tag:theconversation.com,2011:/us/topics/property-law-3309/articlesProperty law – The Conversation2023-11-20T01:45:01Ztag:theconversation.com,2011:article/2175562023-11-20T01:45:01Z2023-11-20T01:45:01ZThe rule of law is fundamental to a free society – so why don’t NZ courts always uphold it?<p>Ever since the 17th century, the <a href="https://www.justice.govt.nz/about/learn-about-the-justice-system/how-the-justice-system-works/the-basis-for-all-law/">rule of law</a> has been regarded as one of the fundamental values of a free society. It means you cannot be forced to do something unless there is a law requiring you to do it. </p>
<p>It also means people in power can coerce you only if there is a rule justifying it. This is the opposite of the “rule of persons”, in which the rulers have arbitrary power: they have the authority to force you to do things simply because they think those things should be done. </p>
<p>In free societies, the courts are the chief institution tasked with upholding the rule of law. It is their job to police government and other officials, to make sure they act only in accordance with the law. </p>
<p>But no one polices the courts. If they uphold the rule of law in their own decisions, that’s fine. But increasingly often, they don’t. And this raises important questions about how we want to be governed as a society.</p>
<h2>The role of judges</h2>
<p>Take, for example, the law of negligence. This is an area of law that allows one person to sue another for injuries that have been carelessly inflicted. To work, the law requires a test that will tell us when a person can sue. </p>
<p>The current approach reads like a set of rules, but basically comes down to <a href="http://www.nzlii.org/nz/cases/NZHC/2016/1945.html">two steps</a>: a judge needs to consider everything that relates to the relationship between the parties; and the judge then needs to consider everything else. </p>
<p>In the end, then, the “rule” is to consider everything. It is surely clear that this not really a rule. It is rather an open discretion pretending to be a rule. </p>
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<a href="https://theconversation.com/high-supreme-federal-family-county-what-do-all-our-different-courts-actually-do-193228">High, Supreme, Federal, Family, County – what do all our different courts actually do?</a>
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<p>Consider also the law of trusts. This is a difficult and technical area of the law, but we can describe what the New Zealand courts have permitted in simple terms.</p>
<p>Imagine you own some property that I am looking after. I then enter into a relationship. My partner helps me look after the property. Eventually, our relationship breaks down and she wants some reward for the work she has done. </p>
<p>She may well be entitled to reward from me, but the courts in this country have dealt with this problem by allowing partners to claim part ownership of the property (as happened in the case of <a href="http://www.nzlii.org/nz/cases/NZCA/2014/377.html">Murrell v Hamilton</a> in 2014, for example). </p>
<p>The problem is this violates fundamental principles of property law. You owned the house from the beginning. How, then, can what went on in my relationship mean my partner came to own what was your property? </p>
<h2>The ‘rule of persons’</h2>
<p>That this was possible saw one leading legal commentator <a href="https://ojs.victoria.ac.nz/vuwlr/article/view/4791">observe</a> that, “in effect theft was being sanctioned by the courts”. </p>
<p>Why has this happened? Because, although the rules of property law would not permit it, the judges think the outcome is fair. If this is not the “rule of persons”, what is? </p>
<p>There are other examples, but one more will suffice. Imagine I do something horrible to you. If it’s a crime, I can be punished by the criminal law. But the courts have also said that if you sue me, a court may impose a monetary punishment on me that will go to you (effectively a fine). </p>
<p>When will such punishment be justified? Some leading New Zealand judges, including the previous chief justice, have said this punishment is justified not on the basis of some rule, but when a judge finds my behaviour to be sufficiently outrageous. (See, for example, the cases of <a href="http://www.nzlii.org/cgi-bin/LawCite?cit=%5b2001%5d%203%20NZLR%20622?query=bottrill">Bottrill v A</a> from 2001 or <a href="http://www.nzlii.org/nz/cases/NZSC/2010/27.html">Couch v AG</a> from 2010). </p>
<p>In other words, the position is that I can be punished if a judge thinks I behaved badly enough. Could it be any clearer this is the rule of persons and not the rule of law? </p>
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Read more:
<a href="https://theconversation.com/white-collar-criminals-benefit-from-leniency-provisions-in-nz-law-why-the-disparity-with-other-kinds-of-crime-205283">White-collar criminals benefit from leniency provisions in NZ law – why the disparity with other kinds of crime?</a>
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<h2>Rule by experts</h2>
<p>The judges who advanced this view were outvoted by the other judges who presided in those cases. But it would be wrong to conclude all is well. As another <a href="http://www.nzlii.org/nz/cases/NZHC/2023/2258.html">recent case showed</a>, the idea remains attractive to judges.</p>
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<p>Why does this matter? The rule of law has been under pressure for about a hundred years. As I explain in my recent book, <a href="https://www.e-elgar.com/shop/gbp/freedom-under-the-private-law-9781035314515.html">Freedom under the Private Law</a>, society has become increasingly technocratic during this period, and the experts who govern it often prefer to do what seems right to them, rather than follow established rules.</p>
<p>It may not be surprising, then, if judges have come to see themselves similarly. But if the rule of law in our courts goes, where does it leave us? We will be ruled, rather than ruling ourselves, and this fundamental pillar of our liberty will be gone.</p><img src="https://counter.theconversation.com/content/217556/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Allan Beever does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Court decisions based on a judge’s discretion rather than the letter of the law are increasingly common. But this risks undermining some basic liberties.Allan Beever, Professor of Law, Auckland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2131002023-09-26T13:42:16Z2023-09-26T13:42:16ZThe family home in South African townships is contested – why occupation, inheritance and history are clashing with laws<p>During apartheid, black South Africans could not own land – and therefore their homes – in what were classified as “white” cities. In racially segregated townships, living in “family houses” and passing them on depended officially on a <a href="https://journals.co.za/doi/pdf/10.10520/AJA02586568_844#page=5">range of permits</a>. These were usually to rent from state authorities, but in some cases confusingly to build or buy a house without owning the plot underneath it, which was owned by the state.</p>
<p>A crucial measure in undoing apartheid was transferring ownership of township houses to their long-term residents. <a href="https://journals.co.za/doi/pdf/10.10520/AJA02586568_844#page=8">In 1986</a>, a few years before apartheid’s end, the law changed to enable outright ownership for black people in urban areas. Subsequently, processes for transfer on a large scale were established.</p>
<p>This massive redistribution of public housing stock, alongside legal change, involved hundreds of thousands of homes. Township houses were now assets. The promise was improved security, rights, and inclusion in the property market.</p>
<p>But change did not necessarily give families greater security. Some family members benefited while others were left vulnerable. That is because the transfers – and the legal definitions of property and inheritance – do not account for how many people understand their homes: collective and cross-generational, available to an extended lineage.</p>
<p>This has led to confusion and heartache for hundreds of thousands of people. That confusion, I showed <a href="https://academic.oup.com/afraf/article/120/479/219/6132108">in a paper in 2021</a>, extended to encounters with state administration, which can become the stage on which family disputes are played out.</p>
<p>As I argued in another <a href="https://www.tandfonline.com/doi/full/10.1080/02587203.2019.1632737">paper</a>, with Tshenolo Masha, these understandings of home and kinship warrant legal recognition – indeed, constitutional recognition – as urban custom. Various state officials have taken seriously the collective ownership of family houses, as a matter of customary norms and practice, through administration and court judgments. But they face the rigid limits of existing law.</p>
<p>The family house is central but effectively legally invisible, leaving many people uncertain about what it even means to own or inherit.</p>
<h2>Collective home but individual property</h2>
<p>For many residents, family houses belong collectively to multi-generational lineages. Often, a group of siblings is at the core – the children of an earlier, typically male, household head. Family members might build extra structures on the site to live in. Or they might come and go, but the home is a place to return to. The family house is defended as customary, drawing parallels with the rural homestead.</p>
<p>By the end of apartheid <a href="https://www.britannica.com/question/How-did-apartheid-end">in 1994</a>, regulation was patchy at best, but the occupancy permits were understood to affirm group entitlement because they listed family members, not just the householder.</p>
<p>In statutory law, at stake is an asset with one or more named owners – an indivisible plot or <a href="https://www.saflii.org/za/legis/consol_act/dra1937172/">“erf” of land</a> that includes its built structures. Owners can sell, or they can evict; other occupants have no legal right to stop them. When family houses were transferred, one person was generally registered as owner.</p>
<p>In some cases, the allocation to the registered householder was automatic. In others, there were hearings, but even here residents found their ideas of home and ownership marginalised. A family member would come forward as family “representative” and “custodian” of the collective home. But that representative would typically become the sole titleholder.</p>
<p>In many cases, relatives were unaware that this had happened, or even that an application for title had been made.</p>
<h2>Inheritance: an added layer of complexity</h2>
<p>Inheritance has added another layer to the problem.</p>
<p>Under apartheid there were separate inheritance rules for black people without wills. These were finally struck down by the Constitutional Court in <a href="https://www.saflii.org/za/cases/ZACC/2000/27.html">2000</a> and <a href="http://www.saflii.org/za/cases/ZACC/2004/17.html">2004</a>. Magistrates’ courts were replaced by the dedicated inheritance office, the <a href="https://www.justice.gov.za/master/">Master of the High Court</a>. Inheritance by the eldest son was replaced by rules for all South Africans, prioritising spouses and children in nuclear families.</p>
<p>Once again, essential redress had the effect of narrowing which relationships would be recognised. When a custodian died, wider family members first discovered that they were not collective owners; then they realised they would not even inherit.</p>
<p>The family house is not a static idea in fights over the home. Warring parties may draw on both customary and legal concepts, sometimes at the same time. Among families that approach the state – and many do not – some subsequently drop out of official process. </p>
<p>There is <a href="https://academic.oup.com/afraf/article/120/479/219/6132108">no simple consensus</a> about who gets what or about how this should be decided.</p>
<h2>Efforts to resolve the issue</h2>
<p>The family house is contested, yet it is key to arguments about what is fair – based not just on who owns, but on the nature of ownership.</p>
<p>State officials have repeatedly tried to make the system more responsive. In Gauteng province, where Johannesburg is located, housing tribunals were set up in the late 1990s to decide ownership and to broker family house rights agreements. They were intended to prevent custodians from selling houses or evicting relatives. But it turned out that they held no legal water: from the point of view of deeds registration, custodians’ <a href="https://academic.oup.com/afraf/article/120/479/219/6132108">ownership was unrestricted</a>. </p>
<p>In the Master’s Office, where inheritance is administered, kin complain that their family home somehow became the property of one relative. In Johannesburg, officials <a href="https://academic.oup.com/afraf/article/120/479/219/6132108">try to explain the law</a>, while where appropriate querying how title came to be acquired.</p>
<p>What they cannot do, though, is change the rules.</p>
<p>The courts, too, have highlighted problems with rigid law and procedure. In a 2004 Constitutional Court <a href="http://www.saflii.org/za/cases/ZACC/2004/17.html">decision on inheritance</a>, a dissenting judge warned that customary understandings of home and custodianship risked being sidelined by standardisation.</p>
<p>More recently in 2018, automatically upgrading householders to owners was <a href="http://www.saflii.org/za/cases/ZACC/2018/42.html">declared unconstitutional</a>.
Men were usually documented as householders under apartheid, and gender discrimination was extended by giving them exclusive property rights. </p>
<p>Other judgments recognise the spirit of collective belonging and access, and they stop individuals from taking the house out of the families’ hands by inheritance or sale. But they cannot make legislation, so they send the question of who owns the house back to a tribunal.</p>
<p>Once again, solutions are restricted to workarounds.</p>
<h2>Towards legal recognition</h2>
<p>In 2022, the <a href="http://www.saflii.org/za/cases/ZAGPPHC/2022/441.html#_ftnref78">Shomang judgment</a> in the North Gauteng High Court called for legally recognising the family house. </p>
<p>A sufficiently flexible notion of family title would be challenging to work out, and doubtless the basis for countless disputes. Surviving spouses need as much protection as the siblings in a lineage. But it would enable administrators and judges to mediate disputes in terms recognisable to the families involved. And to offer more than ad hoc workarounds.</p><img src="https://counter.theconversation.com/content/213100/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Maxim Bolt's research was funded by the Economic and Social Research Council of the UK. </span></em></p>The transfer of township rental houses to inhabitants did not necessarily give families greater security. “Family houses” were frequently acquired by individuals.Maxim Bolt, Associate Professor of Development Studies, University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2080992023-06-26T04:03:09Z2023-06-26T04:03:09ZRent freezes and rent caps will only worsen, not solve Australia’s rental crisis<figure><img src="https://images.theconversation.com/files/533898/original/file-20230626-80593-hpcmzx.jpg?ixlib=rb-1.1.0&rect=73%2C0%2C5382%2C3631&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Average housing rents across Australia have increased by about <a href="https://www.rba.gov.au/publications/bulletin/2023/jun/new-insights-into-the-rental-market.html">10% per year</a> to February 2023 for new rentals, and just a bit lower than that for existing rentals.</p>
<p>Combined with rapidly increasing interest rates and wage rises not keeping pace with inflation, this is placing huge strain on the average household purse, prompting calls for improved rental market conditions.</p>
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Read more:
<a href="https://theconversation.com/to-deliver-enough-affordable-housing-and-end-homelessness-what-must-a-national-strategy-do-207120">To deliver enough affordable housing and end homelessness, what must a national strategy do?</a>
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<p><a href="https://greens.org.au/vic/campaigns/rent-freeze-now">The Greens</a> are refusing to pass the $10 billion Housing Australia Future Fund bill to provide more community housing unless the federal government supports the introduction of rent controls. But is a rent freeze a simple panacea?</p>
<p>Australia used rent controls effectively during the two world wars. However, they have been used in other countries without much success. Using basic economic principles, there is evidence freezes worsen inequality and actually reduce availability.</p>
<h2>Making the market worse, not better</h2>
<p>Rentals, in economic terms, are a product. To make a quality product for the market, the producer – the landlord – invests substantial sums of money in construction and maintenance to meet <a href="https://www.consumer.vic.gov.au/housing/renting/repairs-alterations-safety-and-pets">legislated minimum standards</a> for rental properties. They also have to cover land and income tax, insurance and mortgage costs.</p>
<p>The rent from a property is expected to cover these expenses with an <a href="https://www.openagent.com.au/blog/suburbs-with-highest-rental-yield-australia">average return</a> on investment between 3% and 7%. As soon as there is a rent freeze and the return on investment starts falling – in some cases into the negative – landlords will cut back on what they consider discretionary spending.</p>
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Read more:
<a href="https://theconversation.com/building-in-the-same-old-ways-wont-end-the-housing-crisis-we-need-innovation-to-boost-productivity-206862">Building in the same old ways won't end the housing crisis. We need innovation to boost productivity</a>
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<p>This can affect spending on maintenance because all other outlays are fixed.
Houses are then allowed to fall into disrepair, leading to landlords selling up or withdrawing properties from the long-term rental market.</p>
<p>Experience in the United States shows how landlords allow some houses to become uninhabitable so they can fraudulently obtain insurance payouts for damage to the property.</p>
<p>Unscrupulous landlords will also try to bypass the minimum rental property standards by offering their properties at above-market rents, capitalising on the high demand and low stock.</p>
<h2>Cashing in on the black market</h2>
<p>Promoting <a href="https://www.consumer.vic.gov.au/housing/renting/2021-victorian-rental-laws-changes">rent-bidding</a> above the fixed price will only worsen if there are government-imposed rent freezes. While rent bidding has been banned in some states including New South Wales and Victoria, anecdotally it remains widespread.</p>
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<a href="https://images.theconversation.com/files/533908/original/file-20230626-150979-v3a82w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Man holding cash" src="https://images.theconversation.com/files/533908/original/file-20230626-150979-v3a82w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/533908/original/file-20230626-150979-v3a82w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/533908/original/file-20230626-150979-v3a82w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/533908/original/file-20230626-150979-v3a82w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/533908/original/file-20230626-150979-v3a82w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/533908/original/file-20230626-150979-v3a82w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/533908/original/file-20230626-150979-v3a82w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Some renters are prepared to pay extra in cash just to secure a property.</span>
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<p>Then there is a grey area where real estate agents and landlords appear to adhere to the law by not asking for bids, but willingly accept offers above the <a href="https://www.ahuri.edu.au/research/brief/why-does-australia-have-rental-crisis-and-what-can-be-done-about-it">advertised price</a> from renters desperate to secure a property.</p>
<p>Given the difficulty in evicting renters, and rent freezes not covering costs, landlords might think a premium payment is justified. On paper, it would appear the rent being paid is reasonable and in accord with a government-imposed freeze.</p>
<p>But it also provides the landlord with untaxed cash. This flows on to the building sector where tradies will happily provide their services for cash, thereby expanding the black market.</p>
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Read more:
<a href="https://theconversation.com/the-national-housing-strategy-wont-end-homelessness-without-supportive-housing-207291">The National Housing Strategy won't end homelessness without supportive housing</a>
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<p>The reasons for the property supply shortage are longstanding, and many of the causes were worsened by the COVID pandemic. These included material supply delays, increased costs and changes in preferred housing types. Government policies relating to the release of land and drawn-out approval processes for new builds have added to the supply problem.</p>
<h2>Other unintended consequences</h2>
<p>Battling families are further disadvantaged in the rental market because landlords would prefer to have their properties occupied by professionals with no children. Often, it is easier for owners to charge under-the-table premiums to this cashed-up group prepared to pay to get a particular property.</p>
<p>This increase in <a href="https://iea.org.uk/media/rent-controls-in-london-could-bring-immense-economic-costs-and-increase-social-segregation-finds-new-report/">social segregation</a> has been reported in Britain, where landlords choose renters from their preferred social and economic cohort. This increases the waiting times for “rent frozen” properties, forcing desperate individuals - usually those already most disadvantaged - to rent illegally through the black market.</p>
<p>This worsens the divide between the wealthy market-insiders and unemployed, migrant, young and other disadvantaged renters. The resulting lack of available rentals worsens worker shortages in some areas and can create pockets of increased violence and crime spawned by uncontrolled hidden black markets.</p>
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Read more:
<a href="https://theconversation.com/governments-housing-fund-legislation-delayed-by-greens-coalition-alliance-208016">Government's housing fund legislation delayed by Greens-Coalition alliance</a>
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<p>While freezing rents would appear to be a simple method to increase rental housing affordability, the unintended consequences of any such move will have a long-term negative impact on the total availability of rental housing stock, reducing the quality of housing and increasing a black market in rental housing.</p>
<p>Global experience suggests that improving supply, by easing building restrictions and scrapping red tape for new developments, is likely to be a more effective policy tool in Australia. Local councils and state governments need to simplify and expedite the process for approving new developments at the same time as reducing taxes on rental properties, both during construction and later.</p><img src="https://counter.theconversation.com/content/208099/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ameeta Jain does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
</span></em></p>The Greens and housing support groups want rent rises frozen but this might actually reduce the availability of suitable housing stock.Ameeta Jain, Associate Professor, Deakin Business School, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1912282022-09-30T12:27:10Z2022-09-30T12:27:10ZTrump properties aren’t the only ones to see wild valuations – putting a price on real estate isn’t straightforward<figure><img src="https://images.theconversation.com/files/487394/original/file-20220929-5105-v0nt99.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5477%2C3640&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">40 Wall Street is one of the Trump Organization properties included in the lawsuit.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/view-of-the-trump-building-on-wall-street-in-lower-news-photo/1344365626?adppopup=true">Roy Rochlin/Getty Images</a></span></figcaption></figure><p>On the lower tip of Manhattan there is a prime piece of real estate, the price of which is somewhat up for debate. </p>
<p>To the owners, the Trump Organization, <a href="https://www.40wallstreet.com/">40 Wall Street</a> is worth an eye-watering US$735 million, or at least <a href="https://ag.ny.gov/press-release/2022/attorney-general-james-sues-donald-trump-years-financial-fraud">it was in 2015</a>. Others disagree, pointing to an appraisal that year by a real estate firm that priced it at $540 million. But even that was inflated, <a href="https://ag.ny.gov/press-release/2022/attorney-general-james-sues-donald-trump-years-financial-fraud">according to the New York attorney general</a>: An appraisal three years earlier suggested the worth of the property then was $220 million.</p>
<p>The probe into the <a href="https://www.nytimes.com/2022/09/21/nyregion/trump-fraud-lawsuit-ny.html">alleged fraudulent activities</a> relating to Donald Trump’s property empire has many people wondering about the art and science of real estate valuations. Even when there are no claims of fraud involved, valuations can vary widely – and it is a longstanding problem. This likely sets the bar high for New York’s civil lawsuit to prove its charge, that at least some valuations were fraudulent as opposed to “business as usual.”</p>
<p>In a 1987 <a href="http://www.communicationcache.com/uploads/1/0/8/8/10887248/experts_amateurs_and_real_estate-_an_anchoring-and-adjustment_perspective_on_property_pricing_decisions.pdf">experiment</a>, experienced real estate agents were handed identical information regarding a typical house and asked to estimate its value, with the only difference being the listing price. The resulting valuations differed significantly. With commercial property, the large divergence in valuations has likewise long been <a href="https://www.proquest.com/docview/2299168490?pq-origsite=gscholar&fromopenview=true">recognized as a concern</a>.</p>
<figure class="align-center ">
<img alt="A Black woman in a green top stands behind a lectern." src="https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">New York Attorney General Letitia James disputes the Trump Organization’s property valuations.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/attorney-general-letitia-james-speaks-during-a-press-news-photo/1425942800?adppopup=true">Michael M. Santiago/Getty Images</a></span>
</figcaption>
</figure>
<p>So why do real estate values seem so subjective? As someone who <a href="https://www.uml.edu/msb/faculty/merriman-kimberly.aspx">researches real estate trends</a>, I know the practice is more art than science. Valuations are educated opinions. They are based on some degree of factual information, but not facts in themselves. Expert valuations vary based on differing judgments of the same data. And when it comes to commercial real estate, experts even disagree over the methods involved.</p>
<h2>The 3 ways to value property</h2>
<p>Before delving deeper, some valuation basics: There are <a href="https://pickensassessor.org/wp-content/uploads/sites/26/2018/07/Appraisal-Process.pdf">three overarching ways</a> to value commercial real estate – the cost, the market and the income approaches. </p>
