Diminution In Value Research Articles

Penn Central 2.0

A transferable development right or “TDR” refers to the air space above a zoning lot that can be sold to neighboring landowners who seek to build structures that exceed the maximum height permitted by zoning. Until recently, if a developer in Midtown Manhattan required TDRs, he or she needed to acquire them from a landmark building. The city originally intended this scheme to benefit landmark owners, whose properties are regulated from utilizing the full envelope of their air space. However, in 2015 New York City amended its Zoning Resolution to allow developers to build higher in exchange for providing public amenities—without having to purchase TDRs from anyone. This type of “zoning bonus” may significantly impair TDR values. Yet development bonuses often generate needed infrastructure, and whether TDRs merit the same degree of constitutional protection as land remains unclear. This Note engages in the first sustained analysis of TDRs as the principal subject of a regulatory taking by examining whether a regulation that diminishes the value of TDRs, as opposed to the underlying fee estate in land, constitutes a taking. Specifically, this Note uses Grand Central Terminal’s current claim against the City of New York as a lens through which to examine this issue. It then advances a framework by which to analyze the future generation of cases involving the diminution in value of TDRs. This Note concludes that while the position of Grand Central’s owner is not constitutionally protected, viable policy arguments exist for municipalities to provide incentives that support a robust TDR market.

What does it mean to suffer loss?HaxtonvPhilips Electronics

In Haxton v Philips Electronics the Court of Appeal considered whether a widow could recover the diminution in value of her dependency claim following the defendant's tortious reduction of her life expectancy. The note outlines the development of the common law, demonstrating that Haxton is novel but not unorthodox, and tests whether Haxton's principles can provide a sound foundation for future cases. Positing three hypothetical scenarios, it argues that the disparity in outcome, rather than indicating a lack of unifying principle, as was suggested in Jobling v Associated Dairies, may be explained by combining Austin's division between primary and secondary rights with Gardner and Stevens' contributions as to how they are protected. Restitutio in integrum requires consideration of the reasons and values underlying the right in question and these are discernible in the jurisprudence. The note also considers whether Haxton could have been decided on the basis that a defendant should not profit from its own wrongdoing.

Real Estate Markets Are Informationally Efficient: Evidence from Buyer and Agent/Broker Surveys

This article presents new evidence based on unpublished buyer surveys and real estate agent and broker surveys supporting the consensus in the published literature that real estate markets are informationally efficient. This evidence is drawn from expert reports submitted in litigation involving claims that contamination caused property value diminution, and presents a new hedonic regression model of residential sales prices that includes as an independent variable the state of knowledge of the buyer regarding a contamination event. In this model the state of knowledge of the buyer has no statistically significant effect on the sales price. The article also discusses standards for the use of buyer and agent/broker surveys in litigation.

Breaking the Deadlock through Law & Economics: How Can We Reconcile the Effectiveness of the French Law of Security Interests with French Insolvency Law?

