Which way is the right way to ensure property rights?

[TuringAI]

This is the question I was going to ask but I didn't call in time:

Doesn't Capitalism rely on government to define what can be property or not and what measures must be taken to get this property?

Even granted that you get to keep property you DO acquire, doesn't government have to step in and say "no, that's the wrong way to make property of something, we won't defend it" and "yes, that's the right way to make property of something, we will defend it"?

In other words, isn't the free market dependent on an infrastructure that is based on one particular concept for property aquisition in order for property protection to occur? How do we ensure that the concept is the correct one? If it isn't correct then isn't the government violating people's rights by denying people who WERE correct about the concept the proper deed to what is rightfully theirs?

Edited November 17, 2008 by TuringAI

[DavidOdden]

The role of the government is to promulgate enforceable objective rules that protect a person's right to their property. The rule may be in error, and if it is, hopefully it will be corrected. Generally, the government plays no legitimate role in determining what is necessary to acquire property, but in some cases it must say what is required to prove that some thing is your property. For instance registering a work with a copyright office provides an objective legal means of determining what work is protected and when the work existed, but such registration does not "create" the property. The act of writing the work is what creates the property. Governmental title transfers don't create property, they objectively answer questions about whose property something is. In principle, I could sell a particular tract of land that I own by a verbal agreement and the buyer handing me a wad of cash, but he might be concerned about me calling backsies in 20 years, or worse, my heirs repossessing the property because they had no idea that I sold the property. Written and definitive documentation is useful.

The closest I can think of that one can come to a role for government in "defining" property is the need to articulate an objective method for showing ownership of previously unowned property, as in a homestead. So they must set forth criteria that are sufficient to prove the fact of ownership -- that you have taken the land and use it. and intend to keep it.

[Steve D'Ippolito]

For that matter, even after the initial homesteading, some agency would almost certainly need to exist, to keep track of who owns land. In essence that function is performed where I live by the county assessor's office (who also assesses property taxes, most emphatically NOT a laissez-faire capitalist function).

Whether that agency should be part of the government or not is another issue (I suspect that it should be).

[DavidOdden]

For that matter, even after the initial homesteading, some agency would almost certainly need to exist, to keep track of who owns land.

Possibly. Why do you think it's necessary? Well, let me back up a little bit and say that as part of the homesteading business, there would be a tangible recognition of the fact of ownership, say a deed, which the owner could hold on to and show as proof that the property is his (in case someone else wanted to also claim the land). Do you think it's necessary to go beyond that?

[Steve D'Ippolito]

A registry of some sort would help ensure against counterfeiting deeds. It could also help resolve ownership disputes--where exactly is the line between my property and my neighbor's property? (Granted it should say so on the deeds.)

Also, what if your piece-of-paper deed is destroyed--maliciously or not--or lost?

Basically I am talking of an organization that keeps track of who owns what land--and is the source of record. (We have such an institution with internet domain names.)

It may or may not be useful to have a place to go where one can ask, "who owns property X?" (Say you want to offer to buy a right of way through property X.) If there is no place one can go ask, the potential buyer has no idea who the owner is. It would be hard to go around asking, "Do you happen to have the deed for property X?" particularly when the person you are looking for, for all you know, is in Mogadishu. (It's hard enough if you have a place to go to ask, and THEN find out for certain that the owner is in Mogadishu.)

As a related (but not really) piece of trivia, on the island of Yap they use very large stone disks with a hole through the center as money. The discs range from 1' - 7' across. However, it's not quite like our currency where the person actually bearing it is presumed to be the rightful owner. One does not necessarily have to have the Yapstone in ones possession to spend it. Apparently one Yapstone is at the bottom of the lagoon--the outrigger canoe carrying it sank. However since it is common knowlege among the Yapese who owns which stone, it is possible for that stone to be "spent" on goods. In this particular case the registry of title deeds to Yapstones is the recollection of people in the community. (I imagine there is very little theft of money for this very reason.) (Money with a title deed on it.... hmmmm....)