<p>The cost and market approaches are both based on the <a href="https://www.boe.ca.gov/info/iav/lesson2.htm#:%7E:text=The%20principle%20of%20substitution%20states,or%20purchase%20a%20similar%20property.">economic principle of substitution</a>, which equates the value of real estate to the cost to create or acquire a substitute property of comparable utility. For example, an office value estimate of $200 per square foot is reasonable if it costs this amount to purchase an existing comparable office or to newly construct one.</p>
<p>The income approach is based on anticipation of future benefits, which equates the value of real estate to the income stream the property can generate. So a rented office that earns its owner $2 million a year in net income could reasonably be worth about twice the value of an office with $1 million a year in net income.</p>
<p>Appraisers use all three approaches when possible to value a property. Though commercial properties by necessity lean heavily on the income approach to mimic investors, it is also the most prone to value differences because it requires a crystal ball to accurately estimate future income.</p>
<h2>Built on assumptions</h2>
<p>Even when appraisers use the same approach and methods, there is ample room for difference. All three valuation approaches require assumptions, which provide fertile ground for expert disagreement.</p>
<p>The cost approach requires an estimation of depreciation and <a href="https://www.masterclass.com/articles/functional-obsolescence-explained">obsolescence</a> and a way to value the land that the building sits on. Depreciation refers to the physical aging of the property. Obsolescence accounts for trends and market conditions that erode the property’s desirability, such as an outdated building design or an increase in neighborhood crime.</p>
<p>The market approach is limited to past sales that require adjustments to reflect such factors, beyond timing, as any difference in the desirability of a location or the physical condition of a sale property relative to the appraised property.</p>
<p>Meanwhile, the income approach requires the appraiser to make assumptions on a property’s future income stream. Appraisers will typically consider market rents and, for property like hotels that operate as a business, historic income and expenses.</p>
<p>The pandemic made these various assumptions much more speculative due to uncertainty over the future use of office space. Even a property’s location as an influence on real estate value is no longer straightforward. My <a href="https://sloanreview.mit.edu/article/the-new-strategic-road-map-for-attracting-and-retaining-working-parents/">research</a> points to shifting perspectives on what is deemed a quality location, with real estate premiums associated with central business districts becoming dubious as more people <a href="https://www.mckinsey.com/industries/real-estate/our-insights/americans-are-embracing-flexible-work-and-they-want-more-of-it">work remotely</a>.</p>
<p>Experts also disagree over which aspects of real estate to include in a valuation. Real estate that generates income has components beyond the actual land and improvements to it. Elements that contribute to generating income but are not “real property” – things such as furnishings and a hotel’s brand recognition – need to be stripped out of the valuation for some purposes.</p>
<p>Valuations for tax purposes generally focus on real property value, while valuations for lenders tend to include more of these other real estate components.</p>
<p>Consider hotels as an example. It is generally accepted that the hotel’s brand and its furniture, fixtures and equipment are not real property, yet they have big <a href="https://hotelsmag.com/news/valuation-strategies-for-the-new-normal/">implications</a> for its value.</p>
<h2>Influencing assessments</h2>
<p>Commercial real estate does not offer the transparent pricing structure built into some assets like stocks.</p>
<p>Real estate is less frequently traded and sales go through a number of intermediaries, and much of the information surrounding a sale is not publicly shared. As a result, buyers do not have an easy benchmark for price comparison – it is like trying to decipher the going price for a hip replacement or a piece of fine art.</p>
<p>Furthermore, no two pieces of real estate are precisely the same. Commercial real estate assets vary in a multitude of attributes – such as location, condition, permitted uses and existing lease obligations – that affect potential income.</p>
<p>Indeed, <a href="https://research.cornell.edu/news-features/behavior-commercial-real-estate">research shows</a> many commercial properties are listed for sale with no stated asking price because of the difficulty in determining potential revenue, which can vary based on what a given buyer plans to do with the property.</p>
<p>And sellers do not want to inadvertently underprice their asset. Take, for example, the 2014 <a href="https://www.nytimes.com/2014/10/07/nyregion/waldorf-astoria-hotel-to-be-sold-for-195-billion.html">sale of the Waldorf Astoria hotel</a> in New York. The buyer, a Chinese company, deliberately paid a higher price than local investors might because they thought they could reap higher income through converting some space into luxury condos for Chinese buyers. The plan ultimately <a href="https://www.bloomberglinea.com/2021/10/08/nycs-waldorf-gets-plush-renovation-becomes-icon-of-chinas-overreach/">hit some snags</a>, but it nonetheless justified a larger purchase price. </p>
<h2>Rules and regulations</h2>
<p>The uncertainty inherent in real estate values also leaves appraisers vulnerable to client influence. </p>
<p>A <a href="https://link.springer.com/article/10.1007/s10551-015-2953-1">2015 study in the U.K.</a> examined appraisal values for institutional real estate funds and found that their valuation methods arbitrarily changed depending on what kinds of valuations the fund clients seemingly preferred.</p>
<p>So what does this all mean for Trump’s properties? Clearly real estate valuations aren’t a science, but it’s not the Wild West either. Appraisers are expected to follow regulatory standards, certification and licensing requirements and professional norms in the valuation of real estate. The question for the courts hearing the case of Trump properties is whether someone failed to follow them.</p><img src="https://counter.theconversation.com/content/191228/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kimberly Merriman does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>What is real estate actually worth? It depends a lot on who you ask and what method they use to work it out.Kimberly Merriman, Professor of Management, Manning School of Business, UMass LowellLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1788662022-06-03T12:20:19Z2022-06-03T12:20:19ZGenetic paparazzi are right around the corner, and courts aren’t ready to confront the legal quagmire of DNA theft<figure><img src="https://images.theconversation.com/files/466687/original/file-20220601-48041-5tdwjf.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C2309%2C1299&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">DNA is a trove of personal information that can be hard to keep track of and protect. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/dna-royalty-free-image/1369527112">Boris Zhitkov/Moment via Getty Images</a></span></figcaption></figure><p>Every so often stories of <a href="https://ssrn.com/abstract=1684337">genetic theft</a>, or extreme precautions taken to avoid it, make headline news. So it was with a <a href="https://www.theweek.in/news/world/2022/02/12/explained-what-is-dna-theft-why-did-macron-refuse-russian-covid-test.html">picture</a> of French President Emmanuel Macron and Russian President Vladimir Putin sitting at <a href="https://www.reuters.com/world/europe/putin-kept-macron-distance-snubbing-covid-demands-sources-2022-02-10/">opposite ends of a very long table</a> after Macron declined to take a Russian PCR COVID-19 test in 2022. Many <a href="https://www.firstpost.com/world/dna-theft-fears-why-french-and-german-leaders-refused-to-take-russian-covid-test-10386501.html">speculated</a> that Macron refused due to security concerns that the Russians would take and use his DNA for nefarious purposes. German Chancellor Olaf Scholz <a href="https://www.theweek.co.uk/news/world-news/russia/955813/why-world-leaders-refuse-give-russia-dna">similarly refused</a> to take a Russian PCR COVID-19 test.</p>
<p>While these concerns may seem relatively new, pop star celebrity Madonna has been raising alarm bells about the potential for nonconsensual, surreptitious collection and testing of DNA for over a decade. She has <a href="https://geneticliteracyproject.org/2016/02/19/madonna-may-suffer-dna-paranoia/">hired cleaning crews</a> to sterilize her dressing rooms after concerts and requires her own new toilet seats at each stop of her tours. </p>
<p>At first, Madonna was ridiculed for having <a href="https://www.dailymail.co.uk/tvshowbiz/article-2163460/Paranoia-Madonna-orders-sterile-sweep-dressing-room-gig-prevent-fans-stealing-DNA.html">DNA paranoia</a>. But as more advanced, faster and cheaper genetic technologies have reached the consumer realm, these concerns seem not only reasonable, but justified.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/466685/original/file-20220601-66680-bioj3t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Putin and Macron sitting at opposite ends of a long table" src="https://images.theconversation.com/files/466685/original/file-20220601-66680-bioj3t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/466685/original/file-20220601-66680-bioj3t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=380&fit=crop&dpr=1 600w, https://images.theconversation.com/files/466685/original/file-20220601-66680-bioj3t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=380&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/466685/original/file-20220601-66680-bioj3t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=380&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/466685/original/file-20220601-66680-bioj3t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=478&fit=crop&dpr=1 754w, https://images.theconversation.com/files/466685/original/file-20220601-66680-bioj3t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=478&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/466685/original/file-20220601-66680-bioj3t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=478&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">For some, keeping one’s distance might be a preferable alternative to getting one’s DNA stolen.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/RussiaUkraineTalkingtoPutin/0778415f155a4cff94894c58f9fb6bb8">AP Photo/Pool Sputnik Kremlin</a></span>
</figcaption>
</figure>
<p><a href="https://law.emory.edu/faculty/faculty-profiles/vertinsky-profile.html">We are</a> <a href="https://scholar.google.com/citations?user=OKxLE-QAAAAJ&hl=en">law professors</a> who study how emerging technologies like genetic sequencing are regulated. We <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3559405">believe that</a> growing public interest in genetics has increased the likelihood that <a href="https://www.cambridge.org/core/books/abs/consumer-genetic-technologies/genetic-paparazzi/7B0D35C61C3CBD9DA3FE0D457C22BB9B">genetic paparazzi</a> with DNA collection kits may soon become as ubiquitous as ones with cameras. </p>
<p>While courts have for the most part <a href="https://www.forbes.com/sites/michellefabio/2018/04/23/madonna-loses-fight-to-reclaim-tupacs-letter-other-highly-personal-items/">managed to evade</a> dealing with the complexities of surreptitious DNA collection and testing of public figures, they won’t be able to avoid dealing with it for much longer. And when they do, they are going to run squarely into the <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3559405">limitations of existing legal frameworks</a> when it comes to genetics.</p>
<h2>Genetic information troves</h2>
<p>You <a href="https://journalofethics.ama-assn.org/article/shedding-privacy-along-our-genetic-material-what-constitutes-adequate-legal-protection-against/2016-03">leave your DNA behind you</a> everywhere you go. The strands of hair, fingernails, dead skin and saliva you shed as you move through your day are all collectible trails of DNA.</p>
<p>Genetic analysis can reveal not only personal information, such as existing health conditions or risk for developing certain diseases, but also core aspects of a person’s identity, such as their ancestry and the potential traits of their future children. In addition, as genetic technologies continue to evolve, fears about using surreptitiously collected genetic material for <a href="https://news.gsu.edu/2020/04/28/genetic-paparazzi-could-celebrity-dna-become-public-domain/">reproductive purposes</a> via <a href="https://doi.org/10.1093/jlb/lsv057">in vitro gametogenesis</a> become more than just paranoia.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/Eb_o8hQNUFI?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">In vitro gametogenesis (IVG), while still in development, could allow prospective parents to create egg or sperm from other parts of the body, like skin.</span></figcaption>
</figure>
<p>Ultimately, taking an individual’s genetic material and information without their consent is an intrusion into a legal domain that is still considered <a href="https://doi.org/10.1017/9781108874106.012">deeply personal</a>. Despite this, there are <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3559405">few laws</a> protecting the interests of individuals regarding their genetic material and information. </p>
<h2>Existing legal frameworks</h2>
<p>When disputes involving genetic theft from public figures inevitably reach the courtroom, judges will need to confront fundamental questions about how genetics relates to personhood and identity, property, health and disease, intellectual property and reproductive rights. Such questions have already been raised in cases involving the <a href="https://www.virginialawreview.org/articles/genetic-privacy-after-carpenter/">use of genetics in law enforcement</a>, the <a href="https://www.science.org/content/article/us-supreme-court-strikes-down-human-gene-patents">patentability of DNA</a> and ownership of <a href="https://scholarship.law.nd.edu/ndlr/vol93/iss3/5/">discarded genetic materials</a>. </p>
<p>In each of these cases, courts focused on <a href="https://columbialawreview.org/content/dna-by-the-entirety-2/">only one dimension</a> of genetics, such as privacy rights or the value of genetic information for biomedical research. But this limited approach disregards <a href="https://doi.org/10.1111/j.1748-720x.2007.00161.x">other aspects</a>, such as the privacy of family members with shared genetics, or property and identity interests someone may have in genetic material discarded as part of a medical procedure.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1336309197697413123"}"></div></p>
<p>In the case of genetic paparazzi, courts will presumably try to fit complex questions about genetics into the legal framework of <a href="https://scholarship.law.upenn.edu/jcl/vol19/iss4/4/">privacy rights</a> because this is how they have approached other intrusions into the lives of public figures in the past. </p>
<p>Modern <a href="https://heinonline.org/HOL/LandingPage?handle=hein.journals/hclwpo11&div=16&id=&page=">U.S. privacy law</a> is a complex web of state and federal regulations governing how information can be acquired, accessed, stored and used. The right to privacy is limited by First Amendment protections on the freedom of speech and press, as well as Fourth Amendment prohibitions on unreasonable searches and seizure. <a href="https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=1633&context=jcl">Public figures</a> face further restrictions on their privacy rights because they are objects of legitimate public interest. On the other hand, they also have publicity rights that control the commercial value of their unique personally identifying traits.</p>
<p>People whose genetic material has been taken without their consent may also raise a <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3357566">claim of conversion</a> that their property has been interfered with and lost. Courts in Florida are currently considering a conversion claim in a <a href="https://gizmodo.com/how-a-legal-brawl-between-two-rich-guys-could-change-ho-1824191082">private dispute</a> where the former CEO of Marvel Entertainment and his wife accused a millionaire businessman of stealing their DNA to prove that they were slandering him through a hate-mail campaign. This approach replaces the narrow legal framework of privacy with an even narrower framework of property, reducing genetics to an object that someone possesses.</p>
<h2>What the future may hold</h2>
<p>Under existing laws and the current state of genetic technology, most people don’t need to worry about surreptitious collection and use of genetic material in the way that public figures might. But genetic paparazzi cases will likely play an important role in determining what rights everyone else will or will not have.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/466689/original/file-20220601-48776-susuv1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Open 23andMe genetic testing kit" src="https://images.theconversation.com/files/466689/original/file-20220601-48776-susuv1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/466689/original/file-20220601-48776-susuv1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/466689/original/file-20220601-48776-susuv1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/466689/original/file-20220601-48776-susuv1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/466689/original/file-20220601-48776-susuv1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/466689/original/file-20220601-48776-susuv1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/466689/original/file-20220601-48776-susuv1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">As DNA testing technology advances, questions about genetic privacy and ownership will only become more complex.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/this-illustration-picture-shows-a-saliva-collection-kit-for-news-photo/1074407824">Eric Baradat/AFP via Getty Images</a></span>
</figcaption>
</figure>
<p>The U.S. Supreme Court is very unlikely to recognize new rights, or even affirm previously recognized rights, that are <a href="https://www.washingtonpost.com/outlook/2022/03/25/ketanji-brown-jackson-roe/">not explicitly mentioned in the Constitution</a>. Therefore, at least at the federal level, individual protections for genetic material and information are not likely to adapt to changing times.</p>
<p>This means that cases involving genetics are likely to fall within the purview of state legislatures and courts. But none of the states have <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3559405">adequately grappled</a> with the complexities of genetic legal claims. Even in states with laws specifically designed to protect genetic privacy, regulations cover only a <a href="https://doi.org/10.1038/nrg3113">narrow range</a> of genetic interests. Some laws, for example, may prohibit disclosure of genetic information, but not collection.</p>
<p>For better or for worse, how the courts rule in genetic paparazzi cases will shape how society thinks about genetic privacy and about individual rights regarding genetics more broadly.</p><img src="https://counter.theconversation.com/content/178866/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Both Macron and Madonna have expressed concerns about genetic privacy. As DNA collection and sequencing becomes increasingly commonplace, what may seem paranoid may instead be prescient.Liza Vertinsky, Professor of Law, University of MarylandYaniv Heled, Professor of Law, Georgia State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1790672022-04-21T12:19:38Z2022-04-21T12:19:38ZCan you truly own anything in the metaverse? A law professor explains how blockchains and NFTs don’t protect virtual property<p>In 2021, an investment firm <a href="https://www.cnet.com/personal-finance/people-are-paying-millions-for-land-in-the-metaverse-heres-why/">bought 2,000 acres of real estate</a> for about US$4 million. Normally this would not make headlines, but in this case the land was virtual. It existed only in a <a href="https://theconversation.com/what-is-the-metaverse-2-media-and-information-experts-explain-165731">metaverse</a> platform called <a href="https://www.sandbox.game/en/">The Sandbox</a>. By buying 792 <a href="https://theconversation.com/how-nonfungible-tokens-work-and-where-they-get-their-value-a-cryptocurrency-expert-explains-nfts-157489">non-fungible tokens</a> on the <a href="https://ethereum.org/en/what-is-ethereum/">Ethereum blockchain</a>, the firm <a href="https://www.republicrealm.com/news/republic-realm-completes-largest-ever-metaverse-land-acquisition%2C-%244.28-million-usd">then owned</a> the equivalent of 1,200 city blocks. </p>
<p>But did it? It turns out that legal ownership in the metaverse is not that simple.</p>
<p>The prevailing but legally problematic narrative among crypto enthusiasts is that NFTs allow true ownership of digital items in the metaverse for two reasons: decentralization and interoperability. These two technological features have led some to claim that <a href="https://www.ft.com/partnercontent/crypto-com/nfts-the-metaverse-economy.html">tokens provide indisputable proof of ownership</a>, which can be used across various metaverse apps, environments and games. Because of this decentralization, some also claim that <a href="https://ethereum.org/en/nft/">buying and selling virtual items can be done on the blockchain</a> itself for whatever price you want, without any person or any company’s permission.</p>
<p>Despite these claims, the legal status of virtual “owners” is significantly more complicated. In fact, the current ownership of metaverse assets is not governed by property law at all, but rather by contract law. As a <a href="https://scholar.google.com/citations?user=b8cRIfIAAAAJ&hl=en">legal scholar</a> who studies property law, tech policy and legal ownership, I believe that what many companies are calling “ownership” in the metaverse is not the same as ownership in the physical world, and consumers are at risk of being swindled.</p>
<h2>Purchasing in the metaverse</h2>
<p>When you buy an item in the metaverse, your purchase is recorded in a transaction on a blockchain, which is a digital ledger under nobody’s control and in which transaction records cannot be deleted or altered. Your purchase assigns you ownership of an NFT, which is simply a unique string of bits. You store the NFT in a crypto wallet that only you can open, and which you “carry” with you wherever you go in the metaverse. Each NFT is linked to a particular virtual item.</p>
<p>It is easy to think that because your NFT is in your crypto wallet, no one can take your NFT-backed virtual apartment, outfit or magic wand away from you without access to your wallet’s private key. Because of this, many people think that the NFT and the digital item are one and the same. Even experts conflate NFTs with their respective digital goods, noting that because <a href="https://www.nytimes.com/interactive/2022/03/18/technology/nft-guide.html?referringSource=articleShare">NFTs are personal property</a>, they allow <a href="https://theconversation.com/the-metaverse-is-money-and-crypto-is-king-why-youll-be-on-a-blockchain-when-youre-virtual-world-hopping-171659">you to own digital goods in a virtual world</a>.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/uIllSiXVfmI?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">NFTs and the hype about the metaverse have sparked a virtual land rush.</span></figcaption>
</figure>
<p>However, when you join a metaverse platform you must first agree to the platform’s terms of service, terms of use or end user license agreement. These are legally binding documents that define the rights and duties of the users and the metaverse platform. Unfortunately and unsurprisingly, almost no one actually reads the terms of service. In one study, <a href="https://doi.org/10.1080/1369118X.2018.1486870">only 1.7% of users found and questioned a “child assignment clause</a>” embedded in a terms of service document. Everyone else unwittingly gave away their first-born child to the fictional online service provider.</p>
<p>It is in these lengthy and sometimes incomprehensible documents where metaverse platforms spell out the legal nuances of virtual ownership. Unlike the blockchain itself, the terms of service for each metaverse platform are centralized and are under the complete control of a single company. This is extremely problematic for legal ownership.</p>
<p>Interoperability and portability are defining features of the metaverse, meaning you should be able to carry your non-real-estate virtual property – your avatar, your digital art, your magic wand – from one virtual world to another. But today’s virtual worlds are not connected to one another, and there is nothing in an NFT itself that labels it as, say, a magic wand. As it stands, each platform needs to link NFTs to their own proprietary digital assets.</p>
<h2>Virtual fine print</h2>
<p>Under the terms of service, the NFTs purchased and the digital goods received are almost never one and the same. NFTs exist on the blockchain. The land, goods and characters in the metaverse, on the other hand, exist on <a href="https://dx.doi.org/10.2139/ssrn.3682090">private servers running proprietary code</a> with secured, inaccessible databases.</p>
<p>This means that all visual and functional aspects of digital assets – the very features that give them any value – are not on the blockchain at all. These features are completely controlled by the private metaverse platforms and are subject to their unilateral control. </p>
<p>Because of their terms of service, platforms can even legally delete or give your items away by delinking the digital assets from their original NFT identification codes. Ultimately, even though you may own the NFT that came with your digital purchase, you do not legally <a href="https://dx.doi.org/10.2139/ssrn.3834643">own or possess</a> the digital assets themselves. Instead, the platforms merely grant you access to the digital assets and only for the length of time they want.</p>
<p>For example, on one day you might own a $200,000 digital painting for your apartment in the metaverse, and the next day you may find yourself banned from the metaverse platform, and your painting, which was originally stored in its proprietary databases, deleted. Strictly speaking, you would still own the NFT on the blockchain with its original identification code, but it is now functionally useless and financially worthless.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/458454/original/file-20220418-24-iytufa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A graphical image of a young woman with purple hair and slanted bangs" src="https://images.theconversation.com/files/458454/original/file-20220418-24-iytufa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/458454/original/file-20220418-24-iytufa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=311&fit=crop&dpr=1 600w, https://images.theconversation.com/files/458454/original/file-20220418-24-iytufa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=311&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/458454/original/file-20220418-24-iytufa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=311&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/458454/original/file-20220418-24-iytufa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=391&fit=crop&dpr=1 754w, https://images.theconversation.com/files/458454/original/file-20220418-24-iytufa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=391&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/458454/original/file-20220418-24-iytufa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=391&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Virtual items like this avatar are sold in NFT marketplaces.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/azulmarino/51774354674/">Nescolet/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>While admittedly jarring, this is not a far-fetched scenario. It might not be a wise business move for the platform company, but there’s nothing in the law to prevent it. Under the <a href="https://www.sandbox.game/en/terms-of-use/">terms of use</a> and <a href="https://www.sandbox.game/en/premium-nft-terms-of-use/">premium NFT terms of use</a> governing the $4 million’s worth of <a href="https://www.republicrealm.com/news/republic-realm-completes-largest-ever-metaverse-land-acquisition%2C-%244.28-million-usd">virtual real estate purchased on The Sandbox</a>, the metaverse company – like many other NFT and metaverse platforms – reserves the right at its sole discretion to terminate your ability to use or even access your purchased digital assets. </p>
