Monday, June 30, 2008

Keepin' It Real (Property)

If you've been down with KAR for any amount of time, you know that I'm a real property law geek. That is to say: I'm a geek of real property law, not that I'm a real geek when it comes to -

Eh, you get my meaning.

Anyway, I love it. Mainly because a lot of what you do today surrounding the buying or selling of real estate can be traced back to colorful or cataclysmic events in both the near or ancient past. Sometimes these things are amusing or trite, other times, mortifying. But usually interesting.

Look at all the steps that go into a land transaction today. First, you need a purchase agreement. The PA is often riddled with riders. You should never sign one without an inspection rider. Currently own a house? Better have a contingency rider. Financing? Well, duh, moneybags, better put in there a rider that leaves you an out in case your bank runs screaming away. New home subject to an association? It's a good idea to have a look at the bylaws and covenants, and leave yourself an out there too, just in case you had plans of painting your new house a yet-undiscovered-by-science shade of hot pink.

Then you have The Closing. At a date predetermined in the PA, you finally get to meet the slobs you're buying from. You sign all manner of disclosure paperwork, get the abstract and/or title insurance - a product that itself can be traced back to the Great Chicago Fire (Why was the fire so great? Because it burned down Chicago!), execute the financing and the deed (full warranty deed, thank you), the buyer signs the mortgage and note, and then finally the keys slide across the table. From there it's on to the new home, where you spend the next day or 3 moving your shit into the house, eventually pulling a muscle in your back so badly, that for the next three weeks it hurts to poop; but that's OK, - you have no place to do it anyway since your last act before your injury was a convulsive lurch that deposited your 500 pound barca lounger right in front of the bathroom doorway.

If you're also selling you own home, you get to do this twice.

So, if you've ever closed on a home, you already know that it's a huge, paperwork-heavy plastic hassle, where everything -EVERYTHING - is meticulously documented.

And we've been doing it this way for centuries.

Back in Ye Olde Medieval England, the landed gentry also performed a closing ceremony upon the conveyance of land. It was much more elaborate, if not as paperwork-heavy. That's the way it had to be, since the Cuban Education System had yet to be invented, so pretty much everyone was illiterate. Therefore, since a transaction couldn't be written down (and if it was, it would still have been of little use to the vast majority of illiterates) there needed to be an elaborate and memorable to-do with lots and lots of witnesses.

So this is what they did. First, the buyer, seller and all the gathered witnesses, walked the perimeter of the land about to be conveyed three times. Then, the seller, with all the gravity and pomp that could be mustered in such a situation, would present the purchaser a clod of dirt from the land, formally conveying all interest to the property. If there was a key, that would be presented in lieu of the dirt.

Oh, but that's not the interesting part.

Now sure, walking around in circles and watching some guy give some other guy a clod of dirt may be memorable good-time hootenanny for some. Unfortunately, those also tend to be the sort of people who could never be reached in their caves should their memories of the transaction be necessary to resolve some future dispute relating to the land's title. So they needed one guy present at the closing who would have a most unique experience that this person would never forget it. And the younger the better - someone who'll be around for years should any disputes arise in the more distant future.

Thus, the English created the most awesome closing tradition that was known as "birching the boy".

No, Ryan, there was no masturbating. Though "birching the boy" might be an excellent euphemism for that. What BTB entailed was closer to the ordeal modern real estate closers encounter. One of the assembled witnesses gathered would be a young boy, maybe about 14 years old. After the clod o' dirt changed hands, all assembled would turn on the boy and beat the living shit out of him. After that, the same boy would then be the guest of honor at a large feast, likely the greatest shindig of his life.

The boy would not forget that. The purchaser's title in the land was likely safe from claim jumpers for so long as the boy lived.

So what's the point? Why do we have these elaborate customs, practices and documentation surrounding real estate?

Because land tends to be expensive? Well, yeah there's that.

But Hummers are expensive too. Why is purchasing a car that much less of a hassle than buying land? Or a yacht for that matter?

It's because of the nature of land. Real estate is finite and is the least fungible thing on the planet. No two parcels are the same, and there are only so many places to build. The English knew this in 1100, and it's carried forward to this day. Before Clear Title statutes (mandating that any clouds occurring 60 or so years prior to present day are automatically extinguished) and abstracts, land titles were searched back to the original patent from the U.S. government. We take this stuff seriously. And we go through all that hassle up to and at closings to make sure that that parcel we bought will be OURS with no other claims on it, because it's that precious.

It helps to remember that when you hear some ignorant dingbats shrieking about some coming "housing collapse" portending doom in the year of a presidential election. The amount of buildable land will remain constant, even as the population grows.


/geek off

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