The aim of this article is to demonstrate that: • security interests are an advantage for secured creditors and, rather than being disadvantageous to the borrower, they are disadvantageous to other, unsecured creditors of the business; • French law of security interests can facilitate companies' access to credit (and thereby be effective) provided that the security interests of secured creditors survive the commencement of insolvency proceedings (procedure collective - a type of insolvency proceeding under French law which places the operation of the business under judicial control, gathers all of the creditors together and prevents them from bringing individual claims against the defaulting entity) against the debtor and therefore are resistant to the claims of other creditors during insolvency proceedings; • respecting the rights of secured creditors means that : - secured creditors are not treated less favourably during a rescue procedure of a debtor (that is to say, either a safeguard procedure - procedure de sauvegarde - or receivership - redressement judiciaire -) than if they had been in a position to enforce their security, which means that a rescue procedure is only justified if it allows greater value to be preserved than a legal liquidation procedure (liquidation judiciaire) which would force the business to cease trading; and - the preferential rights of secured creditors in relation to other creditors is actually respected during a rescue procedure; that is to say that shareholders and unsecured creditors absorb the losses of the business which is the subject of the rescue procedure before secured creditors. This means that such secured creditors must not be affected by insolvency proceedings while the shareholders and unsecured creditors retain any right and/or interest in the company (provided that the value of the encumbered assets remains greater than the sum of the debt owed to the secured creditors); • therefore: - for the purposes of approving the reorganisation plan, secured creditors should not sit in the same creditor committees as unsecured creditors (contrary to the provisions of French insolvency law); and - the French legislature must ensure that the sum of the privileges are not so sizeable that they drain the rights of secured creditors of all substance. It is only on these conditions that the dual pursuit of the effectiveness of the law of security interests and the ex ante effectiveness of insolvency law becomes viable in such a way as to make it easier for businesses to access credit; and • provided that judicial institutions are sufficiently modernised, it is entirely possible and is in the best interests of society to reconcile the pursuit of ex post effectiveness in insolvency law – that is to say preserving the debtor’s pool of assets by preventing secured creditors from enforcing their security rights during the insolvency proceedings when such measure would lead to a diminution in value of the assets - with the pursuit of effectiveness in the law of security interests. The French version of this article was previously published in the Revue Trimestrielle de Droit Financier - Corporate Finance and Capital Markets Law Review, n°4-2013/n°1-2014 under the title “Sortir de l'impasse grâce a l'analyse economique du droit: Comment rendre a la fois le droit des suretes reelles et le droit des entreprises en difficulte efficaces?”.

Do Survey Results Systematically Differ from Hedonic Regression Results? Evidence from a Residential Property Meta-Analysis

In this paper, we evaluate the effect of environmental contamination situations on residential property values. Using the meta-analysis technique, conclusions are drawn about the effect of location, type of study conducted, empirical technique used, and economic conditions on various outcomes. Using observations extracted from 40 peer-reviewed articles, meta-regression analysis is used to identify the factors that explain variation in marginal willingness to pay for environmental amenities and disamenities as a percentage of the average unimpaired value of local residential properties. Our findings suggest that relatively similar property value diminution conclusions are obtained regardless of the methodological approach employed. Additionally, we find no evidence of ‘‘publication bias’’ in our results.

Stigma Damages and Diminution of Property Claims in Environmental Class Actions

One of the less documented effects of the 2008 U.S. housing collapse has been the rise in lawsuits seeking to recover damages for diminution of value and stigma to property. Many of these suits involve properties with little to no actual “diminished” value and simply look to collect on homes that are “underwater” or less valuable due to the depressed market, unrelated to perceived, alleged environmental conditions. While some of these claims have come in the form of condemnation, lost rent, and lost rental opportunity actions, this article focuses on a particularly dangerous variety: local and regional class actions based on actual or threatened environmental contamination. The article notes that these mass attacks pose an especially high threat of costly litigation and unjust outcomes for defendants and recommends strategies for effectively defending them in precertification discovery. The article also undertakes an elemental analysis of federal class certification requirements and explores the recoverability of environmental stigma damages.

Impact of HVOTLs on Residential Property Rental Values in High-Brow Lagos Metropolis

High Voltage Overhead Transmission Lines (HVOTLs) otherwise refered to as power-lines have been debated to facilitate property value diminution. This current study investigates the impact of power-lines on the rents of residential properties in high brow Lagos. Questionnaires were distributed to registered Estate Surveying firms, residents within 200m to power-lines in Surulere area of Lagos while an indepth interview of the Manager and field officers of the Akangba PHCN sub-station was conducted. On the average, a response rate of 66.5% was recorded. Findings revealed that residential property rents increased as distance from power-lines increased averagely by =N=5,000.00 and a mean value impact of =N=786 on neighbourhood rental value.The study encouraged the use of buried armour cables instead of overhead power-lines in future and the strict enforcement of ROWs within Lagos metropolis where power-lines already exist, in a bid to abate the effect of power line on property investments.Keywords: HVOTLs, Power-line, Residential, Property, Rental Value, Surulere, Lagos and Metropolis.