<p>If The Sandbox “reasonably believes” you engaged in any of the platform’s prohibited activities, which require subjective judgments about whether you interfered with others’ “enjoyment” of the platform, it may immediately suspend or terminate your user account and delete your NFT’s images and descriptions from its platform. It can do this without any notice or liability to you.</p>
<p>In fact, The Sandbox even <a href="https://www.sandbox.game/en/premium-nft-terms-of-use/">claims the right</a> in these cases to immediately confiscate any NFTs it deems you acquired as a result of the prohibited activities. How it would successfully confiscate blockchain-based NFTs is a technological mystery, but this raises further questions about the validity of what it calls virtual ownership.</p>
<p>The Conversation reached out to The Sandbox for comment but did not receive a response.</p>
<h2>Legally binding</h2>
<p>As if these clauses weren’t alarming enough, many metaverse platforms reserve the right to amend their terms of service at any time with <a href="https://scholarship.law.upenn.edu/jbl/vol14/iss4/6/">little to no actual notice</a>. This means that users would need to constantly refresh and reread the terms to ensure they do not engage in any recently banned behavior that could result in the deletion of their “purchased” assets or even their entire accounts. </p>
<p>[<em>Over 150,000 readers rely on The Conversation’s newsletters to understand the world.</em> <a href="https://memberservices.theconversation.com/newsletters/?source=inline-150ksignup">Sign up today</a>.]</p>
<p>Technology alone will not pave the way for true ownership of digital assets in the metaverse. NFTs cannot bypass the centralized control that metaverse platforms currently have and will continue to have under their contractual terms of service. Ultimately, legal reform alongside technological innovation is needed before the metaverse can mature into what it promises to become.</p><img src="https://counter.theconversation.com/content/179067/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>João Marinotti does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>NFTs are hailed as the foundation of the metaverse economy because they allow you to purchase unique digital assets, from art to real estate. But legally, you might not own what you think you do.João Marinotti, Associate Professor of Law, Indiana UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1734162022-02-02T13:08:50Z2022-02-02T13:08:50ZThe great Amazon land grab – how Brazil’s government is clearing the way for deforestation<figure><img src="https://images.theconversation.com/files/442638/original/file-20220125-23-sjc83.jpg?ixlib=rb-1.1.0&rect=7%2C14%2C1590%2C1123&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A satellite captured large and small deforestation patches in Amazonas State in 2015. The forest loss has escalated since then.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/natural-satellite-image-of-deforestation-on-the-banks-of-news-photo/627792180">USGS/NASA Landsat data/Orbital Horizon/Gallo Images/Getty Images</a></span></figcaption></figure><p>Imagine that a group of politicians decide that Yellowstone National Park is too big, so they downsize the park by a million acres, then sell that land in a private auction.</p>
<p>Outrageous? Yes. Unheard of? No. <a href="https://iopscience.iop.org/article/10.1088/1748-9326/ab1e24">It’s happening</a> with increasing frequency in the Brazilian Amazon. </p>
<p>The most widely publicized threat to the Amazonian rainforest is deforestation. A new study by European scientists released March 7, 2022, finds that tree clearing and less rainfall over the past 20 years have left <a href="https://www.nature.com/articles/s41558-022-01287-8">over 75% of the region increasingly less resilient to disturbances</a>, suggesting the rainforest may be nearing a tipping point for dieback. Fewer trees mean less moisture evaporating into the atmosphere to fall again as rain. </p>
<p>We have studied the Amazon’s changing hydroclimate, the role of deforestation and <a href="https://doi.org/10.1080/00139157.2021.1842711">evidence that the Amazon is being pushed toward a tipping point</a> – as well as what that means for different regions, biodiversity and climate change.</p>
<p>While the rise in deforestation is clear, less well understood are the sources driving it – particularly the way public lands are being converted to private holdings in a land grab <a href="https://www.researchgate.net/profile/Gabriel-Cardoso-Carrero">we’ve</a> <a href="https://scholar.google.com/citations?user=qcS5yogAAAAJ&hl=en">been</a> <a href="https://scholar.google.com/citations?user=PTEKYYoAAAAJ&hl=en">studying</a>
for the past decade. </p>
<p>Much of this land is cleared for cattle ranches and soybean farms, <a href="https://interactive.pri.org/2018/10/amazon-carbon/science.html">threatening biodiversity and the Earth’s climate</a>. Prior research has quantified how much public land has been grabbed, but only for one type of public land called “<a href="https://doi.org/10.1016/j.landusepol.2020.104863">undesignated public forests</a>.” Our research provides a complete account across all classes of public land. </p>
<p>We looked at Amazonia’s most active deforestation frontier, southern Amazonas State, starting in 2012 as rates of deforestation began to increase <a href="https://www.cell.com/one-earth/pdfExtended/S2590-3322(19)30081-8">because of loosened regulatory oversight</a>. Our research shows how land grabs are tied to accelerating deforestation spearheaded by wealthy interests, and how Brazil’s National Congress, by changing laws, is <a href="http://www.planalto.gov.br/ccivil_03/_ato2015-2018/2017/lei/l13465.htm">legitimizing these land grabs</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/442639/original/file-20220125-17-6i1s1l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A section of forest showing different stages of deforestation." src="https://images.theconversation.com/files/442639/original/file-20220125-17-6i1s1l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/442639/original/file-20220125-17-6i1s1l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/442639/original/file-20220125-17-6i1s1l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/442639/original/file-20220125-17-6i1s1l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/442639/original/file-20220125-17-6i1s1l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=500&fit=crop&dpr=1 754w, https://images.theconversation.com/files/442639/original/file-20220125-17-6i1s1l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=500&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/442639/original/file-20220125-17-6i1s1l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=500&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Three stages of deforestation: cleared land where the forest has recently been burned to create pasture; pastureland; and forest being burned.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/aerial-view-of-amazon-rainforest-deforestation-and-farm-news-photo/462437532">Ricardo Funari/Brazil Photos/LightRocket via Getty Images</a></span>
</figcaption>
</figure>
<h2>How the Amazon land grab began</h2>
<p>Brazil’s modern land grab started in the 1970s, when the military government began offering free land to encourage mining industries and farmers to move in, <a href="https://origins.osu.edu/article/amazon-rainforest-under-threat-Bolsonaro-fires-agrobusiness-indigenous-Brazil?language_content_entity=en">arguing that national security</a> depended on developing the region. It took lands that had been under state jurisdictions since colonial times and allocated them to rural settlement, granting 150- to 250-acre holdings to poor farmers. </p>
<p>Federal and state governments ultimately designated over 65% of Amazonia to several public interests, including rural settlement. For biodiversity, they created conservation units, some allowing traditional resource use and subsistence agriculture. Leftover government lands are generally referred to as <a href="http://www.bibliotecaflorestal.ufv.br/handle/123456789/4031">“vacant or undesignated public lands.”</a> </p>
<h2>Tracking the land grab</h2>
<p>Studies have estimated that by 2020, <a href="https://ipam.org.br/wp-content/uploads/2021/04/Amazo%CC%82nia-em-Chamas-7-Florestas-pu%CC%81blicas-na%CC%83o-destinadas.pdf">32% of “undesignated public forests”</a> had been grabbed for private use. But this is only part of the story, because land grabbing is now affecting many types of public land.</p>
<p>Importantly, land grabs now impact conservation areas and indigenous territories, where private holdings are forbidden. </p>
<figure class="align-center ">
<img alt="A herd of cattle on grass with thick forest behind them." src="https://images.theconversation.com/files/442640/original/file-20220125-15-wy06rh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/442640/original/file-20220125-15-wy06rh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/442640/original/file-20220125-15-wy06rh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/442640/original/file-20220125-15-wy06rh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/442640/original/file-20220125-15-wy06rh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/442640/original/file-20220125-15-wy06rh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/442640/original/file-20220125-15-wy06rh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Cattle on land cleared in the Jamanxim National Forest in 2020.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/land-grabbing-cattle-raising-and-deforestation-illegal-news-photo/1228648531">Marco Antonio Rezende/Brazil Photos/LightRocket via Getty Images</a></span>
</figcaption>
</figure>
<p>We compared the boundaries of self-declared private holdings in the government’s Rural Environmental Registry database, known as CAR, with the boundaries of all public lands in southern Amazonas State. The region has 50,309 square miles in conservation units. Of these, we found that <a href="https://www.datawrapper.de/_/JbEql/">10,425 square miles, 21%</a>, have been “grabbed,” or declared in the CAR register as private between 2014 and 2020. </p>
<p>In the United States, this would be like having 21% of the national parks disappear into private property.</p>
<p>Our measurement is probably an underestimate, given that <a href="https://doi.org/10.1016/j.landusepol.2014.06.026">not all grabbed lands are registered</a>. Some land grabbers now use CAR <a href="https://www.socioambiental.org/en/noticias-socioambientais/even-before-approval-a-land-grab-draft-law-is-already-destroying-the-amazon">to establish claims that could become legal</a> with changes in the law.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/440680/original/file-20220113-25-10q4hm4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/440680/original/file-20220113-25-10q4hm4.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=383&fit=crop&dpr=1 600w, https://images.theconversation.com/files/440680/original/file-20220113-25-10q4hm4.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=383&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/440680/original/file-20220113-25-10q4hm4.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=383&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/440680/original/file-20220113-25-10q4hm4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=482&fit=crop&dpr=1 754w, https://images.theconversation.com/files/440680/original/file-20220113-25-10q4hm4.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=482&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/440680/original/file-20220113-25-10q4hm4.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=482&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A map of the region showing deforestation and public lands.</span>
<span class="attribution"><span class="source">Gabriel Cardoso Carrero</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>Land grabs put the rainforest at risk by <a href="https://doi.org/10.1088/1748-9326/ab1e24">increasing deforestation</a>. In southern Amazonas, <a href="https://images.theconversation.com/files/440680/original/file-20220113-25-10q4hm4.png">our research reveals that twice as much deforestation occurred on illegal as opposed to legal CAR holdings between 2008 and 2021</a>, a relative magnitude that is growing. </p>
<h2>Large deforestation patches point to wealth</h2>
<p>So who are these land grabbers? </p>
<p>In Pará State, Amazonas State’s neighbor, deforestation in the 1990s <a href="https://doi.org/10.1111/1467-8306.9302008">was dominated by poor family farms in rural settlements</a>. On average, these households accumulated 120 acres of farmland after several decades by opening 4-6 acres of forest every few years in clearings visible on satellite images as deforestation patches. </p>
<p>Since then, <a href="https://www.datawrapper.de/_/JbEql/">patch sizes have grown dramatically</a> in the region, with most deforestation occurring on illicit holdings whose patches are much larger than on legal holdings. </p>
<p><iframe id="JbEql" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/JbEql/12/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>Large deforestation patches <a href="https://doi.org/10.1007/s00267-020-01354-w">indicate the presence of wealthy grabbers</a>, given the cost of clearing land.</p>
<p>Land grabbers benefit by selling the on-site timber and by subdividing what they’ve grabbed for sale in small parcels. Arrest records and research by groups such as Transparency International Brasil show that <a href="https://comunidade.transparenciainternacional.org.br/grilagem-de-terras">many of them are involved in criminal enterprises</a> that use the land for money laundering, tax evasion and illegal mining and logging.</p>
<p>In the 10-year period before President Jair Bolsonaro took office, <a href="http://terrabrasilis.dpi.inpe.br/app/map/deforestation?hl=en">satellite data</a> showed two deforestation patches exceeding 3,707 acres in Southern Amazonas. Since his election in 2019, we can identify nine massive clearings with an average size of 5,105 acres. The clearance and preparation cost for each Bolsonaro-era deforestation patch, legal or illicit, would be about US$353,000. </p>
<h2>Legitimizing land grabbing</h2>
<p>Brazil’s National Congress has been making it easier to grab public land. </p>
<p><a href="http://www.planalto.gov.br/ccivil_03/_ato2015-2018/2017/lei/l13465.htm">A 2017 change in the law</a> expanded the legally allowed size of private holdings in undesignated public lands and in rural settlements. This has reclassified over 1,000 square miles of land that had been considered illegal in 2014 as legal in southern Amazonas. Of all illegal <a href="https://www.car.gov.br/#/baixar">CAR claims</a> in undesignated public lands and rural settlements in 2014, <a href="http://atlasagropecuario.imaflora.org/mapa">we found that 94% became legal in 2017</a>.</p>
<p>Congress is now considering two additional pieces of legislation. One <a href="https://legis.senado.leg.br/sdleg-getter/documento?dm=9050818&ts=1639516395952&disposition=inline">would legitimize land grabs up to 6,180 acres, about 9.5 square miles</a>, in all undesignated public forests – an amount <a href="http://www.planalto.gov.br/ccivil_03/_ato2015-2018/2017/lei/l13465.htm">already allowed by law</a> in other types of undesignated public lands. The second would legitimize large holdings on about <a href="https://www.camara.leg.br/proposicoesWeb/prop_mostrarintegra;jsessionid=node0ncik9mq5phv818u4p592bgsuc3415152.node0?codteor=2066398&filename=Tramitacao-PL+4348/2019">80,000 square miles of land once meant for the poor</a>. </p>
<p>Our research also shows that the federal government increased the amount of public land up for grabs in southern Amazonas by shrinking rural settlements by 16%, just over 2,000 square miles, between <a href="https://link.springer.com/content/pdf/10.1007/s00267-016-0783-2.pdf">2015</a> and <a href="https://certificacao.incra.gov.br/csv_shp/export_shp.py">2020</a>. <a href="https://governancadeterras.com.br/wp-content/uploads/2018/03/Andre%CC%81-Segura-Tomasi-PAF-Curuquete%CC%82-Grilagem-de-Terras-e-Viole%CC%82ncia-Agra%CC%81ria-SulAM-1.pdf">Large ranches are now absorbing that land</a>. Similar downsizing of public land has affected <a href="https://muse.jhu.edu/article/627431/pdf?casa_token=w5cmTxINMOYAAAAA:SwlFEGwJj4BsjBSYggfqbr57fsSgCyOw9AcykDICyjSIzl05hFLFhRADSEJENKFDyqyf4Z5_lQ">Amazonia’s national parks</a>. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/c4-KpR1HrNs?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Satellite images over time show how deforestation spread in the Amazon.</span></figcaption>
</figure>
<h2>What can turn this around?</h2>
<p>Because of <a href="https://doi.org/10.1126/science.1248525">policy interventions and the greening of agricultural supply chains</a>, deforestation in the Brazilian Amazon fell after 2005, reaching a low point in 2012, when it began trending up again <a href="https://doi.org/10.1016/j.landusepol.2020.105072">because of weakening environmental governance and reduced surveillance</a>.</p>
<p>Other countries <a href="https://www.reuters.com/article/us-climatechange-amazon-norway/norway-to-complete-1-billion-payment-to-brazil-for-protecting-amazon-idUSKCN0RF1P520150915">have helped Brazil with billions of dollars</a> to protect the Amazon for the good of the climate, but in the end, the land belongs to Brazil. Outsiders have limited power to influence its use.</p>
<p>At the U.N. climate summit in 2021, 141 countries – including Brazil – signed a <a href="https://ukcop26.org/glasgow-leaders-declaration-on-forests-and-land-use/">pledge to end deforestation by 2030</a>. This pledge holds potential because, unlike past ones, the private sector has committed <a href="https://cnr.ncsu.edu/news/2021/11/cop26-deforestation-pledge-a-promising-solution-with-an-uncertain-future/">$7.2 billion to reduce agriculture’s impact on the forest</a>. In our view, the global community can help by insisting that supply chains for Amazonian beef and soybean products originate on lands deforested long ago and whose legality is long-standing.</p>
<p><em>This article was updated March 7, 2022, with new research suggesting the Amazon is nearing a tipping point.</em></p>
<p>[<em>Over 140,000 readers rely on The Conversation’s newsletters to understand the world.</em> <a href="https://memberservices.theconversation.com/newsletters/?source=inline-140ksignup">Sign up today</a>.]</p><img src="https://counter.theconversation.com/content/173416/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gabriel Cardoso Carrero received funding from the Tropical Conservation and Development Program at the University of Florida to conduct fieldwork related to this research. </span></em></p><p class="fine-print"><em><span>Cynthia S. Simmons and Robert T. Walker do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Land grabs spearheaded by wealthy interests are accelerating deforestation, and Brazil’s National Congress is working to legitimize them.Gabriel Cardoso Carrero, Graduate Student Fellow and PhD Candidate in Geography, University of FloridaCynthia S. Simmons, Professor of Geography, University of FloridaRobert T. Walker, Professor of Latin American Studies and Geography, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1525862021-02-03T13:24:43Z2021-02-03T13:24:43ZLiving with natural gas pipelines: Appalachian landowners describe fear, anxiety and loss<figure><img src="https://images.theconversation.com/files/380512/original/file-20210125-19-mykhz1.jpg?ixlib=rb-1.1.0&rect=0%2C13%2C4595%2C2900&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Pipeline construction cuts through forests and farms in Appalachia.</span> <span class="attribution"><span class="source">Provided by Erin Brock Carlson</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>More than <a href="https://www.ncsl.org/research/energy/state-gas-pipelines.aspx">2 million miles of natural gas pipelines</a> run throughout the United States. In Appalachia, they spread like spaghetti across the region.</p>
<p>Many of these lines were built in just the past five years to carry natural gas from the Marcellus Shale region of Ohio, Pennsylvania and West Virginia, where hydraulic fracturing has boomed. West Virginia alone has seen a <a href="https://www.eia.gov/dnav/ng/hist/na1160_swv_2a.htm">fourfold increase</a> in natural gas production in the past decade.</p>
<p>Such fast growth has also brought hundreds of <a href="https://www.reuters.com/article/us-usa-pipelines-etp-violations-insight/two-u-s-pipelines-rack-up-violations-threaten-industry-growth-idUSKCN1NX1E3">safety</a> and <a href="https://roanoke.com/business/environmental-regulators-seek-more-fines-against-mountain-valley-pipeline/article_31c30aa8-37d8-559a-8009-274ea19e00ae.html">environmental</a> violations, particularly under the Trump administration’s <a href="https://www.washingtonpost.com/graphics/2020/climate-environment/trump-climate-environment-protections/">reduced oversight</a> and streamlined approvals for pipeline projects. While energy companies promise <a href="https://researchrepository.wvu.edu/cgi/viewcontent.cgi?article=1322&context=bureau_be">economic benefits</a> for depressed regions, pipeline projects are upending the lives of people in their paths. </p>
<p>As a <a href="https://english.wvu.edu/faculty-and-staff/faculty-directory/erin-brock-carlson">technical and professional communication scholar</a> focused on how rural communities deal with complex problems and a <a href="https://portal.research.lu.se/portal/en/persons/martina-angela-caretta(5bef3fe2-55eb-4cc8-9326-977f0fabb526).html">geography scholar</a> specializing in human-environment interactions, we teamed up to study the effects of pipeline development in rural Appalachia. In 2020, we surveyed and talked with dozens of people living close to pipelines in West Virginia, Ohio and Pennsylvania.</p>
<p>What we found illuminates the stress and uncertainty that communities experience when natural gas pipelines change their landscape. Residents live with the fear of disasters, the noise of construction and the anxiety of having no control over their own land.</p>
<h2>‘None of this is fair’</h2>
<p>Appalachians are no strangers to environmental risk. The region has a long and complicated history with extractive industries, including <a href="https://doi.org/10.1016/j.eneco.2015.04.005">coal</a> and <a href="https://doi.org/10.3390/w12010147">hydraulic fracturing</a>. However, it’s rare to hear firsthand accounts of the long-term effects of industrial infrastructure development in rural communities, especially when it comes to pipelines, since they are the result of more recent energy-sector growth. </p>
<p>For all of the people we talked to, the process of pipeline development was drawn out and often confusing. </p>
<p>Some reported never hearing about a planned pipeline until a “land man” – a gas company representative – knocked on their door offering to buy a slice of their property; others said that they found out through newspaper articles or posts on social media. Every person we spoke with agreed that the burden ultimately fell on them to find out what was happening in their communities.</p>
<figure class="align-center ">
<img alt="Map" src="https://images.theconversation.com/files/380541/original/file-20210125-21-42d9sr.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/380541/original/file-20210125-21-42d9sr.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=408&fit=crop&dpr=1 600w, https://images.theconversation.com/files/380541/original/file-20210125-21-42d9sr.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=408&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/380541/original/file-20210125-21-42d9sr.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=408&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/380541/original/file-20210125-21-42d9sr.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=513&fit=crop&dpr=1 754w, https://images.theconversation.com/files/380541/original/file-20210125-21-42d9sr.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=513&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/380541/original/file-20210125-21-42d9sr.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=513&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A map shows U.S. pipelines carrying natural gas and hazardous liquids in 2018. More construction has been underway since then.</span>
<span class="attribution"><a class="source" href="https://www.gao.gov/products/GAO-19-48">GAO and U.S. Department of Transportation</a></span>
</figcaption>
</figure>
<p>One woman in West Virginia said that after finding out about plans for a pipeline feeding a petrochemical complex several miles from her home, she started doing her own research. “I thought to myself, how did this happen? We didn’t know anything about it,” she said. “It’s not fair. None of this is fair. … We are stuck with a polluting company.”</p>
<h2>‘Lawyers ate us up’</h2>
<p>If residents do not want pipelines on their land, they can pursue legal action against the energy company rather than taking a settlement. However, this can result in the use of eminent domain.</p>
<p><a href="https://www.law.cornell.edu/wex/eminent_domain">Eminent domain</a> is a right given by the Federal Energy Regulatory Commission to companies to access privately held property if the project is considered important for public need. <a href="https://www.law.cornell.edu/constitution-conan/amendment-5/just-compensation">Compensation</a> is decided by the courts, based on assessed land value, not taking into consideration the intangibles tied to the loss of the land surrounding one’s home, such as loss of future income.</p>
<p>Through this process, residents can be forced to accept a sum that doesn’t take into consideration all effects of pipeline construction on their land, such as the damage heavy equipment will do to surrounding land and access roads.</p>
<p>One man we spoke with has lived on his family’s land for decades. In 2018, a company representative approached him for permission to install a new pipeline parallel to one that had been in place since 1962, far away from his house. However, crews ran into problems with the steep terrain and wanted to install it much closer to his home. Unhappy with the new placement, and seeing erosion from pipeline construction on the ridge behind his house causing washouts, he hired a lawyer. After several months of back and forth with the company, he said, “They gave me a choice: Either sign the contract or do the eminent domain. And my lawyer advised me that I didn’t want to do eminent domain.” </p>
<figure class="align-center ">
