Property and Values: Alternatives To Public And Private Ownership

By Charles Geisler

Property and Values offers a fresh look at property rights issues, bringing together scholars, attorneys, government officials, community development practitioners, and environmental advocates to consider new and more socially equitable forms of ownership. Based on a Harvard Law School conference organized by the Equity Trust, Inc., in cooperation with the American Bar Association's Commission on Homelessness and Poverty, the book:

• explains ownership as an evolving concept, determined by social processes and changing social relations
• challenges conventional public-private ownership categories
• surveys recent studies on the implications of public policy on property values
• offers examples from other cultures of ownership realities unfamiliar or forgotten in the United States
• compares experiments in ownership/equity allocation affecting social welfare and environmental conservation

The book synthesizes much innovative thinking on ownership in land and housing, and signals how that thinking might be used across America. Contributors – including David Abromowitz, Darby Bradley, Teresa Duclos, Sally Fairfax, Margaret Grossman, C. Ford Runge, William Singer and others – call for balance between property rights and responsibilities, between private and public rights in property, and between individual and societal interests in land.

Property and Values is a thought-provoking contribution to the literature on property for planners, lawyers, government officials, resource economists, environmental managers, and social scientists as well as for students of planning, environmental law, geography, or public policy.

• Language: English
• Publisher: Island Press
• Release date: Apr 10, 2013
• ISBN: 9781610913027

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Introduction

In recent years, property rights controversies have moved to center stage in the U.S. Congress, state capitals, the nation’s courts, and local communities. Fueling this deepening interest in property rights are three important currents. First is the political skirmish over the constitutionality of property regulation without restitution and the related issue of uncompensated takings of property from landowners. Such issues evoke historical questions of where value in land originates and who its beneficiaries are, both public and private. A second current, related to the first, is the perennial topic of privatization. Here, fundamental political values about the disposition of assets, including land, compete for allegiance at home and abroad. The third current is both practical and philosophical: the ethics of ownership. It is echoed in diverse tracts on social justice and land tenure, in writings about ecosystem management, in religious discourse on stewardship, and in legal scholarship on equity, both as a claim to land and as a doctrine of fairness.

These currents form the headwaters of a rising river of thought on property, a river breaching the banks of conventional legal thinking and received political wisdom. Some observers are barely mindful that this is happening. Others are content with static notions of ownership or indifferent to the overlapping domains of property and value. The authors of this book are of a different mind.

The reader will sense early on that to discuss property and values is to discuss the fundamental balance between the rights of individuals and those of society. It is to analyze the relationship between the public and private spheres within which so much of ordinary life is organized. Some legal scholars, public officials, community development practitioners, and environmental activists now believe that cleaving ownership into public and private is neither useful nor accurate. More than ever before, they contend, private rights are no longer exclusively private nor are public rights exclusively public.

Today, landownership in the United States and in numerous foreign settings is a mosaic of legal interests, conditional rather than absolute. More than being a bundle of rights residing in a single owner, contemporary property is a series of separable rights often held by a bundle of owners. Some interests therein are more private, others more public. The misperception that land ownership must be one or the other limits policy options for solving a lengthy list of pressing problems—permanently affordable housing, open space and farmland protection, inner city and rural community abandonment, ecosystem mismanagement, concentrated land ownership, and unjust returns to the public sector for what it gives and to the private sector for its subsidies to landowners and, on occassion, to landowners for partial takings.

While such policy debates proceed in many quarters, models and tools that blend the best aspects of public and private ownership are proliferating. Called by various names (third sector, third way, or social property), these tenure innovations address the matter of value origins directly. What Henry George once called unearned increment and others have termed the social mortgage—value created as a result of wide-ranging public actions—is separated from the value that is generated by the individual property owner and retained by the community. Tools to accomplish this end include community land trusts, limited equity co-ops and condominiums, mutual housing associations, conservation easements, certain forms of public land and housing, as well as innovative taxation schemes. Similarly, common property regimes in many societies, including the United States, partition property benefits between individuals and their communities and are predicated on local control.