[Grames]

Yes, laws and government objectively distinguish lawful transactions from theft and fraud. The Constitution also gives congress the power to "fix the standard of weights and measures" which helps makes objective measurement possible.

Possibly. Why do you think it's necessary? Well, let me back up a little bit and say that as part of the homesteading business, there would be a tangible recognition of the fact of ownership, say a deed, which the owner could hold on to and show as proof that the property is his (in case someone else wanted to also claim the land). Do you think it's necessary to go beyond that?

The principle of objectivity applied to deeds of land ownership requires that the names on deeds be public knowledge. There is an office of the local government established for that purpose. Anyone can go there and look up who owns a plot of land. This office also plays a role in preventing fraud in that one can research who has a right to make a sale before committing to the traansaction.

[DavidOdden]

The principle of objectivity applied to deeds of land ownership requires that the names on deeds be public knowledge.

That doesn't make any sense -- what's your reasoning? You don't need to know who owns the property, just that it is owned. If you are attempting to buy the land then you want the seller to provide definitive proof that it is his to sell, so as owner you can share that private information (minimally with a reputable title company). Nothing compels making property ownership a "public record".

[Grames]

That doesn't make any sense -- what's your reasoning? You don't need to know who owns the property, just that it is owned. If you are attempting to buy the land then you want the seller to provide definitive proof that it is his to sell, so as owner you can share that private information (minimally with a reputable title company). Nothing compels making property ownership a "public record".

Land isn't owned unless it is owned by someone in particular, someone identifiable. Otherwise, the land is abandoned and subject to squatter's settlement and use. Squatter's rights or adverse possession can result in new ownership if no one comes forward with a valid claim and evicts the squatters. A valid claim can't be one run off your laser printer, it had better already be public knowledge.

The intro paragraph from Wikipedia:

In common law, adverse possession is the process by which title to another's real property is acquired without compensation, by, as the name suggests, holding the property in a manner that conflicts with the true owner's rights for a specified period of time. Circumstances of the adverse possession determine the type of title acquired by the disseisor, which may be fee simple title, mineral rights, or another interest in real property.

The law of adverse possession is partly statutory and partly common law, as such the laws which govern adverse possession vary by jurisdiction. The required period of uninterrupted possession arises out of a statutory limitation period or statute of limitations. Other elements of adverse possession are judicial constructs.

[DavidOdden]

Land isn't owned unless it is owned by someone in particular, someone identifiable.

The conclusion doesn't follow from the premise. It's sufficient that it be knowable whether land is owned, and completely unnecessary to know which person owns it. The fact that it's owned "by someone in particular" follows from the fact that it is owned. So all that one needs to know is that it's owned.

[Zip]

Is the concept of squatters rights even valid in a truly capitalist marketplace? Seems to me that it is a law made for moochers and looters. If I recall correctly Canada has done away with squatters rights because (and I think properly) a person who owns land owns it regardless of if he uses it or not. He paid for it and he has the right to do with it what he wishes even if doing nothing is his choice.

Now if the owner has died and has not willed the land to anyone then it could be properly assumed that there is no owner, but that is not the same as taking owned property away from someone because he doesn't, or hasn't yet used it.

[Zip]

The conclusion doesn't follow from the premise. It's sufficient that it be knowable whether land is owned, and completely unnecessary to know which person owns it. The fact that it's owned "by someone in particular" follows from the fact that it is owned. So all that one needs to know is that it's owned.

So you would accept that the ownership of land be blocked and thus an impediment to the functioning of the free market be established? Would you have the ownership of companies be unknown too? The idea is the same.

Edited November 18, 2008 by Zip

[DavidOdden]

So you would accept that the ownership of land be blocked and thus an impediment to the functioning of the free market be established? Would you have the ownership of companies be unknown too? The idea is the same.

It's unnecessary for the specific ownership of property to be "a public record". What is needed is that one be able to distinguish "owned" from "unowned", since you can use the latter but not the former. I would not propose any impediments to ownership of land, so there could be no impediments to the functioning of the free market. In fact, I propose removing restrictions, or a suggested restriction, that property cannot be owned unless the fact of your ownership is made into a "public record".