<img alt="Pipeline construction on a farm" src="https://images.theconversation.com/files/380536/original/file-20210125-15-13nu0ly.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/380536/original/file-20210125-15-13nu0ly.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/380536/original/file-20210125-15-13nu0ly.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/380536/original/file-20210125-15-13nu0ly.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/380536/original/file-20210125-15-13nu0ly.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/380536/original/file-20210125-15-13nu0ly.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/380536/original/file-20210125-15-13nu0ly.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Pipeline construction cuts through a farmer’s field.</span>
<span class="attribution"><span class="source">Provided by Erin Brock Carlson</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>There was a unanimous sense among the 31 people we interviewed that companies have seemingly endless financial and legal resources, making court battles virtually unwinnable. Nondisclosure agreements <a href="https://doi.org/10.3390/w12010147">can effectively silence</a> landowners. Furthermore, lawyers licensed to work in West Virginia who aren’t already working for gas companies can be difficult to find, and legal fees can become too much for residents to pay.</p>
<p>One woman, the primary caretaker of land her family has farmed for 80 years, found herself facing significant legal fees after a dispute with a gas company. “We were the first and last ones to fight them, and then people saw what was going to happen to them, and they just didn’t have – it cost us money to get lawyers. Lawyers ate us up,” she said. </p>
<p>The pipeline now runs through what were once hayfields. “We haven’t had any income off that hay since they took it out in 2016,” she said. “It’s nothing but a weed patch.”</p>
<h2>‘I mean, who do you call?’</h2>
<p>Twenty-six of the 45 survey respondents reported that they felt that their property value had decreased as a result of pipeline construction, citing the risks of water contamination, explosion and unusable land.</p>
<p>Many of the 31 people we interviewed were worried about the same sort of long-term concerns, as well as gas leaks and air pollution. Hydraulic fracturing and other natural gas processes can <a href="https://cfpub.epa.gov/ncea/hfstudy/recordisplay.cfm?deid=332990">affect drinking water resources</a>, especially if there are spills or improper storage procedures. Additionally, methane, a potent greenhouse gas, and <a href="https://www.epa.gov/controlling-air-pollution-oil-and-natural-gas-industry/basic-information-about-oil-and-natural-gas">volatile organic compounds</a>, which can pose health risks, are byproducts of the <a href="https://fas.org/sgp/crs/misc/R42986.pdf">natural gas supply chain</a>.</p>
<figure class="align-center ">
<img alt="A woman walks through an oil spill near tanks." src="https://images.theconversation.com/files/381237/original/file-20210128-17-1vjmmwt.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/381237/original/file-20210128-17-1vjmmwt.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/381237/original/file-20210128-17-1vjmmwt.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/381237/original/file-20210128-17-1vjmmwt.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/381237/original/file-20210128-17-1vjmmwt.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/381237/original/file-20210128-17-1vjmmwt.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/381237/original/file-20210128-17-1vjmmwt.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Oil spills are a major concern among land owners.</span>
<span class="attribution"><span class="source">Provided by Erin Brock Carlson</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>“Forty years removed from this, are they going to be able to keep track and keep up with infrastructure? I mean, I can smell gas as I sit here now,” one man told us. His family had watched the natural gas industry move into their part of West Virginia in the mid-2010s. In addition to a 36-inch pipe on his property, there are several smaller wells and lines. “This year the company servicing the smaller lines has had nine leaks … that’s what really concerns me,” he said.</p>
<p>The top concern mentioned by survey respondents was <a href="https://pstrust.org/about-pipelines/state-by-state-incident-maps/">explosions</a>.</p>
<p><a href="https://www.fractracker.org/2018/12/pipeline-incidents-impact-residents/">According to data from 2010 to 2018</a>, a pipeline explosion occurred, on average, every 11 days in the U.S. While major pipeline explosions are relatively rare, when they do occur, they can be devastating. In 2012, a 20-inch transmission line exploded in Sissonville, West Virginia, damaging five homes and leaving four lanes of Interstate 77 looking “<a href="https://www.usatoday.com/story/news/nation/2012/12/11/west-virginia-gas-explosion/1761757/">like a tar pit.”</a></p>
<figure class="align-center ">
<img alt="Flames on the interstate highway." src="https://images.theconversation.com/files/381397/original/file-20210129-19-vva6cu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/381397/original/file-20210129-19-vva6cu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=369&fit=crop&dpr=1 600w, https://images.theconversation.com/files/381397/original/file-20210129-19-vva6cu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=369&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/381397/original/file-20210129-19-vva6cu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=369&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/381397/original/file-20210129-19-vva6cu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=463&fit=crop&dpr=1 754w, https://images.theconversation.com/files/381397/original/file-20210129-19-vva6cu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=463&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/381397/original/file-20210129-19-vva6cu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=463&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A gas line explosion near Sissonville, West Virginia, sent flames across Interstate 77.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/GasLineExplosion/b1a50e758f164daeb5c40364aeb93037/photo">AP Photo/Joe Long</a></span>
</figcaption>
</figure>
<p>Amplifying these fears is the lack of consistent communication from corporations to residents living along pipelines. Approximately half the people we interviewed reported that they did not have a company contact to call directly in case of a pipeline emergency, such as a spill, leak or explosion. “I mean, who do you call?” one woman asked.</p>
<h2>‘We just keep doing the same thing’</h2>
<p>Several people interviewed described a fatalistic attitude toward energy development in their communities.</p>
<p>Energy analysts <a href="https://www.reuters.com/article/us-usa-oil-natural-gas-outlook/u-s-shale-firms-amp-up-natural-gas-output-as-futures-signal-more-gains-idUSKBN28A0GN">expect gas production to increase</a> this year after a slowdown in 2020. Pipeline companies <a href="https://www.hartenergy.com/news/proposed-rules-cloud-startup-mountain-valley-natural-gas-pipeline-191676">expect to keep building</a>. And while the Biden administration is <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-protecting-public-health-and-environment-and-restoring-science-to-tackle-climate-crisis/">likely to restore some regulations</a>, the president has said he <a href="https://www.youtube.com/watch?v=WT6zHIXUsPs">would not</a> <a href="https://www.cfr.org/in-brief/whats-next-fracking-under-biden">ban fracking</a>. </p>
<p>“It’s just kind of sad because they think, once again, this will be West Virginia’s salvation,” one landowner said. “Harvesting the timber was, then digging the coal was our salvation. … And then here’s the third one. We just keep doing the same thing.”</p>
<p>[<em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>.]</p><img src="https://counter.theconversation.com/content/152586/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dr. Carlson has received funding this project from the West Virginia University Humanities Center. </span></em></p><p class="fine-print"><em><span>Dr Caretta has received funding for this project from the Heinz Foundation and the West Virginia University Humanities Center. </span></em></p>Pipeline companies have run roughshod over several regions where they’re building, racking up safety and environmental violations. Many residents feel trapped, with no control over their property.Erin Brock Carlson, Assistant Professor of Professional Writing and Editing, West Virginia UniversityMartina Angela Caretta, Senior Lecturer in Human Geography, Lund UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1320352020-02-19T13:48:17Z2020-02-19T13:48:17ZBanksy: what happens when someone vandalises graffiti – and who owns it anyway?<p>The news that a Valentine’s Day mural by world-renowned graffiti artist Banksy was “<a href="https://www.bbc.co.uk/news/uk-england-bristol-51515557">vandalised</a>” has attracted substantial media interest. The image of a girl firing red flowers from her catapult was defaced by spray paint within hours of appearing on a house wall in Bristol. News reports said measures would be taken to protect the artwork from further damage, but the incident has raised the question as to whether an unsolicited piece of street art can be vandalised.</p>
<p>“Vandalism” is not a legal term – in UK law, it equates to criminal damage and may amount to an offence under section 1 of the <a href="http://www.legislation.gov.uk/ukpga/1971/48/contents">Criminal Damage Act 1971</a> if it were to be an intentional or reckless destruction or damage of property belonging to another.</p>
<p>The law does not, however, draw a clear distinction between great works of street art that have been thoughtfully applied and the casual tagging of a wall. In both cases, if permission has not been sought, then an offence may be committed regardless of the merit of the artwork in question. The <a href="http://www.legislation.gov.uk/ukpga/2003/38/contents">Anti-social Behaviour Act 2003</a> defines graffiti as “the painting or writing on, or the soiling, marking or other defacing of, any property by whatever means” and graffiti artists may be subject to a fine or may be subject to prosecution under the Criminal Damage Act 1971 where more substantial damage has been done.</p>
<p>Several Banksy artworks have been removed or defaced. <a href="https://www.bbc.co.uk/news/uk-england-bristol-14145286">The Gorilla in a Pink Mask</a>, one of Banksy’s first works on a Bristol social club, and his <a href="https://www.bbc.co.uk/news/uk-england-hampshire-11827202">No Future</a> mural on a Southampton wall were painted over – the first accidentally, and the second in an act of apparent vandalism.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315957/original/file-20200218-10995-5ysi38.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315957/original/file-20200218-10995-5ysi38.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315957/original/file-20200218-10995-5ysi38.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315957/original/file-20200218-10995-5ysi38.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315957/original/file-20200218-10995-5ysi38.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315957/original/file-20200218-10995-5ysi38.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315957/original/file-20200218-10995-5ysi38.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Banksy’s Masked Gorilla artwork in Bristol was hit by vandals.</span>
<span class="attribution"><span class="source">JOHN19701970 via Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<h2>Damaging property</h2>
<p>What amounts to damage to property is broadly construed and includes where that damage is both temporary and minor. For example, the courts <a href="http://www.e-lawresources.co.uk/Hardman-v-Chief-Constable-of-Avon.php">have previously held</a> that painting a pavement with water-soluble paints amounted to damaging the pavement despite the fact this could be easily removed. Damaging typically means property has been rendered unusable, a cost will be incurred in repairing the property, or the property has been otherwise been reduced in value.</p>
<p>Though we can normally assume that graffiti amounts to criminal damage, graffiti of artistic merit or monetary worth may instead enhance the value of that property. So much so that homeowners who had Banksy on the side of their home offered that mural for sale in 2007 “<a href="http://news.bbc.co.uk/1/hi/england/bristol/6351467.stm">with a Victorian house attached</a>”. </p>
<h2>The Valentine’s Day mural</h2>
<p>What of the defaced Valentine’s Day mural? We know that a Banksy street mural can be worth <a href="https://www.bbc.co.uk/news/uk-england-bristol-28950398">upwards of £400,000</a> and it is likely that Banksy is one of the few graffiti artists whose unsolicited works may not be subject to criminal prosecution (though, they still would amount to criminal damage in law).</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1228700502361284608"}"></div></p>
<p>It is clear the homeowners were receptive to the Valentine’s mural, as they unsuccessfully attempted to protect it with a perspex sheet. One issue requiring clarification here is the actual “type” of property we are concerned with. The wall is part of a building and is therefore part of the land. With the addition of the artwork, the question becomes whether that wall has taken on a new “form”. </p>
<p>For example, has that wall become a form of “personal” property (like a framed painting)? Has that wall, now with the artwork in tow, become a form of “intellectual” property, the likes of which we speak about protection in copyright?</p>
<p>The damage inflicted by spray paint is a more clear-cut case of criminal damage – although whether this amounts to criminal damage of the Valentine’s mural or merely of the wall is a more difficult question. As the damaged “property” in question remains a wall – albeit a highly decorated one – it is likely the secondary graffiti amounted to criminal damage to a wall that had greatly increased in value.</p>
<h2>Who owns the mural?</h2>
<p>Where graffiti has been applied to the wall of a property, that physical piece of “art” belongs to the owners of the property, who may choose to lawfully <a href="https://www.bbc.co.uk/news/uk-england-essex-29918326">remove it</a> or to protect it. If the property is rented – as is reportedly the case for the Valentine’s mural – the graffiti becomes part of the fabric of that building and belongs to the property owner, not the tenants. Ownership of the intangible rights to the artwork (the copyright), however, will remain the property of Banksy as the artist.</p>
<p>Ownership rights have been a subject of dispute. In 2012 a Banksy mural entitled <a href="https://www.theguardian.com/artanddesign/2013/may/11/banksy-slave-labour-mural-row-sale">Slave Labour</a> was painted on a property owned by Wood Green Investments to later be removed and offered for sale at auction. There was an outcry by local residents who considered it to be community property. Here, the law is once again clear. Regardless of the intentions of the artist – it is unlikely Banksy intended to gift an investment firm a mural – it clearly belonged to those owners of the property.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315963/original/file-20200218-11000-1lt2twc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315963/original/file-20200218-11000-1lt2twc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315963/original/file-20200218-11000-1lt2twc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315963/original/file-20200218-11000-1lt2twc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315963/original/file-20200218-11000-1lt2twc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315963/original/file-20200218-11000-1lt2twc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315963/original/file-20200218-11000-1lt2twc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Banksy’s Slave Labour mural on Turnpike Lane in north London.</span>
<span class="attribution"><span class="source">DeptfordJon via Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>While it is questionable whether the Banksy artwork is capable of being damaged, given that it itself is criminal damage, it is certainly the case that the wall (which will have increased in value as a result of the artwork) will have been further damaged by the act of vandalism. </p>
<p>The question of ownership will remain hotly contested as more Banksy artworks appear and the nature of the property – whether it remains land or becomes personal and intellectual property – will continue to enthuse property lawyers for some time to come.</p><img src="https://counter.theconversation.com/content/132035/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The defacing of a new Banksy mural in Bristol has raised some interesting legal questions.Mark Thomas, Senior Lecturer, Nottingham Law School, Nottingham Trent UniversitySamantha Pegg, Senior Lecturer, Criminal Law, Nottingham Trent UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1128842019-03-05T09:38:22Z2019-03-05T09:38:22ZBerlin’s grassroots plan to renationalise up to 200,000 ex-council homes from corporate landlords<figure><img src="https://images.theconversation.com/files/261897/original/file-20190304-92310-1mnvpxv.jpeg?ixlib=rb-1.1.0&rect=0%2C49%2C1947%2C1249&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://unsplash.com/photos/LDMDCVtQqR4">Jonas Tebbe/Unsplash. </a>, <a class="license" href="http://artlibre.org/licence/lal/en">FAL</a></span></figcaption></figure><p>In major cities throughout the world, the price of housing is <a href="https://www.theguardian.com/world/2018/apr/10/berlin-world-fastest-rising-property-prices">on the rise</a>: in 2017 alone, prices leaped by 20.5% in Berlin, 16% in Vancouver and 14.8% in Hong Kong. As rents keep going up, activists in Berlin are spearheading a novel proposal to nationalise housing. Such response might sound quixotic in cities such as London, but 54.9% of Berliners <a href="https://www.tagesspiegel.de/berlin/grossvermieter-in-berlin-exklusive-umfrage-enteignung-liegt-im-trend/23837280.html">consider it reasonable</a>. And instead of waiting for the government to act, citizens have taken matters into their own hands. </p>
<p>On April 6, 2019 the civic campaign Deutsche Wohnen & Co Enteignen (DWE for short) starts collecting signatures, with the aim to hold a referendum that could lead to renationalisation of up to 200,000 council flats, which were previously sold to corporate landlords. </p>
<p>If successful, the move could provide a legal precedent for other cities to call for nationalisaton as a modern and legitimate solution to their <a href="https://www.tandfonline.com/doi/pdf/10.1080/20450249.2017.1402509">housing crises</a>.
It could also prompt changes to international law, empowering legislation initiatives that see <a href="https://www.nesri.org/programs/what-is-the-human-right-to-housing">housing as a human right</a>, as a strategic resource or as <a href="https://www.geographie.hu-berlin.de/en/professorships/applied-geography/forschung/global-housing-commons">global commons</a>.</p>
<p>For Berliners, it not only matters who owns the housing, but also how they own it. Nationalisation is often associated with centralised, if not authoritarian governance, and inefficient administration. That’s why DWE uses a different legal concept: “Vergesellschaftung” (which translates to “socialisation”) – or social ownership. This model presumes that once flats are made public, they will also be democratically managed. </p>
<h2>The new social housing</h2>
<p>The <a href="https://www.dwenteignen.de/2018/10/25/volksentscheid-vorl%C3%A4ufiger-beschlusstext/">activists envision</a> a new public institution aimed at providing affordable flats to Berliners of all nationalities. Tenants, administration workers and members of the public would be equally represented in its governing body, which would also include members of Berlin’s senate. All profits from rent would be used for the maintenance and modernisation of buildings, and for the construction of new housing.</p>
<p>But how much would it cost the city to reclaim apartments sold to corporate landlords, considering <a href="https://www.theguardian.com/world/2018/apr/10/berlin-world-fastest-rising-property-prices">the record 20.5% leap</a> in housing prices in 2017? While the exact amount of compensation would be negotiated in the court, there are reasons to believe that it won’t be anywhere near market prices. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/261924/original/file-20190304-92298-dukvd4.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/261924/original/file-20190304-92298-dukvd4.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/261924/original/file-20190304-92298-dukvd4.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/261924/original/file-20190304-92298-dukvd4.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/261924/original/file-20190304-92298-dukvd4.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/261924/original/file-20190304-92298-dukvd4.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/261924/original/file-20190304-92298-dukvd4.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Housing in trendy Prenzlauer Berg, Berlin.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/DoMEXHiQMZw">Jonas Denil/Unsplash.</a>, <a class="license" href="http://artlibre.org/licence/lal/en">FAL</a></span>
</figcaption>
</figure>
<p>Crucial here is <a href="https://www.bundestag.de/parlament/aufgaben/rechtsgrundlagen/grundgesetz/gg_01-245122">article 15</a> of the German constitution, created after World War II, which allows either state or local governments to turn land, natural resources and means of production into collective ownership “for the purposes of socialisation”. This legal clause would be the key leverage to ban corporate landlords with <a href="https://nextcity.org/daily/entry/berlin-likely-to-hold-referendum-on-re-nationalizing-200000-apartments">more than 3,000 properties</a> from of the city. </p>
<p>After World War II, legislators of all political factions believed economic monopolies to be dangerous for democracy. Indeed, several German industry giants had <a href="https://books.google.co.uk/books/about/From_Cooperation_to_Complicity.html?id=5Amej-jkAMwC&redir_esc=y">willingly cooperated</a> with the Nazi state. Article 15 of the German constitution was designed as a tool to prevent what <a href="https://cul.worldcat.org/title/kampf-um-das-grundgesetz-uber-die-politische-bedeutung-der-verfassungsinterpretation-referate-und-diskussionen-eines-kolloquiums-aus-anla-des-70-geburtstages-von-wolfgang-abendroth/oclc/1031822502?referer=di&ht=edition">legal experts called</a> a “misuse of economic power against society”.</p>
<h2>Taking back power</h2>
<p>According to Berlin’s housing activists, that is precisely what large housing corporations are doing today: using their economic power against society. Companies such as Deutsche Wohnen, Vonovia or Akelius – which all together own more than 200,000 flats in Berlin – can <a href="https://www.berliner-zeitung.de/berlin/berliner-mietspiegel--verfassungsgericht-weist-beschwerde-von-deutsche-wohnen-zurueck-31840816">use their scale</a> in such a way that existing mechanisms for rent control are bypassed. </p>
<p>For example, in Germany rent increases are usually justified in relation to the “Mietspiegel” (or “rent mirror”), calculated every year in relation to the average rent in the area. If a company owns several thousand units in one neighbourhood, its rent increases drive up the entire “rent mirror”, and so would perpetually justify further increases.</p>
<p>As demand for housing in Berlin <a href="https://www.thelocal.de/20150707/politicians-struggle-to-keep-pace-with-berlins-growth">has grown</a> over the past 15 years, rents have been driven up to the point that – according to <a href="https://www.morgenpost.de/berlin/article214054221/Vielen-Berlinern-droht-Altersarmut-durch-Miete.html">a recent study</a> - 40% of Berliners aged between 45 and 55 are unlikely to be able to afford to stay in the city after they retire. Unless housing is socialised, that is. </p>
<p>Berliners are also entering into unknown legal terrain. Never in the history of the German constitution has article 15 been actually used, and until recently it seemed to have been largely forgotten. But it would be a mistake to see socialisation as an initiative confined to German law. Berlin’s housing corporations are active on the international stock market, and taking their property would lead the city government into a confrontation with international law which, in general, <a href="http://opil.ouplaw.com/view/10.1093/law:epil/9780199231690/law-9780199231690-e864">strongly protects</a> corporate private property.</p>
<p>This battle will be watched closely by proponents of nationalisation and other forms of progressive politics, right across Europe. While the lack of affordable housing in other cities may be driven by other factors – aside from mass housing ownership by large corporate landlords – the outcome in Berlin could lend strength to calls to nationalise empty property or vacant lots. </p>
<p>This would make a big difference in cities such as London, for example, where more than <a href="https://theconversation.com/londons-extraordinary-surplus-of-empty-luxury-apartments-revealed-97947">a third of properties</a> in “prime” market areas remain empty. As it stands, compulsory purchase – a tool related to nationalisation – is currently being used in London for quite the opposite purpose. The city <a href="https://southwarknotes.wordpress.com/tag/aylesbury-estate/">seizes council flats from tenants</a> (who became homeowners under right-to-buy) to make space for commercial redevelopment of sites.</p>
<p>Enraged about the housing crisis, Berlin activists do not just push their legislators, they show them the way by actively searching for progressive possibilities inside the existing law and beyond it. However this particular legal battle pans out, Berliners have already reinvented and democratised nationalisation, turning it from a top-down state intervention, into a grassroots project.</p><img src="https://counter.theconversation.com/content/112884/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joanna Kusiak does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Socialisation of housing would see profits from rent put back into the maintenance and modernisation of the buildings.Joanna Kusiak, Research Fellow in Urban Studies, University of CambridgeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1073072018-11-23T13:06:01Z2018-11-23T13:06:01ZYou may not actually own your Bitcoin – legal expert<figure><img src="https://images.theconversation.com/files/247044/original/file-20181123-149332-1leef9l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">shutterstoc</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/bitcoin-gold-glitter-mining-concept-1219165069?src=r_Xi4mds0_sSU9gQvANCfg-1-11">Tiratus Phaesuwan/Shutterstock</a></span></figcaption></figure><p>The price of Bitcoin has dropped by <a href="https://www.bbc.co.uk/news/technology-46263998">75% in the past year</a>, so anyone who invested heavily at the peak will have lost a lot of money. And now there’s more bad news for crypto-currency investors to worry about: they may not legally own the digital assets they have purchased.</p>
<p>My colleagues and I have recently <a href="https://jolt.richmond.edu/blockchain-demystified-a-technical-and-legal-introduction-to-distributed-and-centralised-ledgers/">completed research</a> showing that courts in England and Wales are unlikely to identify digital tokens as property, since the law does not recognise possession of intangible items. This means that crypto-currency holdings may not qualify as property at all. As a result, although digital tokens are technically secured through blockchain technology, the level of legal protection is unclear. And the same likely applies in other common law jurisdictions such as the United States, Hong Kong, Singapore, and most of India.</p>