Third sector property shares the following characteristics in varying degrees:

Landownership is neither public nor private but a hybrid. Though title may be held by an individual, an association of users or producers, or a nonprofit corporation, ownership rights are shared among multiple interests.

The property’s primary function is to meet broadly defined social needs as well as individual needs, not merely to increase individual wealth.

The property is price-restricted, while acknowledging the individual’s right to equity in initial investment and improvements, thus preserving affordability and access for people of different means. Property speculation is undercut if not eliminated.

The locus of control over property, though sometimes tiered, is primarily local.

Decentralized management of property befits a decentralized ownership system and has substantial likelihood of remaining democratic so long as other civil liberties are respected.

Such models are not neutral. They actively balance economic value with social values including broad access to property, secure tenure, permanently affordable land and housing, resilient communities, farming lifestyle opportunities, open space, natural areas, and ecological integrity. Inspection of available landownership data reveals that both private and public sectors of land share in common an enormous tolerance for monopoly ownership. In contrast, third sector models, whatever their differences, share a commitment to broad equity diffusion. The logic is straightforward. Reasonable equity allocation enables more members of society to access and use land; absolute ownership is usually a prescription for concentrated ownership and centralized management of a valuable resource by a relatively small group of super-enfranchised interests.

Perhaps a better name for this emerging property paradigm is simply democratic property. In many ways, the principle of democratic property is deeply embedded in the history of the United States. Thomas Jefferson rendered a vision of America that rested on far-flung rather than concentrated ownership and on an encompassing norm that land ownership is as much a social as an economic asset. Jefferson understood better than most of his contemporaries the overriding significance of the condition imposed by the British social philosopher John Locke on land ownership, known as the Lockean proviso. Herein, individuals could own land sufficient for their needs so long as a sufficiency of land was left for others.

Land ownership, in other words, was and is conditional rather than absolute. Had the founding fathers codified Locke’s proviso into law, Americans would have sought to balance public and private interests, and ownership realities would have conformed more closely to democratic principles. Both the good of the realm and the good of the individual would have been keystones of the arch of ownership.

In 1995, the Equity Trust, Inc., in cooperation with the American Bar Association’s Commission on Homelessness and Poverty, hosted a conference entitled Property and Values: Striking an Equitable Balance of Public and Private Interests at the Harvard Law School. The purpose of the conference was to engage in a dialogue on the origins of property values and evolving concepts of property rights; on innovative initiatives and new property relationships; and on public policy and the possibilities for redefining land reform in America. Over 170 people from a dozen states braved bone-chilling weather to discuss these contentious issues. The participants represented a remarkable mix of attorneys, scholars, government officials, community development practitioners, and environmental advocates. The panelists’ views and the audience’s lively response set in motion a synthesis of ideas retold in the following pages.

The chapters below are organized into four sections. The first inspects ownership as an emergent concept in which property is seen as a social process rather than as an immutable set of objects. The authors seek its origins in social relations and human values, a perspective that Joe Singer (chapter 1) contrasts with other property traditions.

The authors in Part One also argue the case that norms of social stewardship, which recognize that ownership is subject to a social mortgage, extend back many generations (see Peter Salsich’s chapter), and that property value is subject to both takings, givings, and sharings in the normal course of public policy (expanded upon by C. Ford Runge and colleagues). Stewardship values are also of paramount importance in later chapters on state trust lands (e.g., chapter 5) and on Vermont’s land conservation movement (chapter 12).

Part Two challenges the validity and utility of binary (public–private) ownership categories and reviews the historical record to show that mutations in ownership (or other estates, according to Charles Geisler, chapter 4) have many precedents. Examples include the common property estate, the Indian estate, the corporate estate, the utility estate, and the ecoregional estate, among others. Jon Souder and Sally Fairfax (chapter 5) provide striking evidence that state trusts are different in origin, purpose, and management from either public or private lands. Margaret Grossman (chapter 6) revisits the everyday world of leases and finds them remarkably differentiated across time and place. Leases constitute shared ownership of short- or long-term durations and continue to evolve, redistributing rights and values as they do so.