I'm note sure what exactly you're referring to in terms of "ownership of companies". Are you suggesting that the names of all shareholders of a corporation should be a "public record"? I can't see anything that would justify such an action. That is properly dealt with as a private recordkeeping relationship, between the shareholder and the corporation, where some method of establishing establishing that I own 100 shares of Brunswick Corporation is established. Certificates are a classical way; a file at corporate headquarters is another.

[Zip]

It's unnecessary for the specific ownership of property to be "a public record". What is needed is that one be able to distinguish "owned" from "unowned", since you can use the latter but not the former. I would not propose any impediments to ownership of land, so there could be no impediments to the functioning of the free market. In fact, I propose removing restrictions, or a suggested restriction, that property cannot be owned unless the fact of your ownership is made into a "public record".

I disagree. If an entrepreneur wishes to purchase a piece of land in the country for his logging business, but when he goes to the registry office all they can tell him is that it is owned what good is it to him? He should be able to approach the person who owns the land and present his proposal.

I understand your concern about privacy though, what about a simple choice made by the owner upon purchase of a piece of property which allows him/her to be known or not?

[DavidOdden]

I disagree. If an entrepreneur wishes to purchase a piece of land in the country for his logging business, but when he goes to the registry office all they can tell him is that it is owned what good is it to him? He should be able to approach the person who owns the land and present his proposal.

If a man is interested in selling his land, he can choose to make that information publically known. If a man has no interest in selling his land, he has the right to own and enjoy his land free from harrassment from others.

I understand your concern about privacy though, what about a simple choice made by the owner upon purchase of a piece of property which allows him/her to be known or not?

Or, what about the right to let that fact be know at any point that you want? Today I may wish for privacy and not want the goddamn Greenpeace terrorists breathing down my neck on a daily basis, but maybe in 5 years, I'll want to sell the land. I still don't have to make it a matter of "public record", all I need to do is engage a real estate agent who will advertise the property -- with no need to know who owns the land. If a buyer actually cares that profoundly about who the owner is, they can make that a condition of the sale, and if I care that profoundly about my privacy, I will reject the condition. Access to information is negotiable -- unless the government sticks its nose where it doesn't belong and demands "transparency" in everything, i.e. all facts are a matter of "public record".

[Steve D'Ippolito]

Here's a scenario: I buy a parcel of two acres of land. I am handed a title deed by the seller, signed over to me.

If I decide to split the land, then clearly I need, somehow, to take that deed and turn it into two deeds for an acre apiece. Who has the authority to do that in a way that is legally recognizable?

The one deed has to be turned into two deeds. (I cannot just write out a deed saying "I am the owner of such and such acre, and I am selling it to joe bleaux for X dollars." I would then have in my possession a deed for the two acres, and Joe Bleaux would have in his possession a deed for one of those acres.

I see here the need for some sort of organization (needn't be the government) recognized as being able to issue titles, so it can take my original title for the two acres, put it in a shredder, and issue me two one-acre titles. A title not issued by this authority would be invalid.

And no one has addressed my point about what if the piece of paper gets destroyed or lost, and it is the ONLY record of ownership?

[TuringAI]

Here's a scenario: I buy a parcel of two acres of land. I am handed a title deed by the seller, signed over to me.

If I decide to split the land, then clearly I need, somehow, to take that deed and turn it into two deeds for an acre apiece. Who has the authority to do that in a way that is legally recognizable?

The one deed has to be turned into two deeds. (I cannot just write out a deed saying "I am the owner of such and such acre, and I am selling it to joe bleaux for X dollars." I would then have in my possession a deed for the two acres, and Joe Bleaux would have in his possession a deed for one of those acres.

I see here the need for some sort of organization (needn't be the government) recognized as being able to issue titles, so it can take my original title for the two acres, put it in a shredder, and issue me two one-acre titles. A title not issued by this authority would be invalid.

And no one has addressed my point about what if the piece of paper gets destroyed or lost, and it is the ONLY record of ownership?