<h2>Defining property</h2>
<p>Property law deals with the rights you have over the things you own. <a href="https://www.law.berkeley.edu/library/robbins/CommonLawCivilLawTraditions.html">Common law</a> systems distinguish between land, called “real property”, and all other property, called “personal property”.</p>
<p>Personal property includes rights over two categories of things. First, there are “<a href="https://link.springer.com/chapter/10.1007%2F978-1-349-20588-2_18">things in possession</a>”. These are tangible items which you can physically possess and transfer to another. The £20 note in your pocket is a thing in possession.</p>
<p>Second, there are “<a href="https://www.jstor.org/stable/pdf/1327628.pdf">things in action</a>”, a mixed category of rights that can only be claimed or enforced by legal action. This includes debts, rights under contract, and intellectual property. The £20 you have deposited at a bank is a thing in action, because the bank owes you a debt of £20. That debt is intangible, but, if necessary, could be enforced through legal action. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/247046/original/file-20181123-149338-1t3q0ut.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/247046/original/file-20181123-149338-1t3q0ut.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=448&fit=crop&dpr=1 600w, https://images.theconversation.com/files/247046/original/file-20181123-149338-1t3q0ut.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=448&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/247046/original/file-20181123-149338-1t3q0ut.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=448&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/247046/original/file-20181123-149338-1t3q0ut.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=563&fit=crop&dpr=1 754w, https://images.theconversation.com/files/247046/original/file-20181123-149338-1t3q0ut.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=563&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/247046/original/file-20181123-149338-1t3q0ut.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=563&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A hammer in the works.</span>
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<p>So what about digital tokens such as crypto-currencies? Tokens don’t physically exist. They are <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3091218">entries on a virtual ledger</a>. And <a href="http://www.bailii.org/ew/cases/EWHC/Ch/2012/10.html">case law</a> in England and Wales has established that a thing which exists only in electronic form cannot be the subject of possession. So digital tokens aren’t things in possession.</p>
<p>But they don’t really resemble <a href="https://www.lexology.com/library/detail.aspx?g=d40481d7-120a-43c6-adb7-8903a4d4f1bb">things in action either</a>. A Bitcoin doesn’t give you a right to anything or against anyone. What you have is a <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3091218">cryptographic private key</a> (a sort of secret number password) that gives you exclusive control over that Bitcoin. This allows you to submit transactions to the ledger and send your Bitcoin to anyone you like.</p>
<p>Other types of tokens do give you a right against the token issuer. For instance, <a href="https://medium.com/coinmonks/utility-tokens-a-general-understanding-f6a5f9699cc0">utility tokens</a> give you a right to a product or service from a company. Such tokens effectively represent a debt or right under contract and will probably be considered things in action. However, not all tokens give purchasers a right against the issuer. The terms of one recent token sale by start-up firm Block.one – <a href="https://www.cnbc.com/2018/05/31/a-blockchain-start-up-just-raised-4-billion-without-a-live-product.html">which raised US$4 billion</a> – specified that the tokens <a href="https://eos.io/documents/block.one%2520%2520EOS%2520Token%2520Purchase%2520Agreement%2520-%2520September%25204,%25202017.pdf">have no rights, uses, or attributes</a>.</p>
<h2>Legal uncertainty</h2>
<p>This lack of legal protection may suit crypto-currencies’ “<a href="https://www.coindesk.com/the-rise-of-the-cypherpunks/">cypherpunk</a>” origins. Individuals trading secure tokens online <a href="https://www.activism.net/cypherpunk/manifesto.html">in private</a> don’t need protection from “<a href="https://www.eff.org/cyberspace-independence">weary giants of flesh and steel</a>” (industrial governments). But when mainstream consumers buy digital tokens, disputes are bound to arise.</p>
<p>For example, if digital tokens are property, they will form part of your estate when you die and your heirs will inherit them. But whoever has the private key technically controls the tokens, creating a potential conflict. The issue has arisen before a <a href="https://www.law360.com/cases/5a85b578f209942345000002">court in Florida</a>. The estate of the deceased Dave Kleiman <a href="https://motherboard.vice.com/en_us/article/3k74qj/craig-wright-is-being-sued-for-10-billion-dave-kleiman">is suing Craig Wright</a>, who allegedly seized up to 1m bitcoin, worth billions of dollars. The estate is suing for return of the tokens under what is known as the tort of conversion, which in England and Wales <a href="https://publications.parliament.uk/pa/ld200607/ldjudgmt/jd070502/obg.pdf">applies only to things in possession</a>.</p>
<p>Some commentators <a href="https://blog.wizsec.jp/2018/02/kleiman-v-craig-wright-bitcoins.html">have questioned</a> whether Wright – a colourful character who once <a href="https://www.economist.com/briefing/2016/05/02/craig-steven-wright-claims-to-be-satoshi-nakamoto-is-he">claimed to have invented Bitcoin</a> – ever had the tokens to begin with. But the case shows how the outcome of disputes can depend on the property status of digital tokens. Similar issues could arise in cases of theft, bankruptcy, <a href="https://scholarship.law.unc.edu/cgi/viewcontent.cgi?referer=https://www.google.co.uk/&httpsredir=1&article=1288&context=ncjolt">and divorce</a>.</p>
<p>Few investors will have given much thought to the legal status of their crypto-currency. But in the long term a lack of legal protection could further diminish the tokens’ value, particularly if it stops financial concepts such as <a href="https://www.lexology.com/library/detail.aspx?g=d40481d7-120a-43c6-adb7-8903a4d4f1bb">trusts or securities</a> being applied. Admittedly, the value of digital tokens so far has anyway been volatile and unpredictable. But the resulting legal disputes may force property lawyers to confront a new, virtual world of digital assets.</p>
<p>In future, the law could <a href="http://fmlc.org/wp-content/uploads/2018/03/jibfl_2016_vol31_issue10_nov_virtualcurrencies.pdf">extend property rights</a> to digital tokens, for instance by recognising a new category of <a href="http://fmlc.org/wp-content/uploads/2018/03/virtual_currencies_paper_-_edited_january_2017.pdf">virtual-thing-in-possession</a> – but this would probably require <a href="http://www.bailii.org/ew/cases/EWCA/Civ/2014/281.html">new legislation</a>. For now, the property status of digital tokens remains an “<a href="https://www.supremecourt.uk/docs/speech-181026.pdf">area of doubt</a>”, as one of the UK’s Supreme Court justices recently put it. So caveat emptor: bitcoin buyer, beware.</p><img src="https://counter.theconversation.com/content/107307/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dave Michels receives funding for his research on the Cloud Legal Project through a generous charitable donation from the Microsoft Corporation. </span></em></p>New research suggests crypto-currencies aren’t technically property in common law jurisdictions.Dave Michels, Research associate, Queen Mary University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1021962018-09-11T20:13:55Z2018-09-11T20:13:55ZWhat should buyers of a house be told about it?<p>Buying a house is probably one of the most important purchases a person will make. Many people think the vendor is required to disclose matters that affect the property value, particularly if the buyer has no other means of finding out the full history of the house. For instance, if someone was murdered in the house, do the buyers have a right to be told?</p>
<p>The solicitor or conveyancer who acts for a buyer will probably tell them the law is “<a href="https://www.propertyobserver.com.au/forward-planning/advice-and-hot-topics/29805-what-is-caveat-emptor-and-how-it-affects-you.html">buyer beware</a>”. It is up to buyers to satisfy themselves that the property is not affected by any defects in title, that it can be used for the purposes the buyer intends, and that any building on the property is sound. </p>
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<a href="https://theconversation.com/home-ownership-foundations-are-being-shaken-and-the-impacts-will-be-felt-far-and-wide-91664">Home ownership foundations are being shaken, and the impacts will be felt far and wide</a>
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<p>If a vendor actively conceals a known defect, then that might amount to fraud. Examples include <a href="https://www.jade.io/article/258934">painting to conceal serious termite damage</a>, or <a href="http://classic.austlii.edu.au/au/journals/UQLawJl/1987/15.pdf">giving a deliberately false answer to a question from a buyer</a> about the property. </p>
<p>A purchaser would need to show, though, that the vendor was deliberately dishonest or at least reckless. That’s a high standard of proof to meet.</p>
<p>The law requires vendors in some states, including <a href="https://legislation.nsw.gov.au/#/view/regulation/2017/372/sch1">New South Wales</a> and <a href="http://classic.austlii.edu.au/au/legis/vic/consol_act/sola1962100/s33b.html">Victoria</a>, to disclose the title documents and any registered encumbrances such as easements and covenants. The vendor’s mortgages will be discharged on settlement. </p>
<p>In <a href="https://legislation.nsw.gov.au/#/view/act/1919/6/part4/div1/sec52a">NSW</a> and some other states, vendors <a href="https://legislation.nsw.gov.au/#/view/regulation/2017/372/sch3">must attach to the contract</a> a certificate from the local council that sets out whether the land is affected by administrative or regulatory matters. This includes issues like zoning, subdivision, contaminated land or identified bushfire or flood hazards. These council certificates can give buyers a good idea of whether they will be able to use the property as they wish. </p>
<p><a href="https://legislation.nsw.gov.au/#/view/regulation/2017/372/sch3">Where certain statutory requirements have not been disclosed</a>, the buyer can rescind the contract and get their deposit back if the matter was so important that they would not have entered into the contract had they known about it.</p>
<p>In many states, though, there is no duty to disclose matters relating to the title or the use of the land. If the property is a commercial or investment property, the <a href="http://consumerlaw.gov.au/the-australian-consumer-law/">Australian Consumer Law</a> gives remedies to buyers who are induced to enter into contracts by <a href="https://www.legislation.gov.au/Details/C2017C00375/Html/Volume_3#_Toc499717716">misleading or deceptive conduct</a> in trade or commerce by the vendor or the vendor’s agent. Even if the vendor is selling privately, an agent might still be liable if they <a href="https://www.legislation.gov.au/Details/C2017C00375/Html/Volume_3#_Toc499717716">misrepresent the property</a>, or tell half-truths that <a href="http://classic.austlii.edu.au/au/legis/vic/consol_act/eaa1980145/s47c.html">give a misleading impression</a>.</p>
<p>But there is still no general duty on vendors or their agents to disclose matters that affect the property value and may be significant to buyers, but which do not amount to defects in title that can’t be discovered by reasonable inspection.</p>
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<h2>How far should disclosure go?</h2>
<p>Should vendors be obliged to disclose all matters that might influence a buyer? There is probably a good case for all state and territory governments to follow NSW with a requirement to disclose council information. But, beyond that, just how far should a duty of disclosure go?</p>
<p>For instance, if something terrible, such as murder or other violent and upsetting events, has happened at a property, should a vendor be required to tell potential buyers about this? In some US states, <a href="https://www.courtlistener.com/opinion/2111491/reed-v-king/">courts have held</a> that a vendor should disclose the history of the house where a murder has been committed. US brokers call these “stigmatised properties”.</p>
<p>In a <a href="https://research-repository.uwa.edu.au/en/publications/houses-with-a-history-disclosure-obligations-and-psychologically-">case in NSW</a>, a house where three members of a family were murdered was sold to unsuspecting buyers, who later found out about this history. They refused to proceed, but as the vendors were not required to disclose the history, the buyers lost their deposit. The estate agent who handled the sale was ultimately fined for glossing over the history of the house. The agent also met the cost of the forfeited deposit, but that depended on the particular facts involved.</p>
<p>Such horrible events are rare, but buyers might be very distressed by that kind of history. Shouldn’t buyers have complete information?</p>
<p>One problem is just how far any duty of disclosure would reach. Should any matter at all that affects the value of the property be disclosed? </p>
<p>Some buyers might be particularly sensitive and consider that they should be given comprehensive information about the history of the property. Would it be necessary to disclose that a person had died at the property, even if of old age or natural causes? </p>
<p>Just as vendors might not know about any structural defects in the property, they might not know much about the history of the property. A landlord vendor, for example, might not have information about what went on in the house while tenants were living in it. It might be unfair, then, to shift to the vendor the risk of any decline in value caused by sensitive buyers. </p>
<p>Estate agents are usually responsible for marketing the property. So, if any duty is to exist for making statements about it, perhaps this should lie on the agent, and not the vendors, and should be confined to compensation rather than the ability to get out of the sale. Purchasers can always on-sell a bad bargain, but vendors might be stuck with the property through no fault of their own if they have to bear the responsibility of disclosing everything about its history.</p>
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<a href="https://theconversation.com/spring-selling-season-and-other-gimmicks-46254">Spring selling season and other gimmicks</a>
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<p class="fine-print"><em><span>Patricia Lane does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It’s still mostly a case of ‘buyer beware’ when it comes to finding out about a property. But many buyers feel they should be told if, for example, it was the scene of a violent murder.Patricia Lane, Senior Lecturer, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/987962018-06-28T10:36:30Z2018-06-28T10:36:30ZBlockchain-based property registries may help lift poor people out of poverty<figure><img src="https://images.theconversation.com/files/224994/original/file-20180626-112607-lzp8td.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Many rural farmers in India lack clear ownership of the land they work and live on.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/India-Agriculture/278df052afb840c2aa8c56dcf921c108/5/0">AP Photo/Anupam Nath</a></span></figcaption></figure><p>Many developing countries don’t have a working system of tracking property rights, and what they do have can be fragile and incomplete. In Haiti, for instance, a large earthquake in 2010 <a href="http://www.terradaily.com/reports/Haiti_quake_destroyed_or_damaged_60_years_of_archives_999.html">destroyed all the municipal buildings that stored documents</a> confirming many small farmers’ ownership of the land they worked. Even years later, many farmers <a href="http://www.npr.org/sections/goatsandsoda/2017/01/11/503159694/blockchain-could-be-a-force-for-good-but-first-you-have-to-understand-it">didn’t have proof that they were landowners</a>. People are <a href="http://www.coindesk.com/blockchain-land-registry-solution-seeking-problem">still fighting over their land</a>.</p>
<p>This sort of problem – caused by natural disasters or not – is widespread, causing financial hardship for families in the developing world. Without an official, enforceable legal title to their property, people can’t resolve disputes over who can use which land for what – like who can farm where. They also <a href="https://www.reuters.com/article/us-global-landrights-desoto/property-rights-for-worlds-poor-could-unlock-trillions-in-dead-capital-economist-idUSKCN10C1C1">can’t borrow against their existing assets</a> to invest in their homes, businesses or communities. The value of those properties, and the lost economic opportunities for owners of assets without formal documentation, has been <a href="https://www.weforum.org/agenda/2016/03/could-blockchain-technology-help-the-worlds-poor">estimated at US$20 trillion</a> worldwide.</p>
<p>From <a href="https://scholar.google.com/citations?user=Qx3YMi4AAAAJ&hl=en">researching</a> <a href="https://theconversation.com/can-blockchain-technology-help-poor-people-around-the-world-76059">blockchains</a> and <a href="https://theconversation.com/are-cryptocurrencies-a-dream-come-true-for-cyber-extortionists-80115">cryptocurrencies</a> for the past three years, I have become convinced that these technologies have the potential to fight <a href="https://www.youtube.com/watch?v=WDo_Jlov9R4&t=12s">root causes of poverty</a> – including by securely recording property ownership.</p>
<p>I’m far from alone: Blockchain-based land registries have started up in <a href="https://www.coindesk.com/bermuda-launch-blockchain-land-registry/">Bermuda</a>, <a href="http://www.coindesk.com/blockchain-land-registry-tech-gets-test-brazil">Brazil</a>, <a href="http://www.eurasianet.org/node/83286">Georgia</a>, <a href="http://blocktribune.com/blockchain-land-registry-bitland-foodcoin-ecosystem-partner/">Ghana</a>, <a href="http://www.coindesk.com/debate-factom-land-title-honduras/">Honduras</a>, <a href="https://tinyurl.com/ydc5fc3b">India</a>, <a href="https://www.coindesk.com/russias-government-test-blockchain-land-registry-system/">Russia</a> and <a href="https://www.iafrikan.com/2017/10/13/rwanda-government-blockchain-project/">Rwanda</a>. The problems these efforts are addressing are significant.</p>
<h2>Current challenges in land registries</h2>
<p>Across the world, land registries are inefficient and unreliable – or even downright corrupt. In Honduras, some government officials altered the country’s land ownership database, <a href="https://in.reuters.com/article/usa-honduras-technology/honduras-to-build-land-title-registry-using-bitcoin-technology-idINKBN0O01V720150515">stealing property for themselves – including beachfront getaways</a>.</p>
<p>In many African countries, more than <a href="http://www.fieldfisher.com/publications/2017/02/blockchain-the-trust-machine-that-africa-needs">90 percent of rural land is not registered</a>. In Ghana, <a href="http://www.itwebafrica.com/enterprise-solutions/505-africa/236272-land-registry-based-on-blockchain-for-africa">78 percent of land is unregistered</a>, and the country’s courts have a long backlog of <a href="http://internationalbanker.com/finance/blockchain-impacting-industry/">land dispute cases</a>.</p>
<p>In India, millions of rural families <a href="https://www.foreignaffairs.com/articles/india/2013-02-19/untitled">lack legal ownership of the land they live and work on</a>. The lack of secure land ownership is a <a href="https://scroll.in/article/741036/why-the-modi-government-must-work-on-land-reform-before-land-acquisition">bigger cause of poverty</a> in the country than the caste system or a high illiteracy rate.</p>
<p>Brazil has no single centralized land registry. Instead, about <a href="https://cryptovest.com/news/brazil-could-call-upon-blockchain-to-combat-corruption/">3,400 private agents – called “cartorios” – register and check land ownership</a>. The system is confusing, with many different documents created in different historical periods. Most land documents <a href="https://doi.org/10.1016/S0305-750X(01)00039-0">lack specific geographic references</a> on property boundaries. Little wonder, then, that the system is plagued by <a href="https://www.reuters.com/article/us-brazil-property-blockchain/can-blockchain-save-the-amazon-in-corruption-mired-brazil-idUSKBN1FE113">corruption and double allocations</a> – two formal documents each saying someone else owns a piece of land.</p>
<p>These fragile and incomplete property rights systems in the developing world can affect the entire planet. In Brazil’s Amazon rainforest, illicit land grabbers forge deeds and use violence and bribery to <a href="https://doi.org/10.1016/S0305-750X(01)00039-0">falsely claim ownership of property</a>, often under fake names, which the locals call <a href="http://philip.inpa.gov.br/publ_livres/Preprints/2001/LAND-tenureWD.htm">“fantasmas,” or “ghosts.”</a> Then they <a href="https://www.roughguides.com/destinations/south-america/brazil/amazon/eastern-amazonia/southern-para/">clear-cut the rainforest</a>, which has <a href="https://www.nationalgeographic.com/environment/global-warming/deforestation/">serious environmental effects</a>. Having <a href="http://doi.org/10.1007/978-1-349-21068-8_8">“improved” the land by converting it to pasture</a>, these land thieves then are <a href="https://doi.org/10.1016/S0305-750X(01)00039-0">eligible to register as the formal owners of the land they stole</a>. This cycle has repeated for years, contributing to widespread Amazon deforestation.</p>
<h2>How blockchain-based land registries work</h2>
<p>Using a blockchain system to record transactions could help solve these problems. A blockchain is a secure database that’s stored in a distributed – but connected – set of computers around the internet. It’s not susceptible to tampering, and every addition to the database must be <a href="https://hbr.org/2017/03/blockchain-will-help-us-prove-our-identities-in-a-digital-world">digitally signed</a>, making clear who’s changing what and when. So instead of a system with multiple conflicting documents, some of which may have been forged or altered, there’s only one record with a clear history of modifications, including who did what when.</p>
<p>Blockchain transactions can include all kinds of information, including geographic boundaries or serial numbers and an owner’s identity. In Ghana, for instance, the nonprofit Bitland runs a <a href="http://www.itwebafrica.com/enterprise-solutions/505-africa/236272-land-registry-based-on-blockchain-for-africa">blockchain-based land registry system</a> with a written description of each parcel of land as well as GPS coordinates of boundary points and satellite photos of the area.</p>
<p>A collaboration between a U.S.-based blockchain startup and a Brazilian real estate registry has created a record-keeping system for land in the <a href="https://www.coindesk.com/blockchain-land-registry-tech-gets-test-brazil/">southern coastal municipalities of Pelotas and Morro Redondo</a>. Its blockchain database contains details like the property’s address, the owner’s name and contact information, zoning rules and a unique identification number for the property itself.</p>
<p>Blockchain can provide other advantages too. For instance, when transferring land in the republic of Georgia, the buyer and the seller go to a public registry house and pay a fee between $50 and $200. Moving this process onto a blockchain <a href="https://bitcoinmagazine.com/articles/bitfury-announces-blockchain-land-titling-project-with-the-republic-of-georgia-and-economist-hernando-de-soto-1461769012/">could drop the costs to no more than 10 cents</a>.</p>
<h2>Remaining challenges</h2>
<p>Just starting a blockchain-based database isn’t enough to solve these problems, though. Data must be accurate when it’s entered, and records must include enough information to be authoritative about the properties they’re referring to. A new technological system won’t fix much in countries where it’s <a href="https://www.wsj.com/articles/blockchain-could-be-the-answer-to-cybersecurity-maybe-1527645960">hard to determine the legitimate owner</a> in the first place. Also, bureaucrats may object to new record-keeping systems that <a href="http://www.economist.com/news/business/21722869-anti-establishment-technology-faces-ironic-turn-fortune-governments-may-be-big-backers">reduce their power, status and privileges</a>. </p>
<p>However, in places where governments or others who create the systems are viewed as <a href="https://www.wsj.com/articles/blockchain-could-be-the-answer-to-cybersecurity-maybe-1527645960">fair and impartial</a> and run a transparent process, blockchain-based land registry systems could give many of the world’s poorest people their first real asset. Once they have straightened out complex, corrupt and contradictory registry systems, people can safely invest in, borrow against and truly improve their properties, helping lift themselves out of poverty.</p><img src="https://counter.theconversation.com/content/98796/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nir Kshetri does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Without secure records of property ownership, many poor people around the world have trouble improving their economic situations. Several countries are already trying blockchain-based land registries.Nir Kshetri, Professor of Management, University of North Carolina – GreensboroLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/904062018-01-24T12:43:08Z2018-01-24T12:43:08ZIt’s time we let the feudal leftover of leasehold ownership expire<figure><img src="https://images.theconversation.com/files/203212/original/file-20180124-72621-55tt5x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The feudal origins of leasehold land has a lot to do with the Normans.</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Bayeux_Tapestry_scene23_Harold_sacramentum_fecit_Willelmo_duci.jpg">Bayeux Tapestry</a></span></figcaption></figure><p>How is it possible to buy something and yet still not own it? Leasehold estate is one of the earliest inventions in land law, under which land or property is sold on a long lease of many decades or even centuries, but where the ultimate ownership, or freehold, does not change hands, and the property is returned to the freeholder if the lease expires. But its continued existence in Britain has proved increasingly controversial, as freeholders extract considerable sums from leaseholders during the process of lease renewal.</p>
<p>Exorbitant lease renewal fees and spiralling ground rents – as demonstrated in the <a href="https://www.theguardian.com/money/2017/jul/25/leasehold-houses-and-the-ground-rent-scandal-all-you-need-to-know">recent controversy about leasehold houses</a> – have left leaseholders in England and Wales feeling increasingly exploited. Now, a <a href="https://www.theguardian.com/money/2018/jan/14/property-market-braces-for-shockwaves-from-landmark-leasehold-case">long-running case due before the Court of Appeal</a> could curb the power of freeholders, some of which include centuries-old aristocratic estates.</p>
<h2>Remnants of a feudal Britain</h2>