Part Three ventures abroad, summoning three examples of complex social relations yielding ownership regimes largely unfamiliar in the United States. Each case reveals a different response to the globalization of markets and pressures to privatize land, housing, and commercial property. Each reminds us that in different cultures, societies, and historical junctures, property has assumed many forms with little resemblance to the public and private forms many Americans take to be all-inclusive.

In Indonesia, privatization bolstered by colonial and post-colonial (adat) legal regimes unfriendly to customary ownership has restructured property and values in profound ways. Legal anthropologist Franz von Benda-Beckmann (chapter 7) makes the important point, however, that many societies constantly integrate and balance diverse property systems in their daily lives. Moreover, public and private ownership have embedded cultural meanings, and traditional ownership, far from being static, is itself capable of enormous adaptation.

In Kenya’s urban slums, unregulated land privatization invites land grabbing and speculation, making land and housing unaffordable to native Africans. Former peasants and pastoralists find security in a modified version of the community land trust model, according to Murtaza Jaffer (chapter 8), which respects and builds on the customary ownership. The experiment he documents in Voi Township, between Nairobi and Mobaza, required the passage of new laws, the forming of new political coalitions, the securing of support from nongovernmental networks, and extensive outreach and education.

In urban Russia, highly fractured private interests in property induce market paralysis. The transition from Marx to markets, as Michael Heller (chapter 9) tells it, is filtered through culture and politics. Indeed, the paralysis of the anticommons (ever smaller private holdings) occurs in the United States in a wide range of instances and is apt to spread as multiple interests in single land parcels. Heller’s thesis offers much food for thought in a book confident of the affirmative value of equity sharing institutional arrangements.

In Part Four, contributing authors compare various models of equity allocation and underscore recent advances in applying these models to social welfare and environmental conservation. The emergent forms of ownership signaled earlier in the book are approached in practical and politically astute terms and illustrated in detail. David Abromowitz (chapter 10) compares several popular equity limitation tools with particular emphasis on the community land trust model, which he showcases using Boston’s Dudley Street Neighborhood Initiative. John Davis (chapter 11) gives ample evidence that long-term affordable housing requires a special breed of politics, policies, and social values; he offers practical, working examples from a cross-section of states. Libby and Bradley (chapter 12) recount recent events in the life of conservation and social justice groups in Vermont, now a formidable coalition (the Vermont Housing and Conservation) with funding secured through the state’s budget.

The book’s principal message is that new categories of ownership reflecting both individual and community property interests are rapidly evolving, as are the opportunities for laypersons and professionals alike to guide this evolution. It poses new visions and offers new compasses for aligning property and value in the future. It offers a retrospect and prospect for land and property reform in societies that, north and south, are simultaneously abandoning their land base and rediscovering it.

PART I

New Property Perspectives

The following three chapters introduce a combination of new and old values associated with property. Joseph Singer of Harvard Law School suggests that notions of classical ownership are giving way to new concepts among legal scholars. Like their predecessors, these concepts are historically informed and subject to change. One of these, the social relations model of property, sees property as a person—person relationship and entails a distributive component that shifts emphasis from title to entitlement. Although the classical property as bundle of rights/entitlements idea is itself mired in the notion of person–thing relationships, property rights are increasingly divisible rather than unitary.

Professor Peter Salsich, St. Louis University Law School, construes the classical notion of property in a religious context extending back to antiquity. Religious values relevant to ownership vacillate greatly over time, both within and between major denominations. Exploration of the religious tradition of stewardship, with particular (but not exclusive) reference to Catholic teachings concerning land and housing, is of central importance to Salsich. Concepts of the social mortgage, the preferential option for the poor, and the common good tradition are examined, as are the implications of religious principles for secular policy in the domain of affordable housing in the United States.

A relatively new property perspective in the secular world has to do with so-called takings and their antithesis, givings. The latter preoccupy C. Ford Runge and colleagues, as they once did Henry George. Givings are value increments in land resulting from government actions, intended or unintended. Here, value is defined in economic terms, that is, total current value minus the value originally created by public action. The authors review prior research on the net economic effects of agricultural pricing and subsidies, transportation route decisions, amenity siting, local zoning, and urban land use restrictions. Often, we learn, the positive and negative effects of public policy are closely intertwined or occur on immediately adjacent land parcels, making the calculation of net value difficult to determine.

