trump’s lawyers would likely argue that Trump is putting his tower to public use, as he is the President-Elect and running the nation. However, America already has a location for that kind of use: the White House. It would be a huge waste of money to maintain both the White House and Trump Tower as headquarters for the nation’s Executive branch.

Civil Asset Forfeiture

Civil Asset Forfeiture allows the government to take property from alleged criminals. In order for the government to seize property under civil asset forfeiture, the property has to be associated with the crime. This definition allows the government to bypass traditional criminal due process – the defendant need not be found guilty for the government to seize the property. States have often abused civil asset forfeiture to seize all kinds of property, including cash, cars, and even real estate.

New York is probing the Trump Foundation for fraud. If New York were to bring criminal charges against Mr. Trump, they could assert civil forfeiture over Trump Tower if the state could show that Trump ran his foundation from his tower.

Conflicts of Interest

If New York were to seriously threaten Trump Tower, the President-Elect would almost certainly take to Twitter to insult everyone involved. Republicans would no doubt accuse New York of harassing the President-Elect through shady legal avenues.

Trump and his supporters should ask themselves though, how is it that Trump is the first President who could have his property taken from him ? Although Trump’s property is more prominent than most – Trump loves to put his name on buildings in big gold letters – there is another reason. Unlike prior Presidents, the President-Elect has neglected to place his businesses into a blind trust. Instead, he’s letting his kids run his businesses.

This presents serious conflicts of interest. If Trump had to choose between defending America and defending his property, which would Trump choose? Trump properties are in many locations around the country, including California and New York. It would not be difficult for the states most opposed to Donald Trump to threaten to seize his properties if Trump tries to push policies that those states do not want.

If blue states in America can threaten Trump’s properties, what about Trump’s real estate abroad? If Trump’s property in Scotland or Dubai were threatened, would Trump threaten military action to save his businesses, even if his businesses have nothing to do with America’s interests?

Racially-Themed Dorms Fair for All?

California State University of LA (CSULA), UC Davis, UC Berkeley, and University of Connecticut (UCONN) have all recently come under scrutiny due to their racially themed dorms.  The concern is that the themed living arrangements—targeted as they are at persons of color—represent a revived attempt at racial segregation. These colleges are far from alone in offering such housing. There are quite a few campuses that offer similar housing arrangements.

The many housing arrangements vary from sections of a dormitory hall reserved exclusively for African-American men (UCONN), to sections of a dormitory hall designed to be focused on respect for the cultures of persons of color (CSULA and UC Davis), to entire houses dedicated to respecting the culture of persons of color (UC Berkely).

Joining these housing arrangements is 100% voluntary. With the exception of the UCONN hall section, all of these housing arrangements are open to any who apply.  The hall sections are all within a fully integrated dorm.  Generally, they are all created with the goal of creating a more comfortable space for persons of color—free from micro-aggressions and bullying.  The exception to this is, again, UCONN’s attempt at themed housing, which has a stated goal of promoting higher retention and graduation rates among African-American men.

My colleague has recently written a truly excellent article, addressing whether or not these themed housing arrangements are, in fact, veiled racial segregation. It notes that racial discrimination is still an everyday experience for persons of color—providing a safe space from hate crimes and bullying is something to be lauded. It also determines, probably correctly, that these themed dorms are not unconstitutional segregation. Dorm 2

However, the possibility of segregation is an extremely dangerous one. UCONN’s African-American male exclusive dorm hall has already drawn complaints from the U.S. Commission on Civil Rights as beneficent racism.  Their complaints cite the words of Dr. Kenneth B. Clark, the psychiatrist whose testimony contributed to the U.S. Supreme Court striking down segregation in schools once and for all—the greatest triumph of white racism would be “to persuade its black victims that segregation was not only acceptable but desirable in itself, and that the justification for this separatism was color alone.”

What are the potential dangers to minority students? What legal liability could the colleges implementing them may open themselves up to?

Segregation and Fair Housing Rules

Suffice it to say Supreme Court decisions and the Civil Rights Act of 1964 work together to make government and private acts of segregation illegal and unconstitutional today. However, despite being made unconstitutional over a half a century ago; segregation is still not exclusively a thing of the past.  With this in mind, the Fair Housing Act exists to prevent discrimination in housing—including in college dorms.

The Fair Housing Act prohibits, among other protected classes, race-based discrimination in housing by public or private actors. The Act protects against many types of discrimination, first and foremost refusal to rent or sell (or make available for rent or sale) a property to somebody based on a protected characteristic such as race. It also bars discriminating in terms of conditions rental or sale, misrepresenting availability of housing, or advertising for housing.  Fair housing claims also frequently arise out of discriminatory application processes.  The act also bars “steering,” or directing somebody to look in a specific place for housing based on a protected characteristic.