<p>Land law in Britain owes much to the feudal system that developed following the Norman Conquest. The ability to grant inferior interests in land and to take income from these – like rents – remains an important feature of the law. By the 16th century, the law of leases in England and Wales had evolved into a system once described by <a href="https://www.theguardian.com/law/2011/feb/01/brian-simpson-obituary">lawyer and legal historian A W B Simpson</a> as a “<a href="http://www.oxfordscholarship.com/view/10.1093/acprof:oso/9780198255376.001.0001/acprof-9780198255376">very confused body of law</a>”. The most comprehensive attempt to tackle this in the modern era was the Law of Property Acts 1925, which limited the legal estate to either freehold or leasehold. While these remnants of the feudal system appear unfair, it has proved almost impossible to separate our land law from its history. </p>
<p>In Scotland, the feudal structure existed but with other features, including a <a href="http://www.gov.scot/Publications/2004/08/19790/41578">feuduty</a> to be paid by land owners to their feudal superior, similar to the ground rent payable by leaseholders in England and Wales. Often set long ago, they can be insignificant sums today after decades of inflation, but are still legally enforceable. The feudal structure of land-holding was predominant in Scotland until steps were taken to remove it: no feuduty could be created after 1974, no residential lease for more than 20 years could be created, and the feudal structure was <a href="http://news.bbc.co.uk/1/hi/scotland/4048529.stm">finally abolished in Scotland in 2004</a>. Further laws since have converted long leases over 175 years into straightforward ownership. </p>
<p>There has been no such sweeping reform in England and Wales, however. Feudal remnants such as <a href="http://www.parliament.uk/business/committees/committees-a-z/commons-select/justice-committee/inquiries/parliament-2010/manorial-rights-inquiry/">manorial rights still remain</a>, largely unnoticed by industrial and urban development.</p>
<h2>The Victorian age of building</h2>
<p>The popularity of the modern leasehold estate owes much to Victorian property developers. During the late 19th and early 20th centuries, it was common for a builder to develop land under an agreement with the landowner, who would sell the land to the builder on a long lease, typically 99 years. There was little in the way of planning controls and regulations at that time, and land owners were free to do almost anything they liked with their property. Sellers who wished to keep some control over their land could only rely on private legal covenants drawn up in the sale agreement, which might for example prevent a landowner from using the land for business, or from extending property by an extra storey.</p>
<p>A series of legal decisions in English courts established that freehold covenants could only stipulate what was not allowed, while leasehold covenants allowed the freeholder to enforce positive covenants – for example, requiring the property to be maintained. This became an obvious advantage of leasehold – the grandeur of London’s Georgian squares owes much to the burden of upkeep placed on leaseholders, for example – and as English towns grew, leasehold was commonly used.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/203218/original/file-20180124-107967-9ahuun.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/203218/original/file-20180124-107967-9ahuun.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/203218/original/file-20180124-107967-9ahuun.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=350&fit=crop&dpr=1 600w, https://images.theconversation.com/files/203218/original/file-20180124-107967-9ahuun.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=350&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/203218/original/file-20180124-107967-9ahuun.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=350&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/203218/original/file-20180124-107967-9ahuun.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=440&fit=crop&dpr=1 754w, https://images.theconversation.com/files/203218/original/file-20180124-107967-9ahuun.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=440&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/203218/original/file-20180124-107967-9ahuun.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=440&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Bedford Square, one of London’s well-preserved Georgian squares.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Bedford_Square_2.jpg">Russ London</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>But the opposite happened in Scots law, where a new type of property rights known as “real burdens” provided the means to impose positive and negative obligations on land ownership. As this removed the major benefit of leasehold, it never had the same appeal or use in Scotland. </p>
<h2>Change on the horizon?</h2>
<p>Leaseholders gained the right to remain in their homes at a regulated rent under the Landlord and Tenant Act 1954 and to renew their lease or buy the freehold under the Leasehold Reform Act 1967. But the right to buy or extend the leasehold is not free, and leaseholders may find themselves facing significant charges, fees and ground rents. In some cases, long leases may even be forfeit if fees and ground rent are not paid: one leaseholder faced the <a href="https://www.leaseholdknowledge.com/plantation-wharf-leasehold-pensioner-has-forfeiture-order-on-his-800000-flat">forfeiture of his £800,000 flat</a> for non-payment of service charges.</p>
<p>Demands for reform have been growing, with a battle fought on two fronts. The first of these is new build developments with <a href="https://www.gov.uk/government/news/crackdown-on-unfair-leasehold-practices--2">exploitative leasehold terms</a>. The second is legal relief from onerous terms for existing leaseholders, and this is what the pending case at the Court of Appeal, <a href="https://www.theguardian.com/money/2018/jan/14/property-market-braces-for-shockwaves-from-landmark-leasehold-case">Sloane Stanley Estate v Mundy</a>, is concerned with – specifically how the lease is valued and therefore how much the leaseholder must pay to extend it. Mundy will hope that the traditional valuation method will be set aside as overly generous to the freeholder, in exchange for a new method of valuation that significantly lowers costs paid by leaseholders.</p>
<p>Many would argue that the most effective way to address the injustices of leasehold is to abolish it altogether, as in Scotland. In practice, the heavy reliance on leasehold estates in England and Wales – and the vested interests that this has created over centuries – makes this very difficult. One fact undisputed by either side is that any reform of the law would mean considerable loss of income for freeholders: whether this is a benefit or a drawback depends on which side of the line you stand.</p><img src="https://counter.theconversation.com/content/90406/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>To buy without owning, to pay rent on something that’s yours – the origins of leasehold ownership look increasingly out of place today.Ben Mayfield, Lecturer in Law, Lancaster UniversityLu Xu, Senior Lecturer in Property Law, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/806722017-07-12T20:06:51Z2017-07-12T20:06:51ZCan property survive the great climate transition?<figure><img src="https://images.theconversation.com/files/177659/original/file-20170711-5989-eviovx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Property is under threat, physically and conceptually, from climate change.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/martinrp/11343480815/in/photolist-ihoiDr-p1ZUuX-jbJ8Yo-5oaMbe-5t1Azc-qHaqwM-5ofX4q-5og1ru-5ofoBQ-5oaQtP-5ofRKb-5ofu9U-jbKBKy-jbLfdy-5obVkt-5ofNjN-5of8SU-5obkuT-5obT14-5ofjKq-5obrae-jbGGVX-jbGbEN-jbGaA3-5og6UW-o2dvBo-o2cjRf-nJPGBM-5oaHDT-5obDaP-dpsK2Y-2DW8sf-jbHCpm-jbFWpp-qZBxgi-jbGcaW-jatyCB-jbG6KY-qH5cxb-jbJb8J-jbFYmR-nLVsF-nJPNLb-iho8NU-o46DJ6-ihpbdH-nJPuao-javNH9-jbJ7jb-nJP9qx">.Martin./flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p><em>This is one of a <a href="https://theconversation.com/au/topics/ecocity-summit-40496">series</a> of articles to coincide with the 2017 <a href="https://www.ecocity2017.com/">Ecocity World Summit</a> in Melbourne.</em></p>
<hr>
<p>As we become an <a href="https://esa.un.org/unpd/wup/Publications/Files/WUP2014-Highlights.pdf">increasingly urban species</a>, urban resilience is emerging as a big deal. The idea is generating a lot of noise about how to develop or retrofit cities that can deal with the many challenges before us, or consume less energy in the transition to post-carbon economies. </p>
<p>There is ample activity aimed at making this happen, including through designing and building <a href="http://www.urbanecology.org.au/eco-cities/what-is-an-ecocity/">ecocities</a>, and calls such as that of the <a href="http://earthwiseharmony.com/CONNECT/EH-Transition-Towns-Australia.html">Transition Towns</a> movement, which suggests substantial changes to our ways of life might be both necessary and inevitable. </p>
<p>In all of this, very little has been said about the elephant in the urban living room – property. Property systems are the codification of our relationship to place and the way in which many of us make a claim to place, including a roof over our heads.</p>
<p>If our cities are to become more resilient and sustainable, our systems of property need to come along for the ride.</p>
<h2>Static property rights will be tested</h2>
<p>Western systems of property law assume property is delineated and static: the property holder has invested (often substantial) financial resources to secure a claim to that neatly identified parcel of land and/or buildings. Further, the property owner expects to make a nice economic return on their parcel. </p>
<p>Unfortunately, the future doesn’t look neatly delineated or static. Many researchers and practitioners tell us the future might not look like anything we’ve ever seen. Some say we are reaching a tipping point, after which the rules we have constructed will <a href="https://www.opendemocracy.net/neweconomics/the-post-capitalist-interregnum/">no longer apply</a> or be of use.</p>
<p>As some property is <a href="http://www.news.com.au/national/is-the-australian-dream-of-a-beachfront-home-really-worth-it/news-story/37842853b935d2e78faa4d4f7deb2ff2">washed out to sea</a>, much may become <a href="https://www.nytimes.com/interactive/2017/06/22/climate/95-degree-day-maps.html">too hot to live in</a>, and what remains may be subject to relentless and increasing waves of <a href="https://www.theguardian.com/environment/2016/dec/01/climate-change-trigger-unimaginable-refugee-crisis-senior-military">migration and instability</a>. </p>
<p>In the face of such calamity, how then might we – as a big, inclusive “we” – talk about and demonstrate our relationship to place? Will we be able to do that without seeing the emergence of metaphorical or actual fortresses?</p>
<h2>Models that allow for change</h2>
<p>These are live questions. There are no easy answers, but there are places where we might start. </p>
<p>Models such as <a href="http://www.beachapedia.org/Rolling_Easements">rolling easements</a> offer one way to handle property that is in flux. Rolling easements are a form of property that <a href="https://theconversation.com/coastal-law-shift-from-property-rights-to-climate-adaptation-is-a-landmark-reform-59083">recognises that the coast is a dynamic landscape</a> and allows for the coastline of wetlands to migrate inland as sea levels rise. </p>
<p>These sound promising in their capacity to balance private and public interests in property, but their potential has <a href="http://www.coastalconference.com/2014/.../Tayanah%20O'Donnell%20Full%20Paper.pdf">not yet been tested</a> in areas of urban development, such as housing. </p>
<p>Echoing the potential mobility and flexibility of rolling easements are <a href="http://www.shareable.net/blog/can-we-build-homes-on-trust">diverse housing tenures</a> that can dislocate the right to reside in place from exclusionary, proprietary title to an individual, speculative housing “asset”. </p>
<p>Examples include <a href="https://en.wikipedia.org/wiki/Housing_cooperative">housing co-operatives</a> and <a href="https://www.prosper.org.au/2008/05/29/community-land-trusts-explained/">community land trusts</a>. So far, these have proven effective in delivering a range of affordable and flexible housing options, but still ultimately rely on an understanding that property is static.</p>
<p>So, how might we conceptualise and identify dynamic models of housing that can change with our cities? </p>
<p>Mobility studies are starting to talk about home as <a href="https://doi.org/10.1111/gec3.12314">mobile and fluid</a>, while resilience theory is recognising the importance of a <a href="https://doi.org/10.1080/02723638.2016.1139865">sense of place</a>. Resilience theory also tells us that complex systems are <a href="https://www.resalliance.org/adaptive-mgmt">best governed</a> by collaborative, flexible, learning mechanisms. </p>
<p>The combination of more fluid understandings of home and more sensitive ideas of place may offer a framework for thinking about how we occupy cities through complex challenges and in the face of uncertainty – including how to accommodate the need for mobility and flexibility.</p>
<h2>Indigenous inspiration</h2>
<p><a href="https://theconversation.com/kidmans-sale-marks-second-wave-of-south-australian-colonisation-40319">Living in colonised landscapes</a> tells us it might be time to rethink which way around the “ownership” dynamic works in property relationships. </p>
<p>That is, if we are to think about and create property systems that are as dynamic as the landscapes we occupy, we might need to start thinking about ourselves as belonging to and answerable to the land, not the other way around. </p>
<p>We might also need to start thinking about our claims not being static but dependent on the web of relationships we are entwined in, including with non-humans. Some say that First Peoples might have a grasp of property dynamics that is <a href="https://www.theguardian.com/commentisfree/2017/mar/27/western-idea-private-property-flawed-indigenous-peoples-have-it-right">more suited</a> to the times we are entering.</p>
<p>So, making cities green might be the easy part. It remains to be seen whether property law and property systems are up to the task of transition.</p>
<hr>
<p><em>You can read other articles in the series <a href="https://theconversation.com/au/topics/ecocity-summit-40496">here</a>. The <a href="https://www.ecocity2017.com/">Ecocity World Summit</a> is being hosted by the University of Melbourne, Western Sydney University, the Victorian government and the City of Melbourne in Melbourne from July 12-14.</em></p><img src="https://counter.theconversation.com/content/80672/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Louise Crabtree receives funding from the City of Port Phillip, Mount Alexander Community Land Ltd, St Kilda Community Housing Ltd, the Committee for Lorne, Marrickville Council, SEMZ Property Group, Tasman Ecovillage, Servants Community Housing, and Inner Melbourne Action Plan.</span></em></p>To create property systems that are as dynamic as the landscapes we occupy, we might need to start thinking about ourselves as belonging to and answerable to the land, not the other way around.Louise Crabtree-Hayes, Senior Research Fellow, Institute for Culture and Society, Western Sydney UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/783272017-06-14T20:07:36Z2017-06-14T20:07:36ZTorrens, our land-title pioneer, might have approved of privatised registries<figure><img src="https://images.theconversation.com/files/173028/original/file-20170608-32301-1m525ja.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Our land-title system originated in the mid-19th century when Sir Robert Richard Torrens campaigned to reform Adelaide's chaotic deeds-based land system. </span> <span class="attribution"><a class="source" href="http://nla.gov.au/nla.obj-232526115/view">National Library of Australia </a></span></figcaption></figure><p>Recent government moves to commercialise Australia’s state-based land-titles registries have generated strong concerns about <a href="https://theconversation.com/secrecy-on-land-titles-registry-sale-helps-keep-bidders-tax-haven-links-quiet-74827">transparency</a>, <a href="https://theconversation.com/what-are-the-implications-of-privatising-land-title-offices-60099">security of title</a> and <a href="http://www.abc.net.au/news/2017-05-03/victorias-budget-splash-raises-questions-about-privatisation/8493308">loss of government revenue</a>. It might surprise some readers that <a href="http://adb.anu.edu.au/biography/torrens-sir-robert-richard-4739">Sir Robert Richard Torrens</a>, the man behind Australia’s <a href="https://en.wikipedia.org/wiki/Torrens_title">cadastral “Torrens system”</a> of conveyancing and land-title registration, was an economic liberal who just might have approved of the trend towards privatisation. </p>
<p>The story of Torrens and the Real Property Act of 1858 is fairly well known. Torrens took an interest in reforming South Australia’s chaotic deeds-based land system when an acquaintance lost money on a property, owing to a faulty title.</p>
<p>With help and advice from competent friends, and a sustained campaign for conveyancing reform, Torrens won the seat of Adelaide in the first parliamentary election of 1856. His <a href="http://www.foundingdocs.gov.au/resources/transcripts/sa8_doc_1858.pdf">Real Property Act</a> came into effect in 1858. Soon afterwards, Torrens resigned from government to run the new land titles registry. </p>
<p>Under the new system, the location and dimensions of each land parcel were to be surveyed and registered. Every new land owner received a secure grant of title, guaranteed by the Crown.</p>
<h2>Torrens: the man and his motivations</h2>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/173030/original/file-20170608-32402-oq1f76.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/173030/original/file-20170608-32402-oq1f76.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=743&fit=crop&dpr=1 600w, https://images.theconversation.com/files/173030/original/file-20170608-32402-oq1f76.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=743&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/173030/original/file-20170608-32402-oq1f76.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=743&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/173030/original/file-20170608-32402-oq1f76.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=934&fit=crop&dpr=1 754w, https://images.theconversation.com/files/173030/original/file-20170608-32402-oq1f76.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=934&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/173030/original/file-20170608-32402-oq1f76.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=934&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Sir Richard Robert Torrens was an admirer of John Stuart Mill.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/paelocalhistory/14768578379/in/photolist-ov3PPH-gKdE7z-gKdFQe-gKdCeA-gKoyER-gKnk3z-gKnGT8-gKJfs8-gKm96g-gKnpW3-gKHfHS-gKnBX6-gKHpfJ-gKHoRh-gKoAfK-gKdNBb-gKnGdk-gKnFvD-gKJ1cK-gKdHDz-gKoy7B-gKHeUs-gKHg54-gKnAB9-gKHhsK-gKH1xh-gKHanU-gKJ244-gKH4cX-gKJ2up-gKnQwo">Port Adelaide Enfield Local History Photos/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Torrens’ interest in market systems is less well known. His father, Colonel Robert Torrens, was both a colonisation commissioner and a noted <a href="https://books.google.com.au/books?id=4fjwxnH8VPcC&pg=PA89&source=gbs_toc_r&cad=3#v=onepage&q&f=false">political economist</a> who wrote extensively on theories of rent, wages, profit and comparative advantages in trade. Colonel Torrens admired the early work of liberal theorist <a href="https://plato.stanford.edu/entries/mill/">John Stuart Mill</a>, especially his “system of logic” in economic science.</p>
<p>Expert historians, including <a href="https://hekyll.services.adelaide.edu.au/dspace/bitstream/2440/14869/1/alr_v1n2_1961_PikIntPg169.pdf">Douglas Pike</a>, <a href="http://www.austlii.edu.au/au/journals/AdelLawRw/2009/14.html">Rosalind F. Croucher</a>, <a href="http://www.austlii.edu.au/au/journals/MonashULawRw/2007/13.html">Greg</a> <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1935816">Taylor</a> and <a href="https://www.academia.edu/6352173/On_Torrenss_Theory_of_Profits">Giancarlo de Vivo</a>, have described the lives and works of father and son in detail. Still, the intellectual relationship between them remains unclear. How strongly was the son influenced by the father? Did he develop his own ideas on political economy? </p>
<p>One thing is certain: Torrens (the son) expressed strong admiration for Mill. In his <a href="http://handle.slv.vic.gov.au/10381/187620">prospectus</a> for a new South Australian land bank, Torrens named him “the great economist” and “the most accurate thinker of our time”. He also quoted Mill: </p>
<blockquote>
<p>To make land as easily transferable as stock would be one of the greatest economical improvements that could be bestowed on a country.</p>
</blockquote>
<h2>Land as a commodity</h2>
<p>With the Real Property Act in place, Torrens could argue further that land, being immovable and indestructible, was the safest kind of collateral for loans of money. Its “limited extent” made it “<a href="http://handle.slv.vic.gov.au/10381/187620">yearly more and more valuable</a>”. </p>
<p>So, freeing up the transfer of land for everyone was a stepping stone to freeing up flows of money, which Torrens saw as a good thing.</p>
<p>On one hand, the institutionalisation of land ownership has allowed the efficient, cheap transfer of land parcels via a single, trusted provider. It minimises costs for home buyers and gives them a certain peace of mind. As long as the transfer process is performed correctly, title holders are immune to claims from former owners and their creditors.</p>
<p>On the other hand, it has allowed faster, easier land speculation and wild fluctuations in property values. It seems that Torrens didn’t anticipate the phenomenon of the commodity <a href="https://www.rba.gov.au/publications/confs/2003/pdf/simon.pdf">price bubble</a> and couldn’t foresee growing, public disquiet over market failures.</p>
<h2>Privatising the system</h2>
<p>In 2014, Victoria’s Liberal government proposed the sale of the state’s land titles office. Treasurer Michael O’Brien <a href="https://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwjf19jvjLDUAhVDkpQKHX4-BDYQFggmMAA&url=http%3A%2F%2Fwww.afr.com%2Fnews%2Fpolitics%2Fvics-stateowned-land-registry-functions-could-be-for-sale-20141125-11tw84&usg=AFQjCNH6bn7MM7Nsx--V64FU3nAx8-nKLw">explained</a> that “the market can perform those services just as efficiently, if not more so”. However, the Liberals lost to Labor at the November 2014 election and the sale did not go ahead. </p>
<p>Last year, the New South Wales Liberal government floated the idea of privatising the state’s land titles registry. Despite <a href="http://www.governmentnews.com.au/2017/02/experts-say-nsw-land-titles-registry-sell-off-disaster/">protests and arguments</a>, the deal has gone through. Responsibility for title transfers has been <a href="http://www.smh.com.au/nsw/nsw-land-titles-registry-leased-for-26-billion-to-hastings-funds-management-first-state-super-20170412-gvjcfw.html">leased to a consortium of investment fund managers</a>. NSW Premier Gladys Berejiklian promised “more efficient practices and better outcomes for customers”.</p>
<p>Victoria’s recent <a href="https://s3-ap-southeast-2.amazonaws.com/budgetfiles201718.budget.vic.gov.au/BP4_2017-18_StateCapitalProgram.pdf">2017-18 budget includes funds</a> for a scoping study to investigate the privatisation of its own land titles office. There have been some <a href="https://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0ahUKEwj9mcaikLDUAhVGj5QKHRzvAjQQFggsMAE&url=http%3A%2F%2Fwww.theaustralian.com.au%2Fnational-affairs%2Fstate-politics%2Fvictorian-budget-resistance-hardens-to-2bn-land-titles-registry-sale%2Fnews-story%2Fea37b027fe6a7b9096b3ffbd7504ab75&usg=AFQjCNHzmVj7fwRReM3MWHq-Xf6p-WafnA">negative comments</a> in the news media, but the final decision is still some time away. </p>
<h2>Torrens, then and now</h2>
<p>Is privatisation consistent with Torrens’ ambitions for land-titles reform? If the aim was to free up the trade in land and money by reforming an unruly, inefficient system, further reform couldn’t be called inconsistent. </p>
<p>Once the new system was established, Torrens didn’t stay put to run it. He travelled widely and, when nominated to run for parliament in Britain in 1865, resigned as registrar-general without returning to Australia. If the system mattered more than the people running it, shifting it back into private hands might not be inconsistent either.</p>
<p>But, if privatisation caused delays, eroded security, or raised the price of conveyancing, it wouldn’t be consistent at all. For better or worse, Torrens really wanted land transfers to be quick, safe and cheap.</p><img src="https://counter.theconversation.com/content/78327/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>This work was supported by an Australian Government Research Training Program Scholarship. </span></em></p>Sir Robert Richard Torrens – the man behind Australia’s ‘Torrens system’ of land-title registration – was an economic liberal who might have approved of privatising title registries.Dr Karen Strojek, PhD Candidate in Politics, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/756912017-04-12T20:13:34Z2017-04-12T20:13:34ZHow the blockchain will transform housing markets<figure><img src="https://images.theconversation.com/files/164394/original/image-20170407-16671-7oy4kf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A blockchain's ability to move assets from one owner to another allows less dependence on intermediaries. </span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>An emerging technology, blockchain, could transform the way we buy and sell real estate by doing away with the <a href="http://www.realestate.com.au/advice/hidden-costs-buying-home/">hidden costs</a> and inefficiencies of our housing markets. </p>
<p><a href="https://theconversation.com/demystifying-the-blockchain-a-basic-user-guide-60226">Blockchain</a> is an online ledger that records transactions. It’s capable of recording the movement of any kind of asset from one owner to the next.</p>
<p>It’s public and isn’t owned by any one corporation, there are no charges to record transactions. Its openness ensures the integrity of transactions and ownership, as everyone involved has a stake in keeping it honest. </p>
<p>This means there are fewer intermediaries; less <a href="http://www.afr.com/real-estate/goodbye-to-the-property-middle-man-20170131-gu2t0r">middle-men</a> who increase the costs and time to complete a transaction. </p>
<p>There are risks associated with the system as it’s only as strong as the code that supports it, which has come under attack in the past. Despite this, examples from overseas show it is possible to apply this technology successfully to our housing market.</p>
<h2>Problems in how the property market is run</h2>
<p>For buyers able to find the right property, secure a mortgage and save a deposit, they must also pay for a range of so-called “hidden costs”. These are additional payments associated with the transaction over the cost of the home itself. Many legal and title-related costs would become near-obsolete in a blockchain system. </p>
<p>The combined costs of title registration, title insurance, and legal fees associated with register the property transfer <a href="http://www.realestate.com.au/advice/hidden-costs-buying-home/">approach A$1,000</a> on the average Australian house. Costs continue to rise as the prudent buyer undertakes further due diligence, through building inspection documentation, previous sales records and so forth.</p>