CHAPTER 1

Property and Social Relations

From Title to Entitlement¹

Joseph William Singer

Property rights serve human values. They are recognized to that end, and are limited by it.²

—Chief Justice Joseph Weintraub, Supreme Court of New Jersey

The whole world seems to be embracing private property as a form of economic and political organization. What are we getting ourselves into? Property rights regulate relations among people by distributing powers to control valued resources. Property rights often involve bundles of particular entitlements. Among the most important of these entitlements are the privilege to use property, the right to exclude nonowners, the power to transfer property, and immunity from nonconsensual harm or loss. It is often assumed that these rights naturally go together and that a property system based on them is feasible. Yet, if property involves a bundle of rights, it is not at all clear that all the sticks in the bundle fit comfortably together.

Liberties such as the privilege to use or develop resources as one sees fit may conflict with rights to be secure from nonconsensual invasion or loss; uses of property that further the owner’s interests may harm others or interfere with their legitimate expectations (Kennedy 1976). The owner’s right to exclude and power to transfer may conflict with and be limited by the public’s rights of access to the market without discrimination based on race or sex or disability. If the individual entitlements that constitute ownership are seen as a family of rights of a certain class, it can also be seen that the members of the family do not necessarily get along with each other all of the time. How should these inevitable conflicts be resolved?

In analyzing such questions, judges, policymakers, and scholars appeal, more or less unconsciously, to a conception of property, the classical version of which focuses on the concepts of title and ownership and presumes the owner’s full control of specific valued resources, with state backing. This conception remains powerful and exerts substantial determinative force in adjudicating and developing the rules of property law. The legal realists³ criticized the classical conception and argued that we should disaggregate property rights into their component parts and discuss each particular entitlement separately. Such a view presumes no utility for the general concept of property. Because property is a fixed feature of our way of talking about the world, it is important that we understand it rather than discard the general concept entirely.

We should recognize that traditional property concepts perform a number of rhetorical functions. First, common discourse often identifies a particular person as the owner even when property rights have been split or distributed among several (or many) persons. In other words, the ownership concept structures legal doctrines in a rule-exception format to the effect that owners win unless specified conditions are established. Second, the property concept sometimes creates an assumption that certain sets of rights are bundled or consolidated and must be owned by the same person. Third, calling something a property right often reflects an intuition that the right in question implicates a strong moral claim to immunity from nonconsensual loss or harm and places a heavy burden on those seeking to regulate or limit the property right. Fourth, the idea of property rights often creates a perception that there should be a strong presumption that the right in question is alienable in the marketplace, and conversely, that nonalienable interests do not count as property rights.

I will present and criticize the classical conception of property. I will then develop a new model of property that conceptualizes it as a social system composed of entitlements which shape and are shaped by social relationships. I will argue that the traditional classical conception of property centered around absolute control of an owner should be replaced by some version of this social relations model.

The Classical Conception of Property Reconsidered

The classical view of property is premised on the notion that property rights identify a private owner who has title to a set of valued resources with a presumption of full power over those resources. The property may be subject to some state regulation, but this regulation always alters some baseline property right of the titleholder. This view presumes it is always possible to identify some person as the titleholder, and that, in the absence of a contract or specific rule of law to the contrary, the titleholder is an owner who possesses the full bundle of privileges, rights, powers, and immunities that accompany fee simple title to property (Singer 1982). The concept of ownership sometimes refers to the consolidation of these rights in the same person, even though it is often the case that most of an owner’s rights have been transferred to others. The image underlying ownership is absolute power of the owner within rigidly defined spatial boundaries.

Thus, the classical conception of ownership assumes consolidated rights and a single, identifiable owner of those rights who is identifiable by formal title rather than by informal relations or moral claims. It also assumes rigid, permanent rights of absolute control conceptualized in terms of boundaries that protect the owner from nonowners by granting the owner the absolute power to exclude nonowners, and the full power to transfer those rights completely or partially on such terms as the owner may choose.