Well we could say that there is an agreement first which organization would keep records for a given piece of property. Furthermore government would still be needed to protect people from fraud. There shouldn't be "one organization for every single transaction" unless that one organization was government, since only the government is bound by the constitution. How would we have an organization which was allowed to select which property rights to enforce? It sounds like Anarcho-Fascism, in the sense that you'd be giving a private entity power that rightfully does not belong to anybody except those who MUST by their very NATURE observe law.

[Chwisch87]

Well the legal foundation for how one owns property is set by the government. (like a slip saying you own this). this is in line with the job of the government is to protect you from violations of your person, property and rights.

[DavidOdden]

And no one has addressed my point about what if the piece of paper gets destroyed or lost, and it is the ONLY record of ownership?

Sorry, I forgot. I don't see the necessity of forced registration with the government, but could not imagine a person failing to voluntarily register such property somewhere somehow, for exactly that reason.

[Steve D'Ippolito]

I think you underestimate the dufosity of some people.

However, I am sure that anyone taking out a loan to buy real estate would have the decision made for him by his lienholder, in much the same way that lienholders decide that you shall carry insurance.

It sounds to me like the question is not: would such a registry be useful, but rather should such a registry be mandatory?

And another question--is such a registry so much a part-and-parcel of contracts enforcement that it's actually the government's role to do it?

If not, presumably, private entities can compete for the business.

Practical questions that would have to be worked out... what if there are (say) five different registries each with only 20 percent of the properties registered with them? That one is probably easy. You'd have to search them all to find the owner (if he wants to be public) or the owner could actually register with several of them. Certainly a seller can say, "I am registered with ACME Title Registry."

A more difficult one: Lets say some scam artist starts a registry, collects a few legitimate registrations, waits a few years, then inserts some phony deed giving him ownership of the Empire State Building into the registry? Since there is no single recognized authoritative registry, his claim to it is just as good as the guy who has had a deed for it registered with another company for the last five years. (Variation--a wealthy scam artist buys a registry company with a good reputation and hijacks it for this purpose.) In any case I believe I have demonstrated that there can *easily* be conflicts between different registries, either innocent or mendacious.

I see enough difficulties here that I would be tempted to check the premise that this function is NOT so integrally a part of contract adjudication/enforcement that the government should be doing it.

BTW valid point about getting rid of "squatters' rights", also valid point: a registry ought to give an option for privacy, either by sealing the records until and unless the owner wants them unsealed, or actually issuing a bearer title (in which case the owner would assume the risk of its destruction, theft or loss).

[Grames]

The conclusion doesn't follow from the premise. It's sufficient that it be knowable whether land is owned, and completely unnecessary to know which person owns it. The fact that it's owned "by someone in particular" follows from the fact that it is owned. So all that one needs to know is that it's owned.

If your ownership is a private matter, then how can you possibly prove it should the necessity arise? Without objective proof, your legal status is no different from a squatter, and there would be no way to settle an ownership dispute other than on the basis of possession.

Ownership without an owner is every bit as nonsensical as existence without identity.

[DavidOdden]

I think you underestimate the dufosity of some people.

Unfortunately, no. But their problems are not my problems, unless of course as under the current and future regimes their failures become my responsibility to fix up.

However, I am sure that anyone taking out a loan to buy real estate would have the decision made for him by his lienholder, in much the same way that lienholders decide that you shall carry insurance.

I would certainly hope so. But I understand that 100% mortgages are or were not bizarre anomalies, so all I can say is whatever the situation, be sure to get title insurance! (There was a case in the local news recently where a guy lost a potload of money because he couldn't be bothered with title insurance, and the government's title search was just wrong). It's like not getting fire insurance for your house: why would any sane person take a risk.

It sounds to me like the question is not: would such a registry be useful, but rather should such a registry be mandatory?

It seems to me that the only things that should be mandatory (required by law) are those things that if you don't do them, you violate someone else's rights. So like fire insurance, you really should get it, and if you don't, you're not violating anyone's rights.

And another question--is such a registry so much a part-and-parcel of contracts enforcement that it's actually the government's role to do it?