<p>On top of the financial cost, it then typically takes <a href="http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Buying_property/Contracts_and_deposits.page">over a month to settle</a> a real estate transaction in Australia. The blockchain system can speed things up, as currently tedious checks undertaken by hand, move to an automated system overseen and approved by the relevant stakeholders. </p>
<p>There is also the risk that land titles offices with a single database simply get things wrong too. In 2016 it was reported that 300 incorrect certificates had been issued in NSW, with <a href="http://www.smh.com.au/nsw/scramble-to-warn-property-owners-after-bungle-over-f6-motorway-20161029-gsdnfi.html">140 of those being recent property buyers</a> affected by government plans for major motorways in Sydney’s west.</p>
<p>There are now concerns that the system’s quality could be compromised in several states, <a href="http://www.afr.com/street-talk/south-australia-launches-land-titles-deal-as-nsw-indicative-bids-due-20161213-gt9v86">including NSW and South Australia</a>, as land titles offices become privatised.</p>
<h2>A blockchain real estate market</h2>
<p>If blockchain were applied to the property market in Australia, every property would be encoded with a unique identifier. Property IDs already exist in most land registry systems, so these would need to be migrated to a blockchain. </p>
<p>Next, the blockchain ecosystem then needs to have defined who the people behind the transaction are, those stakeholders that include the owner, lender, and government. </p>
<p>Transactions of property are conducted via “smart contracts” – digital rules in the blockchain that process the agreement and any specified conditions. Buying and selling could still take place via agents, or the smart contract can be advanced to incorporate the sale rules and make this decision automatically. The blockchain for each property grows as transactions are added to the ledger.</p>
<p>A housing market without agents, conveyancers and a land-titles office may seem decades away, but a handful of countries have already piloted blockchain land registration system.</p>
<p>In Australia, our current land titles system is among the world’s best, but it is not infallible. A range of hidden <a href="http://www.policypartners.com.au/assets/treasury---economic-incidence-of-taxes-(2015).pdf">taxes</a> and transaction costs increase market inefficiencies.</p>
<p>And while the electronic system <a href="https://theconversation.com/explainer-how-the-paperless-property-market-works-62109">Property Exchange Australia or PEXA</a>, has brought us to the point of a near paperless property market, it’s still an intermediary between the parties and the record of the transfer in the <a href="http://www.dtpli.vic.gov.au/property-and-land-titles/land-titles/torrens-titles">Torrens system</a> - our current land title system. </p>
<p>The added advantage of a blockchain system is in eliminating risks, in particular the risk of records being accessed fraudulently and altered or deleted because it is <a href="https://bitsonblocks.net/2016/02/29/a-gentle-introduction-to-immutability-of-blockchains/">a permanent and immutable record</a>. This means that a huge amount of computing power would be required, probably along with some collusion, and the alteration is easily detected across the ledger. That’s not to say the blockchain system is perfect. </p>
<p>Blockchain’s advantage in restricting any changes to historical records becomes a disadvantage when incorrect or fraudulent entries are added. Digital currency managers, Ether and Bitfinex, <a href="https://www.ft.com/content/05b5efa4-7382-11e6-bf48-b372cdb1043a">learned this the hard way</a> through cyber attacks. </p>
<p>Last year these attacks siphoned off over <a href="http://www.coindesk.com/understanding-dao-hack-journalists/">US$50 million in ether tokens</a> from <a href="https://daohub.org/">The DAO</a>, the largest crowdfunded venture capital fund. This breach led to a controversial split of Ether into two separate active digital currencies. </p>
<p>Only months later, Hong Kong-based crytocurrency trading firm, <a href="https://www.bitfinex.com/">Bitfinex</a>, had the equivalent of US$68 million stolen by hackers in a security breach reminiscent of the hack that bought down <a href="https://www.nytimes.com/2016/05/26/business/dealbook/mt-gox-creditors-seek-trillions-where-there-are-only-millions.html?_r=0">Mt Gox in 2014</a>. It is little comfort to cautious market regulators that the thieves behind these attacks <a href="https://www.buzzfeed.com/josephbernstein/you-just-stole-50-million-in-cryptocurrency-now-how-the-hell?utm_term=.hsL058LOq#.pnMwOzAx2">can not spend it</a> without revealing their identity on the blockchain.</p>
<p>These hacks demonstrate that blockchain systems are only as secure as the code which supports them. As a nascent technology, its cracks are detected only when they are exposed.</p>
<h2>Where blockchain has worked before</h2>
<p>Sweden became <a href="http://www.reuters.com/article/us-sweden-blockchain-idUSKCN0Z22KV">the first western country</a> to explore the use of blockchain for real estate in July last year. At the time, the Swedish Land Registry partnered with blockchain startup <a href="https://chromaway.com/landregistry/">ChromaWay</a> to test how parties to a real estate transaction – the buyer, seller, lender, government – could track the deal’s progress on a blockchain. </p>
<p>Other countries at the forefront of blockchain for real estate include <a href="https://www.forbes.com/sites/laurashin/2016/04/21/republic-of-georgia-to-pilot-land-titling-on-blockchain-with-economist-hernando-de-soto-bitfury/#257624a544da">The Republic of Georgia</a>, <a href="http://in.reuters.com/article/usa-honduras-technology-idINKBN0O01V720150515">Honduras</a>, and <a href="http://www.coindesk.com/blockchain-land-registry-tech-gets-test-brazil/">Brazil</a> which announced a pilot program earlier this month. While this might seem like a disparate list, it’s in these countries where the long-term potential of a blockchain for real estate are most significant. </p>
<p>Systemic corruption and insecure database management in these countries, and many other emerging economies, is seen as a major constraint on growth and prosperity. Why would you invest in a house, or any other asset, if there is a distinct possibility that the record of your ownership could simply disappear?</p>
<p>With ever increasing demands for improvements to transaction efficiency and local real estate industry giants like <a href="https://www.propertycouncil.com.au/Web/Content/News/National/2016/Blockchain__bitcoins_and_rental_payments.aspx">CoreLogic appointing research teams</a> dedicated to new technology applications, it might not be long before we see a real estate blockchain system in Australia.</p>
<hr>
<p><em>This is an edited version of an article originally printed in The University of Sydney Business School Magazine.</em></p><img src="https://counter.theconversation.com/content/75691/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Danika Wright does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There are many hidden costs and inefficiencies in housing markets. Blockchain is poised to transform that.Danika Wright, Lecturer in Finance, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/714882017-01-23T19:17:45Z2017-01-23T19:17:45ZAirbnb hosts beware – it’s not just Centrelink using robo-debt systems<figure><img src="https://images.theconversation.com/files/153561/original/image-20170120-5243-1fcvvp8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Federal and state agencies are using powerful automated data-matching programs to identify properties that are generating income and might be liable for tax.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/man-touchscreen-house-network-home-web-435609754">from www.shutterstock.com</a></span></figcaption></figure><p>Australian homeowners who have been sharing their homes for profit using Airbnb, or like services, could be subject to the same <a href="http://www.couriermail.com.au/news/pensioners-families-disabled-targeted-when-centrelink-debt-recovery-scheme-expands/news-story/1432b6d8ca1920fef710788c45f32ce6">“robo-debt” recovery services</a> that have <a href="http://www.huffingtonpost.com.au/2017/01/22/centrelink-admit-review-system-too-slow-to-save-people-from-fake/?utm_hp_ref=au-homepage">targeted</a> Centrelink <a href="https://theconversation.com/note-to-centrelink-australian-workers-lives-have-changed-70946">recipients</a>. </p>
<p>This is problematic because of ongoing uncertainties about the legal relationship between owner and Airbnb guest, and whether or when the property can be subject to land tax. Despite this, owners are receiving automated notices and may possibly be admitting liabilities and paying fines they shouldn’t. </p>
<p>Until recently, governments, especially in Australia, have tended to be cautious and conservative <a href="https://theconversation.com/in-love-with-uber-and-airbnb-you-might-have-disruption-fever-49592">in response to the sharing economy</a>. That is not just because of the long-standing inability of regulatory systems to keep pace with technology, but also because of the threat of disruption to traditional industries and those who work in them. Despite this conservatism, the shift to a sharing economy has had a sense of inevitability about it. </p>
<p>Airbnb has had perhaps the most long-standing and significant <a href="https://theconversation.com/how-airbnb-is-reshaping-our-cities-63932">influence in Australia</a>, in most cases prior to any specific legislation being created to regulate it. And if trade and commerce are free of regulation, they are also free of government control, protection and taxation. In many cases legislators are still to work out how to regulate or tax this new economic model. </p>
<h2>Identifying owners who Airbnb</h2>
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<a href="https://images.theconversation.com/files/153555/original/image-20170120-5257-1rrgjut.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/153555/original/image-20170120-5257-1rrgjut.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/153555/original/image-20170120-5257-1rrgjut.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=816&fit=crop&dpr=1 600w, https://images.theconversation.com/files/153555/original/image-20170120-5257-1rrgjut.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=816&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/153555/original/image-20170120-5257-1rrgjut.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=816&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/153555/original/image-20170120-5257-1rrgjut.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1025&fit=crop&dpr=1 754w, https://images.theconversation.com/files/153555/original/image-20170120-5257-1rrgjut.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1025&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/153555/original/image-20170120-5257-1rrgjut.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1025&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<a href="https://images.theconversation.com/files/153556/original/image-20170120-5251-8pbix2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/153556/original/image-20170120-5251-8pbix2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/153556/original/image-20170120-5251-8pbix2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=674&fit=crop&dpr=1 600w, https://images.theconversation.com/files/153556/original/image-20170120-5251-8pbix2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=674&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/153556/original/image-20170120-5251-8pbix2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=674&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/153556/original/image-20170120-5251-8pbix2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=847&fit=crop&dpr=1 754w, https://images.theconversation.com/files/153556/original/image-20170120-5251-8pbix2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=847&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/153556/original/image-20170120-5251-8pbix2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=847&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">This Notice of a Data Matching Program shows the ATO casts a wide net (click to enlarge), and the results are shared with state revenue offices.</span>
<span class="attribution"><span class="source">Commonwealth Government Gazette</span></span>
</figcaption>
</figure>
<p>While some arms of government, such as lawmakers, may have struggled to keep up with the information revolution, others, such as law enforcers, <a href="http://thenewdaily.com.au/money/your-budget/2016/07/19/ato-sharing-economy/">have not</a>. Over the past decade, state and Commonwealth agencies have worked together to develop <a href="http://www.itnews.com.au/news/ato-grabs-30-years-of-property-records-to-catch-tax-cheats-412851">data aggregation</a> and <a href="http://www.propertyobserver.com.au/financing/tax-and-legal/21502-tuesday-march-26-news-ato-data-matching-hit-list-property-banking-and-local-government-contracts.html">data-matching systems</a> into a <a href="https://theconversation.com/why-centrelink-should-adopt-a-light-touch-when-data-matching-70989">powerful regulatory surveillance tool</a>. </p>
<p>The Australian Taxation Office (ATO), for instance, reportedly <a href="https://www.ato.gov.au/General/Gen/Real-property-transactions-data-matching-program-protocol/">data-matches</a> some <a href="http://www.domain.com.au/news/airbnb-hosts-should-prepare-for-close-scrutiny-from-the-tax-office-warns-industry-leader-20160223-gn1w9x/">600 million pieces of data</a>. It <a href="http://www.grantthornton.com.au/client-alerts/2015/state-revenue-offices-and-the-ato-information-sharing/">shares the results with state revenue offices</a> (which are responsible for land tax). These offices <a href="http://www.hgfin.com.au/blog/land-tax-crackdown-by-ato">aggregate the ATO data with their own records</a> along with data from other agencies, such as rental bond authorities, electoral rolls and apparently publicly available information.</p>
<p>The volume of data is massive, and limited only by the power of the computers used to identify target behaviour.</p>
<p>It is very likely, however, that state revenue offices can identify (see, for instance, <a href="http://www.sro.vic.gov.au/compliance">here</a>, <a href="http://www.sro.tas.gov.au/domino/dtf/SROWebsite.nsf/v-all/3767F56269FC10B7CA2577F40014E998?OpenDocument">here</a> and <a href="http://www.osr.nsw.gov.au/info/compliance/factsheet/compliance-2016">here</a>) when houses are being used for income-generating purposes (especially when owners <a href="http://www.sbs.com.au/news/article/2016/02/23/ato-has-airbnb-users-its-sights">declare that income as required to the ATO</a>).</p>
<h2>What’s the problem with this?</h2>
<p>The problem is that the law is hardly certain on whether homeowners do owe land tax on short-term lodging arrangements like Airbnb. While each state and territory differs in the approach to land tax, the general rule is that a person’s principal place of residence is exempt. Land tax generally applies only to investment/second properties or commercial premises. </p>
<p>A landowner can do a number of things with their property – including generating revenue there – without turning it into a commercial premise. To think otherwise would mean parents who charged their adult children board would suddenly see their home treated as a business operation – and so would people receiving compensation for hosting home-stay students, or allowing a house cleaner or <em>au pair</em> to live in the house in exchange for reduced wages.</p>
<p>In fact, current laws are relatively nuanced when it comes to working out when a house is being used as a “principal residence” and when it is a “residential tenancy” or commercial premises. It requires looking at a range of factors, weighing them up, and ultimately working out if the owner is in exclusive occupation of the property for their own domestic purposes (even if they make some money there). </p>
<p>If a person staying in the house does not undermine the exclusive occupation and control of the overall property, then they are a lodger and the home is a principal residence. </p>
<p>If they do (for instance, because they have a separate lock on the door and can exclude the landlord), they are a residential tenant. The part of the property they occupy is then not the principal residence of the owner. </p>
<h2>Data matching struggles with nuances</h2>
<p>Such nuances are beyond the current scope of automated computer data-matching systems. And the problem with Airbnb is that every single home-stay arrangement is different. </p>
<p>In some circumstances, a guest may stay only a day or so, sharing common areas, probably not getting a lock on their door (maybe even staying on the fold-out bed in the living room). In other circumstances, the relationship may resemble more of a residential tenancy, taking possession of the whole house for much longer periods. </p>
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<a href="https://images.theconversation.com/files/153562/original/image-20170120-5214-v2n7mo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/153562/original/image-20170120-5214-v2n7mo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/153562/original/image-20170120-5214-v2n7mo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=795&fit=crop&dpr=1 600w, https://images.theconversation.com/files/153562/original/image-20170120-5214-v2n7mo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=795&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/153562/original/image-20170120-5214-v2n7mo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=795&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/153562/original/image-20170120-5214-v2n7mo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=999&fit=crop&dpr=1 754w, https://images.theconversation.com/files/153562/original/image-20170120-5214-v2n7mo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=999&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/153562/original/image-20170120-5214-v2n7mo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=999&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The ease of using Airbnb blinds some home-owners to the risk of legal complications.</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<p>The other problem is that many landowners will have been operating under the assumption that they do not owe land tax on their homes. As a result, state tax offices face a dilemma: leave Airbnb alone until the law catches up, or make judgments on thousands of home-sharing arrangements to determine whether they are lodging arrangements or residential tenancies. </p>
<p>Some revenue offices appear to have opted for the latter course. And they have dealt with the logistical problem, as Centrelink has done, by employing robo-debt-like approaches.</p>
<h2>Caught in the data dragnet</h2>
<p>As an illustration, in Tasmania, the approach involves using evidence from the dragnet for information that the property is being advertised for accommodation, or that it is generating income. If this is the conclusion, the homeowner is issued with an investigation notice. </p>
<p>The investigation notice requires, under the force of statutory penalty, that the homeowner provide information relating to current and prior home use. Based on the information from these sources, it is then suggested that the principal place of residence of the titled and resident owner was only part of the building. This leaves the remainder of the property valued for land tax purposes, with the owner then potentially liable.</p>
<p>We suspect that many homeowners receiving the letters do not choose to contact a lawyer. Instead, they pay fines ranging from thousands to tens of thousands of dollars. Those who do challenge the assessments face extended uncertainty and expense. </p>
<p>An additional problem in this area is that state revenue rulings are not recorded and publicised like <a href="http://www.abc.net.au/news/2015-05-20/tax-office-issues-gst-warning-for-uber-and-airbnb/6482590">Australian Tax Office rulings</a>. This means we don’t know how many successful or unsuccessful challenges there have been. It also means many tax lawyers and accountants may be unaware of the risk to homeowners who provide home-sharing arrangements. </p>
<h2>What should Airbnb hosts do?</h2>
<p>People who have received such letters should definitely consult with a lawyer with expertise in state tax.</p>
<p>Those who haven’t received notices but who are hosting Airbnb guests, or intend to, should still seek tax advice, preferably from someone legally trained. Given the ease with which people can advertise parts of their homes on Airbnb, it can be easy to forget that you are entering into a business transaction and generating income. Homeowners should protect themselves in advance.</p>
<p>State governments should reflect on this too. While it is legitimate to earn revenue from the sharing economy, the inherent unfairness of retrospectively penalising people who reasonably believed that their homes didn’t attract land tax is palpable. </p>
<p>Using automated software to “efficiently” achieve this aim by removing the human element is even more unfair. The practice really should stop until the law is modified to make the system more transparent, fair and, it might be argued, <em>human</em>.</p><img src="https://counter.theconversation.com/content/71488/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>State revenue offices are using data matching to identify people who earn income from Airbnb, then sending notices that they may be liable for land tax, even though this remains a legal grey area.Brendan Gogarty, Lecturer in Law, University of TasmaniaLynden Griggs, Senior Lecturer, Faculty of Law, University of TasmaniaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/600992016-06-10T00:35:31Z2016-06-10T00:35:31ZWhat are the implications of privatising land title offices?<figure><img src="https://images.theconversation.com/files/124917/original/image-20160602-3253-v0eyn6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australians do business with a title office only a couple of times in their lives – when they buy and sell their homes, for instances.</span> <span class="attribution"><span class="source">AAP/Paul Miller</span></span></figcaption></figure><p>The New South Wales government is <a href="http://www.treasury.nsw.gov.au/__data/assets/pdf_file/0004/128083/20052016_Gladys_Berejiklian_med_rel_-_LPI_transaction_to_fund_new_infrastructure.pdf">set to privatise</a> its land-titling services. This decision may provide the impetus for other states and territories in Australia to go down the same path.</p>
<p>But what are the implications of privatising the operation of title offices for the Australian public?</p>
<h2>What are title offices and why do they matter?</h2>
<p>Title offices maintain a registry that defines the ownership and boundaries of private and public properties and keeps records of changes to the properties as they happen. </p>
<p>Details of various changes affecting the land – such as mortgages, restrictions, leases and rights of way – are also recorded in the registry. </p>
<p>So, if you are about to commit hundreds of thousands of dollars to buy a property, you or your solicitor need to search the registry and make sure the seller is not a pretend owner, and the dimensions of the property are the same as what the registry says. </p>
<p>Similarly, if you want to subdivide your backyard to sell or build a new dwelling, it is necessary to look into the registry about what you can and can’t do in your backyard. </p>
<p>Australians may do business with a title office only a couple of times in their lives, but they do provide services to many people every day. For example, in NSW, about 900,000 land dealings (like transfers of title or mortgage discharges) were lodged and almost 53,000 new titles registered <a href="https://www.finance.nsw.gov.au/sites/default/files/OFS_AnnualReport_201415-Part-One.pdf">in the 2014-15 financial year</a>.</p>
<p>Australia’s stable and reliable property market is a <a href="https://theconversation.com/australias-soaring-housing-costs-signal-need-for-a-new-economic-consensus-56806">key contributor</a> to the country’s economy. From buying and selling to financing property, title offices underpin billions of dollars of economic activity every year. The robust titling systems in Australia’s states and territories are <a href="http://www.fig.net/resources/proceedings/fig_proceedings/fig2010/papers/ts07a/ts07a_cowen_buhler_4022.pdf">one of the reasons</a> the country was among the least affected by the global financial crisis. </p>
<p>Australia’s system is a simplified land registration method that guarantees the ownership of a property if it is recorded in the title office. Although there is always room for improvement, this system of registration is one of the best and most efficient in the world. </p>
<p>In Victoria, if you have all the necessary documentation you could transfer the ownership of property in 24 hours. Many countries around the world – including the US – cannot even dream of such efficiency.</p>
<h2>But what might privatisation lead to?</h2>
<p><strong>Uncharted territory</strong></p>
<p>Title offices usually do not cost the government; they generate revenue through the provision of land-related services and selling land and property information. </p>
<p>But, if privatising title offices is being done with the aim of improving its performance, does any provider in Australia already have a better service in place to do the job more efficiently than it is being done now?</p>
<p><strong>Impact on individuals</strong></p>
<p>Apart from the economic significance of land and property, arguably a property could be the most valuable asset an average person could own in their life. </p>
<p>Although the <a href="http://www.treasury.nsw.gov.au/__data/assets/pdf_file/0004/128083/20052016_Gladys_Berejiklian_med_rel_-_LPI_transaction_to_fund_new_infrastructure.pdf">announcement emphasises that the government will continue guaranteeing titles</a>, the for-profit philosophy of privatisation can lay the groundwork for the private sector to negotiate more profitable alternatives such as the insurance-based titling system that operates in the US. So this may well be the starting point of moving away from guaranteeing Australian land titles.</p>
<p><strong>Impact on the public</strong></p>
<p>Land information that is created in the process of titling is <a href="http://www.csdila.unimelb.edu.au/publication/conferences/2012/FIGAAAPaper.pdf">accurate, assured and authoritative</a>. </p>
<p>When you subdivide the backyard of your million-dollar property, a new title is to be created. In this process, a <a href="http://www.surveyorsboard.vic.gov.au/content/60/find-a-surveyor.aspx">licensed surveyor</a> prepares a plan, which is lodged and registered with the title office. Before being registered, the title office staff examine the plan to ensure the ownership boundaries on the plan correspond with the boundaries as marked on the ground. </p>
<p>Land information generated and maintained in title offices has a documented and legally valid audit trail. This is not only key to the property market and land development, but is critical to many public services such as infrastructure engineering, emergency management, or disaster responses. Any compromise on the private sector’s part will have significant consequences, which could go beyond the properties we own.</p>
<p>Privatisation has its advantages. But Australia’s title offices may not necessarily be the right government businesses to be privatised.</p><img src="https://counter.theconversation.com/content/60099/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mohsen Kalantari receives funding from Australian Research Council, Bushfire and Natural Hazard CRC, the University of Melbourne, Open Geospatial Consortium and Australian Urban Research Infrastructure Network.