The classical conception is furthermore premised on widely shared norms of promoting autonomy, security, and privacy. Yet the classical model of property is distorted and misleading both because it is descriptively inaccurate and because it is normatively flawed (Underkuffler 1990). The classical model misdescribes the normal functioning of private property systems by vastly oversimplifying both the kinds of property rights that exist and the rules governing the exercise of those rights. It also distorts moral judgment by hiding from consciousness relevant moral choices about alternative possible property regimes.

The classical view assumes that (a) most rights associated with property are ordinarily consolidated in the same owner and (b) that it is possible to determine who that owner is by reference to the title. In other words, the classical view presumes it is easy to tell who the titleholder is. But in many cases, this is not easy at all. When a house is subject to a mortgage, for example, some states in the United States grant title to the homeowner reserving a lien for the bank while other states grant title to the bank while granting the owner a mere equity of redemption. When a couple divorces, title to the house may be shifted from husband to wife or vice versa, as part of the property division awarded by the court. Thus the formal titleholder’s rights may be altered on divorce; it is not clear why one should not conceptualize the non-titleholding spouse as the owner of rights in the property, which can be confirmed by a property division on divorce.

Or consider who owns a corporation. We are accustomed to saying that the shareholders own it. Yet shareholders’ rights have traditionally been extremely limited in the United States. Courts have strictly limited the ability of shareholders to interfere with the day-to-day management of the business. More fundamentally, courts have placed roadblocks in the way of shareholders attempting to present independent candidates for the board of directors or to communicate with other shareholders. It has taken a new movement in recent years to reassert the rights of shareholders as owners (Minow and Monks 1991). Moreover, recent statutes have authorized corporate boards of directors to take into account the interests of stakeholders other than the shareholders (such as workers, creditors, and the communities in which corporations operate) in formulating corporate policy (Singer 1993).

Title is important to the classical conception because of the presumption that owners ordinarily win disputes about use or control of property. If it is not easy to identify which of several claimants is the titleholder, it will be difficult to assign ownership rights and thus to adjudicate disputes concerning control of the property. Yet when rights over a particular resource or object of property have been divided among several persons, or when several persons have plausible claims to such rights, a simple, noncontroversial, morally defensible method for identifying the titleholder or owner is exactly what we lack.⁴

Even if one could easily identify the titleholder, we must recognize that many disputes about property involve conflicts among titleholders. Consider land use disputes among neighbors. Property uses by one owner or titleholder that interfere with the legitimate interests of neighboring owners are adjudicated through nuisance law as well as through specific rules about particular types of interests.⁵ In these situations, the legal issue involves multiple titleholders whose property uses conflict. Such cases cannot reasonably be resolved or analyzed by reference to the concept of title.

In other cases, property rights in the same parcel of land have been divided by contract or law between two or more persons. If we observe the operation of private property systems, we see that full consideration of property rights in the same person is the exception rather than the rule; most property rights are shared or divided among several persons. Indeed, almost every interesting dispute about control of or access to property can be described as conflict between property holders or between conflicting property rights. Typical situations include relations between landlords and tenants, mortgagors and mortgagees, homeowners and lien holders, servitude or easement owners and subservient estates, present and future estate owners, parents and children, husbands and wives, testators and heirs, homeowners associations and unit owners, shareholders and managers, trustees of charitable foundations and their beneficiaries, employers and employees, creditors and debtors, buyers and sellers, bailors and bailees. In all of these cases, property rights in the same parcel of land or structure or resource have been divided among two or more parties.

When the owners of different rights in the same resource act in ways that impinge on each other’s legally protected interests, we face the same problem present in nuisance cases—action by one owner that interferes with the use and enjoyment of another’s property rights. In such cases, title and ownership are not helpful ways to conceptualize the dispute. Adjustment of the relationship between the parties is required.