A meta‐analysis of the effect of environmental contamination on non‐residential real estate values

Purpose – This paper seeks to reduce the lack of quantitative research by addressing diminution in value to non‐residential property resulting from environmental contamination.Design/methodology/approach – This meta‐analysis extracts data from approximately a dozen peer‐reviewed articles and 100 case studies from real estate appraisers in the USA. A dataset containing 106 contaminated non‐residential observations is examined using Regression (OLS). Forward (stepwise) and backward selection was performed. The dependent variable included percentage loss and dollar amount. The independent variables were contamination type, US region, land use type, distance from the source (mostly contaminated subjects), passage of time, year, urban or rural, market conditions, litigation, and indemnification.Findings – The model adjusted R squares range from 37 percent to 66 percent. Approximately a third of cases had no loss. This research used petroleum case studies as the reference category for comparison with other type...

Calculating the cost of overheads: the real impact of HVOTLs on house price

PurposeThe purpose of this paper is to establish whether or not asking price can provide a reliable indication of the impact of a negative externality when transaction data are scarce.Design/methodology/approachUntil recently, transaction data within the UK were either unobtainable or expensive. Subsequently, an analysis of the value impacts of living near negative externalities (such as high voltage overhead power lines (HVOTL)) relies almost entirely on valuer expertise. Since behavioural research suggests that valuers often anchor to asking price which, in theory, is based on the selling agent's opinion of the likely transaction value of a property, the argument is made that “asking price” provides a reliable indication of the impact of a negative externality when transaction data are scarce. This theory is tested through an analysis of the real versus perceived impacts of an HVOTL on proximate house prices.FindingsThe results, whilst providing additional evidence to support the relationship between value diminution and the presence of an HVOTL near residential homes, suggest that agents' marketing price does not capture the true impact of this type of negative externality and should therefore be treated with caution by practitioners seeking to establish the value of this type of property.Originality/valueThe results of this article add additional evidence to support the findings from previous studies in this field.

ASSESSMENT OF DAMAGES: SOME CASE LAW

Summary Two historical documents are referred to, the first involving an extensive review of case history on the assessment of damages, by the House of Lords (1995) in the cases of Ruxley v Forsyth and Laddingford Enclosures Ltd v Forsyth, and the other being an appeal in the case of Bryant v Macklin (2005). The crux of the matter, as summarised by the Lords in 1995, is that “where the expenditure was out of all proportion to the benefit to be obtained, the appropriate measure of damages was not the cost of reinstatement but the diminution in value…even if that would result in a nominal award”. This has implications for the methods used to assess the amount of damages as a result of accidental or deliberate damage to trees.

Evaluating the effects of blacklisting on residential property prices in Hong Kong

PurposeThe purpose of this paper is to empirically examine whether public knowledge of poor conditions of multi‐storey residential buildings affected the sale prices of these properties based on an analysis of panel data in Hong Kong.Design/methodology/approachPrevious studies suggested that physical conditions of residential properties, particularly those concerning communal areas and services, might not be fully priced by the market because of the problem of information asymmetry. Therefore, it was envisaged that additional information pumped into the housing market could alter the price gradient between high‐quality and low‐quality properties. In November 2000, the Hong Kong Government publicly announced a list of poorly‐performing buildings, and this study aims to examine whether the blacklisting exercise brought about negative impacts on the sale prices of the affected properties. Hedonic price analysis was conducted on a set of panel data which consists of property transactions in both blacklisted and non‐blacklisted buildings.FindingsThe analysis results showed that properties in blacklisted buildings were not transacted at a discount, compared with those in non‐blacklisted buildings before the blacklisting exercise. Also, the release of public information on the blacklist did not create a relative diminution of the property prices of the blacklisted buildings.Research limitations/implicationsThin property transactions in derelict buildings limited the number of observations for running the regression analysis.Practical implicationsThe piecemeal blacklisting exercise could not create price differential in the housing market, and thus it was not possible for the Hong Kong Government to lure homeowners to invest in their properties by market forces. The government should consider the implementation of a territory‐wide building classification scheme or other alternatives to solve the problems of building disrepair.Originality/valueThis study is the first attempt to empirically investigate the value diminution effects of the government's blacklisting against dilapidation buildings.

