Property Rights Foundation of America®

reprinted from "Worth Commenting," New York Property Rights Clearinghouse (Vol. 3., No. 2, April - July 1996)

By Carol W. LaGrasse
Sullying Title

A Moscow exchange student who was working at a nearby children's camp had trouble explaining to me how privatization works for the ordinary Russian. I had wanted to know how his parents would get to own their home. I instead explained to him how our system of transferring land by deed works.

"Did you say, 'deed'?" he asked. "What's a deed?"

After a discussion about fundamentals, it remains for us to visit the county seat for him to see our system of filing deeds.

Our language, he pointed out, has far less inflection than Russian. Even our verbs are quite regular, such as the verb "to do," as opposed to the verb "to be," which has multiple linguistic roots. Only the verb "to be" is more basic than the simple verb "to do."

You are, and there is what you do, your deed. Not long ago it was universally allowed that you knew a person by his or her deeds, and that, unless the person was an imbecile or very young, he or she was even responsible for them.

Among its few meanings, this simple word "deed," has long been applied to the transfer of real property.

The same mindset that is bungling up our legal and moral traditions by muddying culpability or credit for a person's deeds is making a jumble of our ancient, stable system of real property title.

In our system, if the government wanted your property, it had to negotiate a sale from you or back you into court with eminent domain where you could seek just compensation. Even a utility company, with the same power, had to negotiate with you or face you in court, and pay you for an easement for that value of your property conveyed to allow the company to erect poles and hang wires.

But nowadays, the "bundle of sticks," or "rights" that is your property can be dissected by the zoners and preservers. First they zone your ability to use your land so that it is basically they, not you, who determine the use that you can make of it. The courts, having trashed our Constitution, are satisfied that they leave you something, an "economic use," or "investment-backed expectation."

Unless squelched in court, "transferable development rights" now being implemented in the Long Island Pine Barrens show the capriciousness of zoning. To use the rights which the government mandates be removed from your land, the government arbitrarily allows more development than it previously ordained as the maximum allowable somewhere else by depriving that owner.

TDR's, as they're called, muddle title exceptionally. After the process is executed, a single deed is broken into three parts, open to a great deal of interpretation. The original deed festers at the county seat, stricken by a "conservation easement" which extracts development rights under a set of confusing conditions and qualifications that will give lawyers plenty of opportunity.

The conservation easement, a separate deed, is recorded at the same county seat. But the living, breathing value of the property flies away, as a "transferable development right" detached forever from the property, to be glued to an application to build somewhere else.

Since the conservation easement is to be bought with the peculiar, perhaps mandated, unconstitutional tender of a "transferable development right," the once fee simple property owner is left with the bare land and the TDR, for which he must seek a buyer in a specialized buyers' market.

The market is made of developers who would like to build five houses wherever they could formerly build only four by the zoning in one of the towns that will allow use of the TDR's for residential construction.

The courts apparently feel that TDR's can be imposed in lieu of "just compensation" if the compensation is "reasonable." A Hofstra University study points out that TDR's which cannot come to land immediately in a government cash-in bank, but instead have to fly around looking for a buyer, are not even "reasonable" compensation.

The cash-in value of the Long Island Pine Barrens TDR's will be low, because they are being awarded on the basis of stricter zoning that was imposed after people bought most of the small city lots. But there is an additional unjust feature of the TDR's.

The Pine Barrens Commission engaged consultant Dr. James Nicholas, who is aware of 400 TDR programs around the U.S., to help them set the TDR values. He used sophisticated analysis to figure the range of value of a development right on property in the TDR landing, or receiving, areas. He came up with values for Brookhaven, for instance, of between $18,000 and $48,000, which he divided by two to give values of between $9,000 and $24,000 which a buyer would actually pay a development right holder for the right, considering costs, time and uncertainties.

The commission perversely applied these receiving area values including the division by two for transaction uncertainty to the cash-in procedure for the TDR's. This means that even if the Pine Barrens bank has enough government money to be open for business, the Pine Barrens property owners would be guaranteed no more than half the average appraised value of a development right in any town. If that were not enough of a steal, the commission them knocked the numbers down another 20 percent with the idea of discouraging cash-ins.

When questioned about the confusing application of the study, the county executive, who also heads the Pine Barrens Commission, was reported to respond that neither he nor anyone else understood Nicholas's study anyway.

Fee simple derives, and retains, its meaning from the Latin, meaning a lawful or pure inheritance. This definition begins the work in which Thomas Jefferson immersed himself to learn English law.

The designation of private property as an environmental zone is a giant step that environmentalists take to mangle fee simple property title. TDR's institutionalize confusion of title.

They are nothing more than slight of hand to avoid justly compensating owners.

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