Even if conventions exist to identify the owner or titleholder and even if no conflict of owners is involved, knowing who the owner is does not help us to adjudicate most disputes concerning property. I sometimes joke that most of the rules in my property casebook describe situations in which the owner loses (Singer 1997). Property owners’ rights are often limited to promote the interests of nonowners.⁶ Consider public accommodations laws that prohibit businesses open to the public from excluding or segregating customers on the basis of race. Convention dictates that the business or individual who has title to the land or who is the lessee of the space is the owner and that customers—members of the public—are not called owners. The most central right associated with property, according to tradition and current constitutional law, is the right to exclude. Yet federal and state statutes substantially limit the rights of the owner to exclude members of the public on an invidious basis such as race. This is not a minor glitch in the system. It was not until 1964 that federal law unambiguously prohibited racial discrimination in places of public accommodation, and even then the statute did not regulate most businesses open to the public.⁷

The fact that property rights are often limited to promote the interests of other property owners or the public at large suggests the reason why the classical conception of property has distinct disadvantages from a moral point of view. The ownership model of property utterly fails to incorporate an understanding of property rights as inherently limited both by the property rights of others and by public policies designed to ensure that property rights are exercised in a manner compatible with the public good. It makes regulations of property appear inherently suspect. It presumes that when property rights are limited by government regulation, an evil has been effectuated that bears a heavy burden of justification. It places the burden of proof consistently in one direction. It has no vocabulary for describing or expressing certain types of property use as themselves inherently suspect. Nor can it adequately express the existence of conflicts between property owners.

Thus, for example, public accommodation laws appear to limit and interfere with property rights in order to promote equality. To justify them, we must explain why equality as a value justifies taking or interfering with established property rights. The classical conception of property suggests that all owners have rights to exclude nonowners with a few exceptions; business owners have the same rights as homeowners to determine whom they will admit to their property. An alternative model might presume that businesses generally held open to the public have effectively transferred some of their property rights to the public at large. Businesses open to the public are in the public world in a way that homes are not. They are public accommodations. This model suggests that property which is used in a way that affects the interests of nonowners or the community at large can be regulated in a way that responds to public policy concerns without impinging illegitimately on the owner’s property rights.

By presuming that the basic question is one of identifying the owner and justifying limits on the owner’s rights, the classical conception obscures the conflict of interests that should be adjudicated by reference to a moral theory. Further, it obscures the fact that property rights exist on both sides: the right of the store owner to exclude and the right of members of the public to enter public accommodations and to engage in contractual relationships to purchase property. Truthful recognition of the conflict is a prerequisite to an adequate moral judgment. A better approach would express the inherent tensions within both property law and theory, freeing for judgment the actual moral choices implicated in developing property law (Singer 1988).

The Social Relations Model

The legal realists correctly recognized that property rights can be and often are disaggregated. They were also correct in seeing property laws as beset by conflicting values and competing interests. Most important, they analyzed property rights in terms of human relationships rather than relations between persons and things. The legal realist view shifts attention from relations between people and things to relations among people with respect to the valued resource. The right to control property, after all, places duties on others not to interfere with that control. Similarly, the freedom to use property means that others may be vulnerable to the effects of one’s property usage.

The legal realist model, however, was incomplete. I propose a conception of property based on social relations. This model reconceptualizes property as a social system composed of entitlements that shape the contours of social relationships. It involves, not relations between people and things, but among people, both at the level of society as a whole (the macro level) and in the context of particular relationships (the micro level). Four reasons, over and above the critiques just offered, warrant a new model. First, property rights can be bundled in different ways and multiple models exist for defining and controlling property relationships. Second, property rights must be understood as both contingent and contextually determined. Third, property law and property rights have an inescapable distributive component. Fourth, property law helps to structure and shape the contours of social relationships.

Bundle of Rights

When most people think of property, they have an image in their minds of an individual owning a plot of land with a house on it. The land has clear borders and no doubt exists about who the owner is. Only one person is involved. Others enter the picture only if the owner invites them in or voluntarily transfers some of his rights to them.⁸ This ownership model is misleading even in the case of ownership of a single-family home. It is particularly misleading if one considers the multiple contexts in which property is owned, in the family, in the business world, and by government entities. When our view is broadened, it becomes evident that we have multiple ways of bundling property rights and therefore multiple models of property in different spheres of social life, such as family relations, business organizations, and