Section 18 valuations: Wisdom or witchcraft?

This paper seeks to investigate the impact of Section 18 of the Landlord and Tenant Act 1927 in settlement of dilapidation disputes. This is seen as a developing issue, in current economic conditions. The paper looks at the two limbs of Section 18, and offers practical advice to valuers on preparation of Section 18 valuations. By close analysis of the second limb followed by the first limb, the impact of the terms of the Act upon diminution in value used as a defence by tenants against landlord claims under dilapidations can be identified. This paper recognises that preparation of Section 18 valuations is a practical rather than a theoretical exercise and seeks to offer practical advice based upon the author's extensive experience of undertaking such work. The work is, however, mindful of the potential for litigation following such disputes and the role of the valuer in such an event.

Evidence of the Dual Nature of Property Value Recovery Following Environmental Remediation

The literature on home value diminution attributable to environmental degradation and its possible reversal typically ignores indirect effects upon neighborhood characteristics that can exacerbate the overall change in property values, resulting in underestimates of diminution and overestimates of recovery. Furthermore, to the extent that direct price effects and neighborhood transition effects respond differently to remediation efforts, the relatively new postremediation literature misses an important part of the recovery process. This study examines both direct and indirect effects and finds in the case of Houston Environmental Protection Agency Superfund sites that, while the direct value impacts of proximity to toxic waste sites was significantly reduced after remediation, the indirect effects associated with induced demographic changes were much slower to reverse, producing a housing market inertia that stifled full home value recovery.

Hadacheck v. Sebastian

This short encyclopedia entry discusses Hadacheck v. Sebastian and its relevance to contemporary regulatory takings jurisprudence. The entry describes the Hadacheck litigation and the treatment of Hadacheck in the Supreme Court's more recent regulatory takings cases. It notes four reasons why caution should be used before applying Hadacheck to contemporary regulatory takings issues: (1) the case is ambiguous about the diminution in value actually suffered by the plaintiff; (2) Hadacheck was decided before Pennsylvania Coal v. Mahon, which arguably marked a shift in regulatory takings law; (3) the Court's holding in Lucas v. South Carolina Coastal Council that a total diminution in value is a per se taking undercuts one possible reading of Hadacheck; and (4) that the Court's recent decision in Lingle v. Chevron suggests that the substantive due process analysis in early cases like Hadacheck should not be a part of the regulatory takings analysis.

BARRING RECOVERY FOR DIMINUTION IN VALUE OF SHARES ON THE REFLECTIVE LOSS PRINCIPLE

The question of whether a shareholder may bring a personal action to recover diminution in value of his shares as a result of a wrong committed by the defendant against the company appears to be settled by the House of Lords in Johnson v. Gore Wood & Co. (to be referred to as the Johnson case). The facts may be stated briefly. Gore Wood, a firm of solicitors, had acted for Johnson's company, in which he owned almost entirely all the shares. The solicitors were alleged to have acted negligently when they failed to exercise an option to purchase a piece of land for Johnson's company. The solicitors then settled a suit brought by the company. After the settlement, Johnson sued the solicitors, arguing that they also owed a duty to him personally. As some of the losses claimed by Johnson were also losses which the company suffered and which had been settled, the solicitors applied to strike out those claims on the ground that they were “reflective losses”. The House of Lords struck out those claims which were reflective losses, namely, claims for diminution in value of his shares and reduction in dividend stream, but allowed other claims to go to trial. The concern of this article is with a shareholder's personal claim for diminution in value of shares.

Regulatory Takings and the Diminution of Value: An Empirical Analysis of Takings and Givings

A hedonic model is used to measure the change in value of residential lots in Rockport, Texas, resulting from Section 404 of the U.S. Clean Water Act. Results show that average lot values initially decreased, went through a six-year adjustment period, and then stabilized on a higher price path resulting in a positive net effect on average lot values throughout the Rockport area (with the exception of a particular subdivision). The results indicate that Section 404 generated both regulatory “takings” and “givings,” suggesting that both effects should be considered when assessing the benefits and costs of regulatory events and compensation claims.