If not, presumably, private entities can compete for the business.

The "(en)force" part is government business, but not everything relevant to contracts (which can be enforced) are therefore government business. When there is a contract dispute and there's some question of fact which has to be resolved to decide the case, the involved parties have to get that fact resolved. The government doesn't step in and provide the evidence. So the fact of registration is a material fact bearing on whether such-and-such is a person's property: the interested party should bring forth any and all evidence that is relevant to that conclusion, and the job of the courts is to come to a conclusion based on the evidence presented to the court -- it is not the governments job to present evidence. Registration is an evidentiary matter, which the interested parties need to take responsibility for.

A more difficult one: Lets say some scam artist starts a registry, collects a few legitimate registrations, waits a few years, then inserts some phony deed giving him ownership of the Empire State Building into the registry? Since there is no single recognized authoritative registry, his claim to it is just as good as the guy who has had a deed for it registered with another company for the last five years.

I don't know what the most efficient way to run such a business would be, which prevents such misuses. The problem of a scam-artist registry and corrupt government clerk are pretty much interchangeable in that respect. I think perhaps some clues from the realm of computer security would be applicable, since exchanges on the interwebs frequently involve the question "Are you authentic?". Insurance is part of the key, I would think. As a matter of course, a person would no doubt purchase registry-insurance that insures the authenticity of the registration. That is a warrantee of reliability issued by the insurance company (backed up with their liability) which affirms that the registration is authentic. Of course you are totally screwed if the registration company is fraudulent and the insurance company is fraudulent, but you're also totally screwed if the clerk is corrupt and the judge is corrupt.

[Zip]

It is nonsensical to me that such an unwieldy process and arrangement as the one David describes would exist.

First lets look at the idea of private registry. From the start the problem I see is that there isn't going to be 4 or 5 registries in a country of 300+ million but many many more. I'd guess you would probably get as many registries as you have insurance companies today, which Goooogle tells us is 253,486.

Governments job is to protect rights chief among which are the right to life, liberty and property. Now I realize the the governments protection does not include government legislation but in the interest of utility and in keeping with LFC system I can not think of any reason that the government couldn't ensure titles (i.e. run a property registry) in order to protect the rights of all those involved.

David spoke at length about the wish for privacy. I wonder which way would ensure that privacy better, a single registry with millions of users and the resources to ensure security, or a small privately owned registry with a handful of users and perhaps not as much to be spent on the security of the data.

What happens if your registry company goes out of business because it had perpetrated a property fraud like issuing a false title? Who is going to accept a deed from that company?

In order to sever a piece of property one would have to get a Lawyer and have it done legally. With all the proper paperwork done (title search, search for liens) a judge should be able to create 2 deeds for the severed property and then destroy the first one.

In my opinion a property registry would be a proper function of government either at national or 2nd tier level (state/province/whatever). The government control of it would also generate money that would be used to support it's other legal functions.

Food for thought: It would be entirely possible for private companies to handle the logistical and administrative functions of such a registry but I would feel much better if my title was secured by government.

[DavidOdden]

It is nonsensical to me that such an unwieldy process and arrangement as the one David describes would exist.

I think the nonsense lies in the idea that Capitalism is an impossible political system and that the free market is fundamentally unworkable, that free choice and individual responsibility for one's actions are so difficult that we need to be protected by the wisdom of government force via regulation.

First lets look at the idea of private registry. From the start the problem I see is that there isn't going to be 4 or 5 registries in a country of 300+ million but many many more. I'd guess you would probably get as many registries as you have insurance companies today, which Goooogle tells us is 253,486.

Supposing that your number is true (I think you're confused about the difference between an "insurance company" i.e. an underwriter and an "insurance agent"), shouldn't this show you that the "too many companies" argument is flawed at its core? We are not dying in the strees because insurance is a competitive business. Why would property registry be different?

Governments job is to protect rights chief among which are the right to life, liberty and property.