Even beyond all these protections provided by the Fair Housing Act, organizations which take grants from the federal government—such as every single university which has introduced racially-themed housing listed above—are held to an even higher standard by the U.S. Department of Housing and Urban Development (HUD). Just last year HUD published a ruled placing an obligation on those who take advantage of certain grants to affirmative further fair housing by taking “steps proactively to overcome historic patterns of segregation, promote fair housing choice, and foster inclusive communities for all.”

What Does This Mean for Themed Dorms and the Universities that Offer Them?

As my colleague determined, these themed dorms are very unlikely to be actual segregation based on the facts in front of us. Just considering that they are open to all who apply by itself points heavily in this direction.  The only program that is actually exclusionary in any sense is the UCONN program that has come under fire—only serving men who identify as black.  Even then, the fact that participation is totally voluntary would undercut most arguments of segregation.  HUD standards explicitly state that the Fair Housing Act does not prevent people from living where they choose—it only prohibits “policies and actions by covered entities and individuals that deny choice or access to housing or opportunity through the segregation of persons protected by the Fair Housing Act.”

The most common complaint now is “reverse racism.” To be blunt, these housing arrangements do not represent discrimination against white people.  While race-based discrimination under the Fair Housing Act does indeed include discrimination against Caucasians, such claims are generally held to a higher evidentiary standard because, not surprisingly, discrimination against majority groups is much more uncommon.

These housing programs are usually open to all who apply and represent a very small percentage of the comparable housing readily available, often within the same dormitory hall. We know nothing of the application and acceptance process.  Even were potentially discriminatory practices to come to light, it seems unlikely that this housing would pose a constitutional issue.

As has been seen with affirmative action in the past—including in the realm of housing—providing opportunities based on race can be acceptable where the purpose behind the policy is to offset previous and ongoing racial discrimination—something that undeniably exists for minorities in the realm of housing.  In fact, under HUD guidelines one could even argue that universities are required to make such safe-space housing available.

When it comes to fair housing generally, the issue essentially comes down to the terms, cost, and quality of the housing they provide. While most of the housing is open to all, housing such as UCONN’s is especially vulnerable to suit if the housing provided is not of comparable quality with other dorm halls.  What’s more, universities will need to be careful about steering.  Even well intentioned prodding towards racially-themed housing may well leave them vulnerable to a lawsuit.

It is important to be wary of any housing program which limits its services to such a narrow group of minorities. While creating safe spaces is indeed to be congratulated, it is crucial to keep an eye on the quality of the services and housing these programs offer.  It is a small step for such a program to move from safe spaces to segregation.

Black Priority Housing: Safe Haven or Return to Separate but Equal?

With most Universities back in session, many college students are settling into their housing, but the months leading up to school may have been riddled with anxiety about student housing.

On-campus housing is offered at most four-year universities. Campus housing is student housing that is owned and controlled by the college campus. It offers several benefits, including an environment where students can meet and befriend one another, on-campus housing (often within walking distance to classes), and may be cheaper than living off-campus.

California State University, Los Angeles (“CSULA”) is the most recent university to offer priority on-campus housing to their African American students. The housing is in response to demands from the campus’ black students who say they experienced insensitive remarks and “macroaggressions” (daily verbal, behavioral, or environmental indignities such as racial slights or insults) from white classmates. University of Connecticut, UC Davis and UC Berkeley already offer similar housing to their black students. Dorm

Proponents of the housing believe students can draw on their common experiences to support one another in black housing. Non-black students are not barred from applying for the housing.

While it is certainly admirable to enact housing regulations in an attempt to make black students feel comfortable on their own campus, the housing can be said to segregate black students. Are CSULA’s good intentions unintentionally contributing to the underlying problem of racism?

History of Segregation

Without going into the details of the horrific way our country treated blacks historically, African Americans have experienced extreme mistreatment, oppression, and inequality based entirely on their race.

In 1896, the pivotal constitutional law case of Plessy v. Ferguson upheld a legal doctrine that would be known as “separate but equal.” Under this doctrine, accommodations for blacks and whites could be separate but were for all intents and purposes supposed to be “equal.” They were not. Blacks had inferior everything – bathrooms, water fountains, schooling, modes of transportation, etc. Things were labeled “blacks” versus “whites” to designate who could use what. It was not a proud time in our history.

It wasn’t until 1954 that the “separate but equal” doctrine was overturned by the Supreme Court case of Brown v. Board of Education. The Court concluded that state laws establishing separate public schools for black and white students was unconstitutional, thereby overturning Plessy v. Ferguson. The case was one of the first acts of the Civil Rights Movement.

We have made great strides since the days of “separate but equal,” going so far as to elect our first African American president in 2008, but we still have a ways to go. Nothing exemplifies the disparity in treatment more than the recent “Black Lives Matter” movement. The movement was created in 2012 in response to Trayvon Martin’s murderer, George Zimmerman, being acquitted for his crime. Since then, numerous African Americans have been killed at the hands of citizen and police who have not been held accountable for their actions.