He is a member of Surveying and Spatial Sciences Institue, Surveyors Registration Board of Victoria and affiliated with International Federation of Surveyors. However, the views expressed in the article are those of the author and do not necessarily reflect those of these groups. </span></em></p>Privatisation has its advantages. But Australia’s title offices may not necessarily be the right government businesses to be privatised.Mohsen Kalantari, Senior Lecturer in Geomatics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/549552016-03-31T00:30:58Z2016-03-31T00:30:58ZHow can we arrest the rise in white-collar crime in Australia’s property industry?<p>Consumers lose out when a real estate agent acts fraudulently. This includes actions such as false and misleading advertising, deceptive conduct and misappropriation of trust funds.</p>
<p>So <a href="https://www.researchgate.net/publication/298808572_The_Ethical_Considerations_for_Occupational_Licensing_in_Property_-_Why_is_White_Collar_Crime_on_the_Increase">what is behind</a> the increase in white-collar crime and fraudulent behaviour? And are there are any preventative measures that could be implemented to reduce the impact on consumers?</p>
<h2>The scale of the problem</h2>
<p>There are various property agency laws and codes of ethics that set out appropriate standards of behaviour for property agents.</p>
<p>In New South Wales, occupational licensing for property agents and certificates of registration <a href="http://www.austlii.edu.au/au/legis/nsw/consol_act/psabaa2002385/">are mandatory</a> if working in the property industry. Occupational licensing for this category is managed under the auspices of individual state and territory <a href="http://www.fairtrading.nsw.gov.au/">Fair Trading offices</a>.</p>
<p><a href="https://www.researchgate.net/publication/298808572_The_Ethical_Considerations_for_Occupational_Licensing_in_Property_-_Why_is_White_Collar_Crime_on_the_Increase">My research</a> concluded that education plays a pivotal role, coupled with industry experience, in combating white-collar crime in the property industry.</p>
<p>From 2003, the NSW regulator diminished the existing higher educational requirements and abolished the need for industry experience. This has been followed by significant increases in consumer and trader complaints in real-estate transactions. </p>
<p>These complaints include non-disclosure of a vested interest, misrepresentation, unethical conduct and fraud.</p>
<iframe src="https://datawrapper.dwcdn.net/1U7Xm/1/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="632"></iframe>
<p>The table above indicates an increase in complaints from 1756 to 3754 in a decade.</p>
<p>In 2012-13 Fair Trading reported only 1,444 complaints, which represented a decrease of 17.77%. However, there does appear to be an anomaly with the following year, which reported an increase of 113.78%. Therefore, it is possible that the complaints for 2012-13 could have been partly accounted for in the following financial year – hence the disparity.</p>
<p>If this is the situation, then an average calculation would indicate that complaints increased in 2012-13 and 2013-14 by an average of 48% for each year. This appears more in line with trends during the earlier years.</p>
<p>My <a href="https://www.researchgate.net/publication/298808407_White_Collar_Crime_and_Property_Agents_A_Selection_of_Convictions_involving_Trust_Accounting_Fraud">2013 study</a> identified ten randomly selected court cases from 2010 to 2013 that related to trust accounting fraud. Of these, five cases disclosed the amounts misappropriated – which totalled A$2,107,261.</p>
<p>I undertook <a href="https://www.researchgate.net/publication/298808572_The_Ethical_Considerations_for_Occupational_Licensing_in_Property_-_Why_is_White_Collar_Crime_on_the_Increase">further research</a> on five court cases that occurred during the 2013-14 financial year. The misappropriation of trust funds ranged from $813,936.00 to $1,434,111.43. The penalties ranged from jail sentences, extending from a bond for good behaviour to 18 months’ imprisonment, to disqualification from holding a licence or certificate and working in the property industry.</p>
<h2>The way forward</h2>
<p>Consumer complaints and trust accounting fraud continue to increase. Over the last decade, the property industry has continuously lobbied the regulator for an improvement in the educational requirements for the certificate of registration and licence categories. </p>
<p>My research developed a model of occupational corruption. Based on this, it <a href="https://www.researchgate.net/publication/298808407_White_Collar_Crime_and_Property_Agents_A_Selection_of_Convictions_involving_Trust_Accounting_Fraud">recommends</a> the following preventative measures be implemented:</p>
<ol>
<li><p>A major overview of the educational course curriculum and associated mandated qualifications. All certificate of registration holders should complete a Certificate IV qualification. All licensed holders should complete a diploma qualification, both within the property services training package and the relevant category of employment.</p></li>
<li><p>An increase in the mandated units and training hours required before starting work in the property industry. The previous industry experience of a minimum of two years should be reintroduced.</p></li>
<li><p>A points system where agents must submit their business and personal financial details to Fair Trading in order to obtain or renew their property licence. This will identify the agents whose businesses are not trading profitably and who might be considered high risk in trust accounting ethics and processes. The issuing of the licence should be linked back to obtaining a nominated minimum point score that reflects the financial viability of the licence holder or business.</p></li>
<li><p>An interview system, where agents applying for their licence are required to undertake an oral examination. In Australia, the Australian Property Institute and the Royal Institution of Chartered Surveyors have for decades successfully applied this method of assessment to the valuation profession.</p></li>
</ol><img src="https://counter.theconversation.com/content/54955/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hera Antoniades does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Consumers lose out when a real estate agent acts fraudulently – be that false advertising, deceptive conduct or misusing trust funds. Research shows a link between such misconduct and lower regulatory and educational standards.Hera Antoniades, Senior Lecturer, School of Built Environment, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/327212014-10-17T05:22:31Z2014-10-17T05:22:31ZWho owns the moon?<p>Whether you’re into mining, energy or tourism, there are lots of reasons to explore space. Some “pioneers” even believe humanity’s survival depends on colonising celestial bodies such as the moon and Mars, both becoming central hubs for our further journey into the cosmos. Lunar land peddlers have started doing deals already – a one-acre plot can be yours for <a href="http://www.moonestates.com/p1/One_acre_parcel_of_land_on_the_Moon/product_info.html">just £16.75</a>. </p>
<p>More seriously, big corporations, rich entrepreneurs and even <a href="https://theconversation.com/a-us-moon-colony-does-newt-gingrichs-idea-have-a-legal-basis-5031">US politicians</a> are eyeing up the moon and its untapped resources. <a href="http://www.themoscowtimes.com/article/499806.html">Russia</a> has plans for a manned colony by 2030 and a Japanese firm wants to build a <a href="http://gizmodo.com/japan-wants-to-ring-the-moon-with-solar-panels-to-power-1474946201">ring of solar panels around the moon</a> and beam energy back to Earth.</p>
<p>We need to be clear about the legal validity of extraterrestrial real estate as the same ideas that were once used to justify colonialism are being deployed by governments and galactic entrepreneurs. Without proper regulation, the moon risks becoming an extra-planetary Wild West.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/61836/original/qp2gprz5-1413376114.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/61836/original/qp2gprz5-1413376114.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=396&fit=crop&dpr=1 600w, https://images.theconversation.com/files/61836/original/qp2gprz5-1413376114.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=396&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/61836/original/qp2gprz5-1413376114.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=396&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/61836/original/qp2gprz5-1413376114.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=498&fit=crop&dpr=1 754w, https://images.theconversation.com/files/61836/original/qp2gprz5-1413376114.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=498&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/61836/original/qp2gprz5-1413376114.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=498&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A lunar base, as imagined by NASA in the 1970s.</span>
<span class="attribution"><a class="source" href="http://en.wikipedia.org/wiki/File:Lunar_base_concept_drawing_s78_23252.jpg">NASA</a></span>
</figcaption>
</figure>
<p>To figure out whether “earthly” laws can help decide who owns what in space – or if anything can be owned at all – we must first disentangle sovereignty from property. Back in the 17th century, natural law theorists such as Hugo Grotius and John Locke argued that property rights exist by virtue of human nature but that they can only have legal force when they are recognised by a sovereign government. Within the context of space law, the big question is whether sovereignty reaches infinity – how high must you go to escape your country?</p>
<h2>Galactic commons</h2>
<p>When the US was confronted with this query in the early 1950s, it lobbied for the recognition of outer space as a global commons. The Soviet Union was difficult to infiltrate to gather intelligence, so open access to Soviet air space was crucial for the US during the Cold War. Perceiving outer space as a commons was also another way of preventing national sovereignty in space. But neither the USSR nor the US was keen to fight out the Cold War on yet another front. Geopolitics dictated the decision to treat outer space as being non-appropriable.</p>
<p>This principle can be found back in Article II of the 1967 <a href="http://www.state.gov/t/isn/5181.htm">Outer Space Treaty</a> which clearly forbids “national appropriation by claims of sovereignty, means of use or occupation by any other means”. It has been widely accepted: no one complains the various moon landings or satellites in space have infringed their sovereignty.</p>
<p>However, legal commentators disagree over whether this prohibition is also valid for private appropriation. Some space lawyers have argued for the recognition of real property rights <a href="http://www.spacefuture.com/archive/proposal_for_a_multilateral_treaty_regarding_jurisdiction_and_real_property_rights_in_outer_space.shtml">on the basis of jurisdiction</a> rather than territorial sovereignty. </p>
<p>Historical records of the Space Treaty negotiations clearly indicate people were against private appropriations at the time, but an explicit prohibition never made it into Article II. Lessons have been learned from this omission and the ban was far more explicit in the subsequent <a href="http://www.oosa.unvienna.org/oosa/SpaceLaw/moon.html">Moon Agreement</a> of 1979. However only 16 countries signed the agreement, none of which were involved in manned space exploration, leaving it somewhat meaningless as an international standard. </p>
<p>Consequently, space entrepreneurs such as <a href="http://www.dailymail.co.uk/news/article-2654045/Id-buy-moon-Former-car-salesman-claims-owns-Earths-satellite-10million-selling-pieces-lunar-landscape-buyers-include-Tom-Cruise-Tom-Hanks-George-Lucas.html">Dennis Hope</a> from the Lunar Embassy Corporation seem to think that there is a loophole in Article II which allows private citizens to claim ownership of the moon. Most space lawyers disagree however. They point out that states assume international responsibility for activities in space, whether by national companies or private adventurers, and therefore that the same prohibition extends to the private sector.</p>
<p>So while the idea of buying some lunar real estate might be fun, in order for these plots to be recognised as property there needs to be legal recognition by a superior authority such as a nation state. As states are not allowed to claim sovereign rights in outer space, landed property on the moon and planets will in all likelihood be outlawed.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/61823/original/qbdk9wd3-1413366446.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/61823/original/qbdk9wd3-1413366446.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/61823/original/qbdk9wd3-1413366446.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=333&fit=crop&dpr=1 600w, https://images.theconversation.com/files/61823/original/qbdk9wd3-1413366446.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=333&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/61823/original/qbdk9wd3-1413366446.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=333&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/61823/original/qbdk9wd3-1413366446.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=419&fit=crop&dpr=1 754w, https://images.theconversation.com/files/61823/original/qbdk9wd3-1413366446.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=419&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/61823/original/qbdk9wd3-1413366446.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=419&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Not recognised by any state.</span>
<span class="attribution"><a class="source" href="http://moonestates.com/">Moon Estates</a></span>
</figcaption>
</figure>
<p>Legal commentators are hopeful that states will remain loyal to the treaty and refrain from recognising or endorsing a private property claim. If there is a precedent, it lies at the bottom of the ocean. In 1974, the US government refused to recognise the exclusive mining rights of Deepsea Ventures to the seabed beyond the limits of national jurisdiction.</p>
<h2>Lunar takeover</h2>
<p>But all of these arguments are rather theoretical. If you just simply occupy a place and no one else can access or use it, aren’t you the de facto owner? Lawyers call this corporate possession (<em>corpus possidendi</em>) and it represents another reason why title deeds cannot be a legal proof of lunar ownership – no one is physically there. In order to possess something, both mind and body need to be involved. Intention alone is not sufficient; possession also requires a physical act. </p>
<p>The difficulty of physically establishing an act of possession on the moon should protect it from private development, but it seems technology is once again outsmarting the law. Back in the late 1990s commercial firm SpaceDev intended to <a href="http://www.thespacereview.com/article/2315/1">land robotic prospectors on an asteroid</a> to conduct experiments and claim it as private property. The project eventually ran out of funds and was shelved, but advocates of such “<a href="http://www.angelfire.com/trek/galactic_mining/Telepossession.htm">telepossession</a>” point to cases of salvage companies claiming undersea wrecks as property after exploring them with robots. After all, if an undersea probe with a TV camera was all that was required to take possession of a (previously owned, earthly) shipwreck, why shouldn’t a space probe be enough to take possession of an unowned and unclaimed patch of celestial real estate?</p>
<p>Though legal ownership of the moon or Mars is prohibited, the appropriation of material is a whole different matter. It looks like entrepreneurs could claim something like “enterprise rights” that allows them to explore and exploit natural resources in outer space. </p>
<p>I get the uncomfortable feeling of a déjà vu. Was it not <a href="http://www.oxfordscholarship.com/view/10.1093/acprof:oso/9780198279679.001.0001/acprof-9780198279679-chapter-7">Locke’s property theory</a> that justified possession over nature and vacant land and eventually led to the colonisation of the Americas? </p>
<p>Let’s hope that the international community and individual states come to their senses before it’s too late and get to sign and ratify the Moon Agreement which might give us a little bit of hope that we can avoid another enclosure movement.</p>
<p>Recent conflicts over Ukraine, the South China Sea or Syria have raised talk of a “new era in geopolitics”. They may also rekindle the realisation that outer space should not become the next playground for conquest.</p><img src="https://counter.theconversation.com/content/32721/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Saskia Vermeylen receives funding from research councils.</span></em></p>Whether you’re into mining, energy or tourism, there are lots of reasons to explore space. Some “pioneers” even believe humanity’s survival depends on colonising celestial bodies such as the moon and Mars…Saskia Vermeylen, Senior Lecturer, Lancaster Environment Centre, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/247672014-04-28T20:28:36Z2014-04-28T20:28:36ZWho owns the beach when the sea is rising?<figure><img src="https://images.theconversation.com/files/47111/original/ydfrqg9p-1398653870.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Are archaic laws getting in the way of Australians enjoying the beach? </span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/suburbanbloke/2681302409">Tim J Keegan/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>We commonly assume that Australians have a fundamental right to access the vast array of beautiful beaches that fringe our continent. </p>
<p>But as sea levels rise, these assumptions are being put into question. Two recent events, one in New South Wales, the other in Victoria, have highlighted the issue of beach ownership and access.</p>
<h2>Staying put</h2>
<p>In 2013, at Old Bar on the NSW north coast, landowners submitted a development application to construct a seawall that would have extended onto the public beach. They did this under their land title, which had a “fixed” or “right line” boundary. At Old Bar, the beach and dune has been receding for a lengthy period so the original “fixed” boundary on dry land was now on the active beach. </p>
<p>The NSW statutory Coastal Panel acting under the Coastal Protection Act 1979 <a href="http://www.abc.net.au/news/2013-08-07/old-bar-beach-residents-lose-bid-for-wall-to-keep-out-eroding-w/4871232">rejected the application</a>. But if the application had been successful, we could have seen the beach divided into sections preventing safe beach access in front of the planned seawall.</p>
<p>Then, this past summer, Victorians were made aware of a <a href="http://www.abc.net.au/news/2014-02-16/vic-govt-27not-happy27-about-fox-beachside-property-extension/5263140">title extension</a> onto the Point King Beach near Portsea by trucking magnate Lindsay Fox. Officials accepted his claim based on the seaward movement of the high water mark under the so-called “doctrine of accretion”. </p>
<p>Fox’s property is a somewhat unusual case. Unlike the “fixed” property boundaries held by most titles, Fox’s and nearby properties have “ambulatory” boundaries. This means they can move seawards with the mean high water mark as sand builds upon the beach. </p>
<p>But if there is erosion of the beach, the registered high water mark will move landward, resulting in property loss. The doctrine is ancient common law based on a principle of gradual and imperceptible movement of the shoreline; and it’s unknown how many of these properties exist around Australia’s coast. </p>
<h2>Privatising the beach</h2>
<p>Both cases have a similar objective: for the private landowner to use what they see as a property right to claim land for private purposes. In the case of Old Bar it was for property protection and at Port King Beach it was for personal amenity. </p>
<p>What these two cases highlight is that there appear to be valid ways for land owners to “privatise” the beach, or part of the beach. Attempts to do this in the USA and UK have led to community conflict, legal battles and government intervention. Australia is seeking to learn from their experiences in how the interests of the public are secured, as more and more land that is privately owned is becoming threatened by rising sea levels and shoreline recession. </p>
<p>It is complicated where the law permits compensation if land lost is converted from private to public use, a situation that can occur in the US but not in the UK.</p>
<p>John Corkill, a legal scholar at Southern Cross University, is studying aspects of the Australian shoreline law, in particular in NSW where there is a mix of “right line” and “ambulatory” titles. His research indicates there is a level of ambiguity regarding the operation of NSW property law when the mean high water mark gradually moves across a “fixed” boundary. He is calling on the NSW government to put in place a process that would clarify existing uncertainties. </p>
<p>In Victoria, the Planning Minister and others have expressed concern over the extension of title to Mr Fox. The government is currently exploring ways to stop coastal landowners with similar titles from claiming what is considered to be “public beach”.</p>
<h2>Beaches for public good?</h2>
<p>We have a legacy of property subdivision on land immediately adjoining beaches. Whatever the specifics of the freehold title, “ambulatory” or “right line”, the situation is ripe for increasing dispute between public and private interests. </p>
<p>It could be argued that our beaches should be enshrined as Crown Land held in trust by governments for the “public good” with unfettered right of access. This principle should be recognised in law in each state of Australia. Corkill’s work shows that actions must be taken soon by governments to resolve the present confusion and ambiguities in law. </p>
<p>The “time to act is now”, as stated in the 2009 House of Representatives Inquiry on managing our coastal zone in a changing climate. Sea level will continue to rise well into the future and coastal recession will become more prevalent, as it already is along the shores of large parts of the US and UK. We cannot afford to leave a legacy of restricted access or shores armoured by seawalls with no beach in sight.</p><img src="https://counter.theconversation.com/content/24767/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bruce Thom is affiliated with University of Sydney as Emeritus Professor; member of the Wentworth Group of Concerned Scientists; member of the NSW Coastal Panel; Vice-President of the Australian Coastal Society.</span></em></p>We commonly assume that Australians have a fundamental right to access the vast array of beautiful beaches that fringe our continent. But as sea levels rise, these assumptions are being put into question…Bruce Thom, Emeritus Professor, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/186582013-09-30T04:23:08Z2013-09-30T04:23:08ZAre SMSFs inflating a property bubble?<figure><img src="https://images.theconversation.com/files/32110/original/z6dsmdkf-1380442020.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australia's property market is heating up; but what role have self-funded superannuants played?</span> </figcaption></figure><p>Self managed superannuation funds (SMSFs) have come under criticism from regulators amid concerns that the sector is over-investing in the residential property sector. </p>
<p>The profession has hit back at the criticism, saying that most SMSF borrowings do not relate to residential property, and that the surge in the cost of housing is not due to SMSFs. So what is going on?</p>
<p>There are two separate issues at play here. Firstly SMSFs are becoming more active investors, including in the residential property market; and secondly the rules restricting borrowing by a superannuation fund have been relaxed since 2007. </p>
<p>The problem arises at the intersection of these two trends, where residential property is being aggressively marketed to the SMSF market on the basis that it can borrow for the purchase.</p>
<p>The fundamental rule of superannuation, known as the sole purpose test, is that the core purpose of a superannuation fund is to provide <a href="http://www.austlii.edu.au/au/legis/cth/consol_act/sia1993473/s62.html">benefits to its members in retirement</a>. Risky investments are discouraged as this could compromise the ability of the fund to pay retirement benefits; and benefits to members are supposed to be deferred until retirement.</p>
<p>Prior to 2007 superannuation funds were not permitted to borrow, however the restriction could be circumvented by the use of instalment warrants, a financial instrument that allowed the fund to leverage to acquire assets, accordingly in 2007 <a href="http://www.austlii.edu.au/au/legis/cth/consol_act/sia1993473/s67a.html">the superannuation legislation</a> was amended to allow superannuation funds to use such instruments to fund property acquisitions. </p>
<p>These changes were <a href="http://www.austlii.edu.au/au/legis/cth/consol_act/sia1993473/s67a.html">superseded in 2010</a> by the limited recourse borrowing provisions, which allow a superannuation fund to borrow to acquire an asset through a mechanism that ensures that the risk of borrowing is quarantined to the specific asset. This is intended to protect the remaining assets within the fund in the event of a default by the borrower.</p>
<p>It is within this framework that the concern over borrowings by SMSFs has arisen but there are several trends that coalesce around this issue. There has been a sharp rise in the number of Australians setting up SMSFs as many investors establish a self managed superannuation funds in order to manage their own investments, particularly in the wake of the GFC. This has been facilitated by the superannuation choice rules that allow a person to choose the superannuation fund their compulsory contributions will be paid into. Finally, Australians have always been attracted to bricks and mortar investments, and many investors lost faith in shares as the value decreased during the GFC. </p>
<p>The residential property market is already under pressure with concerns over affordability for home buyers. Activity by investors has increased due to the combination of low interest rates and increasing property values, and SMSFs are increasingly visible among investors. </p>
<p>The Reserve Bank, in its recent <a href="http://www.rba.gov.au/publications/fsr/2013/sep/html/contents.html">Financial Stability Review</a> noted that the ability to borrow for investments has resulted in an increase in property holdings. It shows that SMSFs have a higher proportion of assets in property than other funds, although property, without differentiation between residential and commercial, still ranks fourth behind cash, Australian equities and “other” investment classes. </p>
<p>The Reserve Bank did not limit its concerns to bricks and mortar, but also indicated that hybrid securities were an emerging problem area. The SMSF Professionals Association of Australia (SPAA) <a href="http://www.spaa.asn.au/library/spaa-media-releases/keep-smsf-property-investment-in-perspective,-says-spaa.aspx?categoryid=1371#.UkT3A38nJpQ">claims</a> that residential property is a minor element of the total SMSF investment market as most property held by SMSFs is commercial. </p>
<p>At 30 June, 11.7% of SMSF investments were in commercial property compared to 3.4% in residential property, and the <a href="http://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Tax-statistics/Taxation-statistics-2010-11/?">latest Taxation Statistics</a> show that less than half of 1% of all property investment was geared. </p>
<p>SMSF trustees need to be aware that it is not always a tax effective strategy to borrow to acquire property in a SMSF. Superannuation funds pay a concessional rate of tax, so negative gearing within a superannuation fund will often be less tax effective than if the member invested directly, outside the fund. The income available to make the payments will be primarily from the return on the asset, with the shortfall from other income, particularly member contributions to the fund, which are subject to the contribution caps. </p>
<p>Borrowing may allow the SMSF to leverage up an investment in the hope of receiving a higher capital gain when the property is sold. Capital gains will be exempt in a SMSF but only if the property is sold after the fund enters the pension phase, which may be many years down the track. Accordingly this is only likely to be tax effective if the member is approaching pension age.</p>
<p>The worrying trend identified by the Reserve Bank is the increased promotion of leveraged property purchases to SMSFs. Activity in the residential property market is also highly visible, due to the increasing number of SMSFs in the market, and many of the promoters of this strategy are not regulated by APRA. </p>
<p>It is this lack of supervision of this sector of the industry that is of most concern. Not only is this strategy pushing up the price of real estate, but it is exposing SMSF members to risk if property prices crash.</p><img src="https://counter.theconversation.com/content/18658/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Helen Hodgson was a Member of the Legislative Council in Western Australia from 1997 to 2001 representing the Australian Democrats. She is not currently a member of any political party.</span></em></p>Self managed superannuation funds (SMSFs) have come under criticism from regulators amid concerns that the sector is over-investing in the residential property sector. The profession has hit back at the…Helen Hodgson, Senior Lecturer, School of Tax and Business Law, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/78742012-06-29T04:39:48Z2012-06-29T04:39:48ZDownton Abbey: melodrama, frocks and … property law?<figure><img src="https://images.theconversation.com/files/12366/original/qdw4t68w-1340866374.jpg?ixlib=rb-1.1.0&rect=0%2C387%2C2213%2C1282&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Downton Abbey is a period indulgence for some, but at its heart it is a story of property law.</span> <span class="attribution"><span class="source">AAP/Seven Network</span></span></figcaption></figure><p>Dim the lights, don the snuggie and pass the chocolate; Downton Abbey is back. </p>
<p>Amid all the mooning over Matthew and Mary, viewers may not have noticed that Downton Abbey is actually about property law. Like Jane Austen’s Pride and Prejudice, the central dilemma of the series is the existence of a <a href="http://legal-dictionary.thefreedictionary.com/Fee+Tail">fee tail</a>. </p>
<p>The fee tail stipulates that Grantham Estate cannot be left to beautiful, intelligent, spoilt Mary, but must pass to the nearest male relative, Matthew, a Manchester solicitor. Arguably worse than Austen’s odious Mr Collins in Pride and Prejudice.</p>
<p>Fee tails served an important purpose for a feudal system in which status and wealth were largely determined by accident of birth. Leaving land by will with an entail ensured it would pass down a specific line of descendants and not be dissipated among people unrelated by blood. In the event that a particular line of descendants stopped, the land would revert to the original donor’s family.</p>
<p>Fee tails suited a feudal system of land ownership but they did not suit emerging or fully-fledged capitalist democracies. </p>
<p>First, fee tails were economically stultifying. The interest was effectively only an interest for the life of the current entail holder and thus (invariably) he could not raise money with it, sell it or lease it for longer than his life. Not surprisingly, tenants didn’t like to invest in leases that abruptly ended when their landlord fell off his perch.</p>
<p>Judges and lawyers waged a war of attrition against fee tails for centuries, developing ingenious legal devices to defeat them. </p>
<p>On a micro level, this would give the current holder the economic freedom to deal with his land as he pleased; on a macro level, it forced land out of the hands of families and on to the emerging, free land market. The Dowager Countess engages Matthew to investigate one of these legal devices, although we can be confident that she was not interested in facilitating the onward march of modern capitalism whose values are so antithetical to her own.</p>
<p>Second, fee tails were not just at odds with economic freedom but personal freedom and autonomy; at the risk of understatement, values that had been gaining traction for some time. In the 17th century, the English middle classes had fought hard to free themselves, and most importantly their property, from the arbitrary interference of monarchs. In the 19th century John Stuart Mill wrote eloquently about the necessary limit of government and social power over the individual; so long as people caused no harm to others, they were free to act as they pleased. This concept underpins modern land law, (as long as you don’t live in strata, but that’s another story).</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/12367/original/sc936hym-1340867463.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/12367/original/sc936hym-1340867463.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/12367/original/sc936hym-1340867463.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/12367/original/sc936hym-1340867463.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/12367/original/sc936hym-1340867463.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/12367/original/sc936hym-1340867463.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/12367/original/sc936hym-1340867463.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/12367/original/sc936hym-1340867463.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Downton Abbey: a lot of fuss over a pile of stones.</span>
<span class="attribution"><span class="source">Richard Munckton</span></span>
</figcaption>
</figure>
<p>As an early 20th century aristocrat, Lord Grantham’s autonomy is not threatened by the government or monarch, but it is by his own ancestors. The fee tail allowed long-dead ancestors to determine land-use and disposition for generations to come. It is an example of “dead-hand control”, the nemesis of modern property law.</p>
<p>There is a delicious irony in the Dowager Countess and Mary’s frustration with Lord Grantham’s inability to freely determine to whom he leaves the land. </p>
<p>Personal freedom is a concept they have learned from the despised middle classes, the very people they are trying to keep the land from. Further, while they would like autonomy and agency for themselves, unlike the politically progressive Lady Sybil, it is not something they want to extend to their own housemaids or chauffeur. </p>
<p>Lord Grantham is at least consistent in his social theory. He does not want his chauffeur to have control of his own life, but neither does he want it for himself. He believes he is the temporary caretaker of his land, not its absolute owner in any modern sense.</p>
<p>The fee tail dilemma is a metaphor for a family trapped between two worlds. The dying world of an aristocracy with its roots in a feudal system and the new world of the capitalist, democratic state. Fittingly, fee tails were abolished in most common law jurisdictions, including the United Kingdom, by the 1920s.</p>
<p>Of course the fee tail dilemma is also a metaphor for the all important dilemma of love. Should Mary marry in the tradition of her ancestors, for money, status and wealth or should she embrace the values of the modern world, exercise her personal freedom and marry for love? </p>
<p>We’ll all have to get back to the sofa and snuggie to find out.</p><img src="https://counter.theconversation.com/content/7874/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cathy Sherry does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Dim the lights, don the snuggie and pass the chocolate; Downton Abbey is back. Amid all the mooning over Matthew and Mary, viewers may not have noticed that Downton Abbey is actually about property law…Cathy Sherry, Professor, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.