This is a misunderstanding of the role of government. The proper role of government is to place the use of force under objective control, for the purpose of protecting rights. It is not to "do whatever is necessary to protect rights". See "The Nature of Government" for clarification. Locks and alarm systems are useful for protecting rights; they are not government entitlements or obligations. Similarly, it is not the function of government to provide attorneys even though they are important in the protection of rights.

Now I realize the the governments protection does not include government legislation but in the interest of utility and in keeping with LFC system I can not think of any reason that the government couldn't ensure titles (i.e. run a property registry) in order to protect the rights of all those involved.

By appeal to "the interest of utility", one can also justify the government regulating pharmaceuticals or establishing a minimum wage. As to whether the government can establish an optional registry that competes with privately run ones and which individuals may patronize if they wish, the answer to that question is the same as the question whether the government can properly establish insurance companies that compete with private companies, can establish voluntary shoestores that compete with Shoes R Us, and can get into the competitive car manufacturing business.

David spoke at length about the wish for privacy. I wonder which way would ensure that privacy better, a single registry with millions of users and the resources to ensure security, or a small privately owned registry with a handful of users and perhaps not as much to be spent on the security of the data.

You're addressing a separate question. My point was simply that a person has the right to privacy, that if he does not wish to make it a matter of public record what he owns, that is his business, and that ownership is not a social fact contingent on society at large knowing that you own certain property. It's empirically clear that government incompetence is a major source of actual security breaches, so on practical grounds there are also good reasons to not have the government be in charge of property records.

What happens if your registry company goes out of business because it had perpetrated a property fraud like issuing a false title? Who is going to accept a deed from that company?

First, read my comments about title insurance. Second, answer the question who is going to clean up the mess if a government clerk is incompetent or corrupt. The point which you're failing to grasp is that this is an evidentiary question. You seem to be thinking that the government somehow actually creates and grants the property, which is absolutely the wrong way to look at it. "Property" is a fact that is independent of government action; the point of registration it to provide evidence of that fact. Well, there are lots of ways to provide evidence.

In order to sever a piece of property one would have to get a Lawyer and have it done legally.

Sorta. The same goes with making a will or writing up a contract: you have to get a lawyer and have it done legally. Or take your chances on homebrew.

It would be entirely possible for private companies to handle the logistical and administrative functions of such a registry but I would feel much better if my title was secured by government.

Why? Do you have more confidence in government bureaucracy than in private enterprise?

[Grames]

The idea of competing deed registries has the same flaw as competing police forces: it breaks down at the first conflict. A registry has no value unless it has some claim to being official and enforceable. With no mechanism to reconcile conflicts short of going to court, competing registries will actually multiply the number of conflicts and court cases. No one would ever have confidence their land claims were secure until they were successful in court.

Secret ownership works fine until you get neighbors trespassing across your plot, or squatters working your land. Then you face the choice to come out and defend your claim or walk away from it. There is no way to secretly defend your claim. At least the judge and defendant must know the plaintiffs identity, and if the case goes to trial it should be a public trial. So technically deed registration does not need to be mandatory because it is a self-enforcing requirement as needed.

While searching for examples on the internet I came across the Singapore Land Authority which has two systems in place: a voluntary deed registry covering the rural areas and a mandatory system for use inside the city.

Registration of Deeds

The Registry of Deeds, which administers the Registration of Deeds Act and its rules, keeps a record of deeds lodged against land held under the old Common Law system of land registration. Today, there are hardly any deeds lodged at the Registry of Deeds.

Under common law, interest in land is passed by the act of the parties, that is, when a deed is signed, sealed and delivered. Under the Act, it is not compulsory for owners of land to register the deeds at the Registry of Deeds.

However, most deeds are registered in the Registry of Deeds as it offers priority to a claimant under a deed as against other potential claimants to the land. Failure to register a deed under the Registry of Deeds means that it cannot be produced in a court of law as evidence of title to the land.

So if you tried to defend your secret ownership in Singapore without a title against a newly lodged claim to your land you would be in real danger of losing. The homesteading principle might help your claim if you actually occupy or work the land but if it is vacant it is probably lost. (But then, if you actually occupy or work the land what was the secret?)