Will the Housing Stay?

Given the historical context and how many years it took to achieve desegregation, does the CSULA housing revert back to the days of segregation?

Probably not. Themed housing or student communities focusing on cultural identity is not new to college campuses. On-campus housing is offered to students based on their gender. Further, some colleges have “Common Interest Communities,” which provide students the opportunity to live in a space around a common interest, such as a social group, specific major or charity. None of these on-campus housing initiatives have been deemed inappropriate or criticized as a way to foster a culture of segregation within the school.

It is also important to note that CSULA is not the first campus to create black housing for its black students. The housing does not discriminate against peers who are not black, but wish to live in the designated housing. Finally, the housing was a direct result of requests from CSULA’s black students, who felt that some of their white counterparts were acting aggressively toward them.

And we mustn’t forget the case of the freshman African American student, Donald Williams Jr., who was assigned a dormitory suite with seven other suitemates at San Jose State in California. Williams was targeted in a number of hijinks as the only black student in the suite, including his roommates sneaking up behind him to place a U-shaped bike lock around his neck, hanging a Confederate flag in the common room, writing racial slurs on the dry-erase board in the common room, and calling him names such as “three-fifths” and “fraction.” Three of the white roommates were found guilty of a misdemeanor against Williams for bullying, but not for a hate crime.

If CSULA’s housing can prevent bullying or the commission of a hate crime, then they should be welcome at all college campuses.

Rent to Own Homes: Great Deal or Example of Predatory Lending?

When you don’t have a lot of money or you can’t qualify for a mortgage, the thought of buying a home seems like a pipe dream. But for some who dream of home ownership, they’re finding an alternative with rent-to-own homes.

Vision Property Management is a real estate firm that offers rent-to-own contracts. The homes require tenants to make all the necessary repairs within a specified amount of time. The repairs can be minor inexpensive repairs to major costly repairs. Many tenants who sign these contracts have a certain number of months to correct various code violations. If they do not fix the violation within the required time, they are evicted from the property and are out any cost of repair that they spent to bring the home up to code.

How are companies like Vision Property Management buying these properties? The property management company is based in Columbia, South Carolina, and it buys homes through the secondary mortgage market from Fannie Mae. As a result, they’re able to get great deals on homes that have fallen into various states of disrepair, often paying less than $10,000 for a single-family home.

Are these homes a good option for people who want to own but can’t afford home ownership?

Habitability Concerns

One of the main problems with rent-to-own homes is that they often contain conditions that fall below what is considered habitable. Every state is different, although most states require that a landlord provide a tenant a rental unit that is fit for human habitation. In most states, this requires that the rental comply with applicable state or local housing codes, such as minimum requirements for hot water, sewage disposal, and electricity. State law generally requires the landlord make necessary repairs to bring the house up to code and into a habitable condition. House

With rent-to-own homes, there is no such habitability requirement. Tenants must instead bring the building up to code themselves, which can be prohibitively expensive for people who have little funds to begin with. Many have to live with a broken furnaces (ie. no heat) or drainage problems for a period of time until they are evicted for failing to bring the home up to code. In that regard, the landlord benefits from collecting monthly rent while the tenant maintains all the risk of making and paying for all necessary repairs.

Inspections

What’s worse is that these rent-to-own homes don’t first require a tenant inspection. When a homeowner puts in an offer to buy a home, they typically have what’s called an “inspection contingency.” The inspection contingency permits the prospective buyer to inspect the home with licensed professionals in order to determine what, if any, problems exist with the property. If there are problems unanticipated by the buyer when he or she put in the offer, the inspection contingency permits the potential buyer to re-negotiate the contract at a lower price in anticipation of making necessary repairs.

Because rent-to-own homes are not purchased outright and the potential buyer and seller have a landlord-tenant relationship initially, there’s no such inspection contingency. As a result, tenants do not know what they’re getting into when they sign the contract. They later discover the house is riddled with problems and they cannot afford the repairs.

Mortgages

Rent-to-own homes don’t start with standard mortgages. Instead, Vision Property Management acts as the lender while the tenant rents the property and brings it up to code. After seven years of renting and so long as the home is code compliant, the tenant automatically owns the home. It is up to the tenant to find appropriate financing to pay for the remainder of the home.

Since rent-to-own homes are not a typical home purchase, the landlord is not required to comply with various federal and state laws when it comes to lending money. Most notably, landlords need not comply with the Federal Truth in Lending Act (“TILA”), which requires lenders to detail how much interest they are charging and how many payments prospective buyers must make before they own the house. Tenants may not know how much they’re ultimately paying for these homes.

Are these Contracts Legal?

Although there are a lot of risks associated with rent-to-own homes from the tenant/buyer perspective, they are completely legal and could be a viable option for people who don’t have enough money for a large down payment or can’t quite quality for a mortgage, so long as you know what you’re getting into.



<