PECULIARITIES OF MORGAGE VALUATION

Valuation for mortgage purposes is a very important part of the work of a surveyor in general practice. The property is valued at the date of inspection, but bearing in the future ‐ will the value be maintained and easily realizable. This work considers the important aspects of the approach to such valuation and the factors witch the valuer should take into account. In UK open market valuers use value as the basics of mortgage valuation, but possible diminution of value cannot be ignored. A valuer must inform the lender about special circumstances and the risk and duty of care, of the prospective purchase, which may base his decision to purchase on the valuer's report. In Germany the lending value is always established on the basis of real value (cost approach and income approach) (.dual pillar principle.), with both values being calculated independently of each other (control function). Depending on the type of property, the Mortgage Lending Value (MLV) will as a rule be derived through cost‐ or the income approach. Mortgage Lending Value, provaided by the European Group of Valuers. Associations (TEGoVA) and the International Valuation Standards Committee (IVSC) are not strongly defined and it is necessary to rate criteria for the determination of the risk profile of property.

Peculiarities of morgage valuation

Abstract Valuation for mortgage purposes is a very important part of the work of a surveyor in general practice. The property is valued at the date of inspection, but bearing in the future ‐ will the value be maintained and easily realizable. This work considers the important aspects of the approach to such valuation and the factors witch the valuer should take into account. In UK open market valuers use value as the basics of mortgage valuation, but possible diminution of value cannot be ignored. A valuer must inform the lender about special circumstances and the risk and duty of care, of the prospective purchase, which may base his decision to purchase on the valuer's report. In Germany the lending value is always established on the basis of real value (cost approach and income approach) (.dual pillar principle.), with both values being calculated independently of each other (control function). Depending on the type of property, the Mortgage Lending Value (MLV) will as a rule be derived through cost‐ or...

Neighborhood Effects and Compensation for Property Value Diminution

This paper analyzes the legal issues surrounding defendants’ liability for property value diminution caused by stigma from environmental contamination. The courts, law review articles, and public policy analyses are in disagreement over how to handle stigma damages. This paper argues that a reasonable risk of contamination is not required for a nuisance claim if community effects, which were caused by the contamination, are present. The authors then turn to issues regarding the level of damages and propose a methodology for measuring compensation that is based on a guaranteed sales price. This methodology is applied to the RSR smelter in Dallas, Texas.

Givings, Takings, and the Fallacy of Forward-looking Costs

Mr. Sidak and Professor Spulber extend here the analysis in Deregulatory Takings and Breach of the Regulatory Contract, published last year in this Review. They respond to comments and criticisms raised not only by Professors Baumol and Merrill, but also by Judge Williams and Professor Williamson in their Comments published last year. Sidak and Spulber begin by exploring the constitutional limitations on the government's ability to redefine the public purpose to which a regulated utility has dedicated its private property. Then, the authors examine whether the government has made givings that implicitly compensate the regulated firm for its diminution in value owing to the imposition of policies mandating network unbundling at regulated prices. Sidak and Spulber refine the limiting principles for the recovery of stranded costs that they articulated in their earlier article and show how those principles reconcile with the actual treatment of losses from deregulation in disparate industries. Next, they expose the economic fallacies in the notion of forward-looking costs as that term has been used by the Federal Communications Commission and state public utility commissions to set prices for mandatory network access under the Telecommunications Act of 1996. The authors analyze the Supreme Courts 1996 decision in United States v. Winstar Corp. and argue that the reasoning employed by seven Justices in that case comports not only with earlier decisions of the Court construing the regulatory contract with public utilities, but also with the contemporary economic analysis of why the regulatory contract is essential and efficient. Sidak and Spulber explain how transition bonds may solve the stranded cost conundrum in the telecommunications and electric power industries by permitting the securitization of stranded costs in a manner that restores investors' faith in the state's ability to make credible commitments. Finally, the authors examine the significance of the Eighth Circuit's 1997 decision in Iowa Utilities Board v. FCC for the debate over deregulatory takings and breach of the regulatory contract.