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Archive for January, 2008

Evidently, the Sky Is Not Falling

Sunday, January 27th, 2008

     The Institute for Justice has just published a report concluding that availability (or non-availability) of Kelo-style economic redevelopment has no effect on economic growth. Read all about it at  http://www.ij.org/publications/other/doomsday.html   or  see  the Institute for Justice blog.

Lots of Money to Waste — No Money for Genuinely Just Compensation

Sunday, January 27th, 2008

       All experienced eminent domain lawyers know that from time to time courts offer excuses for shortchanging condemnees. If those property owners who find themselves in the path of a public project, goes the judicial lament, have to be paid  genuinely just compensation, that fairly compensates them for all their demonstrable economic losses inflicted on them by takings of their homes, farms and businesses, the construction of public projects will grind to a halt. The California Supreme Court has asserted that if compensation is provided “too liberally” an “embargo” on the creation of public projects will have to be declared. Yessiree Bob, an “embargo.” This bit of judicial nonsense has been repeated time and again by California courts without any supporting evidence.

            But in fact, there never seems to be a shortage of public funds to be blown in mind-boggling amounts on bungled public projects that either fail altogether or are so badly constructed that they cannot be used and have to be abandoned or redone. The most recent dispatch comes to us from Connecticut. A New York Times editorial of January 27, 2008 (Perestroika for Connecticut), comments on Connecticut’s bungled construction of a highway drainage system and highway widening of Interstate 84, that, according to the Times “created a traffic nightmare.” And guess what? “[W]hen everything was finished, virtually every detail was constructed wrong, rendering the highway prone to washouts and sinkholes,” and surprise, surprise, “leaving taxpayers on the hook for tens of millions of dollars.” The Times reports that the FBI is investigating. We can’t wait.

            This follows on the heels of another recent Connecticut highway fiasco, involving the I-95 in East Haven, where as of January 2006, the project was $9.5 million over budget and counting (I-95 Cost Overruns Put at $9.5 Million, NY Times, Jan. 1, 2006, Sec. 14CN, at p. 2).

            And over in Boston, the latest dispatch from that financial mega-disaster known as “The Big Dig,” (that has already swallowed some $14-plus billions as against the original estimate of $2.6 billion), is that “The two companies that managed the design and construction of the costly ‘Big Dig’ project . . . will pay more than $400 million in an agreement with the government over leaky tunnels and a fatal ceiling collapse.” Abby Goodnough, 2 Big Dig Companies to Pay $407 Million for Repairs, N.Y. Times, Jan. 24, 2008, at A13. Which, if you think about it, is chump change compared to the overruns already incurred on this project.

            And so it goes.

            So keep all that in mind next time a condemnor’s lawyer, or worse, a judge, starts going on about how we can’t provide genuinely just compensation to condemnees for all their demonstrable economic losses because – golly – we just plumb can’t afford it. Perhaps you can remind His Lordship that if the highwaymen have gazillions to waste, they surely must have enough money to pay innocent condemnees being displaced  by public works the just compensation that the Constitution promises but the courts don’t deliver.

When Is an Unenforceable Contract to Condemn, Enforceable?

Friday, January 18th, 2008

            Back in the old days, when your faithful servant was but a wet-behind-the-ears whippersnapper learning the legal ropes, the respected Associate Justice of the California Court of Appeal, Roy Gustafson, wrote to the state Law Revision Commission (which was then considering revisions in the law of eminent domain) and observed in haec verba that the law in this field is a hopeless mess and that one can find authority for any proposition in it if one looks long enough. As time went on we came to realize just how true that unkind assessment was – and still is. Case in point the recent decision of the 9th Circuit in Matsuda v. Honolulu, No. 06-15337, Jan. 14, 2008.

 

The issue was whether a city could be forced to perform its contract to condemn land for condominium dwellers under a city ordinance. At first blush you might think that the judge’s proper reaction to an action to enforce such a contract would be the line of that curmudgeonly judge on Law and Order, who asks counsel: “What kind of turnip wagon do you think I just fell off?” If there is anything in the law of eminent domain that seems (make that seemed) long and well settled, it is that a legislature may not contract away its power to exercise or not to exercise the power of eminent domain. See e.g., In re Condemnation of 110 Washington Street, 767 A.2d 1154 (Pa. Cmwlth. Ct. 2001), City of Glendale v. Superior Court, 23 Cal.Rptr.2d 305 (Cal.App. 1995). Thus, the byways of eminent domain law are littered with bleached bones of litigants who made deals with government entities not to condemn their land, only to see the folks in City Hall reneg on their promises. We even have a song for that occasion – an old vaudeville gem that goes “How could you believe me when I said ‘I love you,’ when you know I’ve been a liar all my life?” So when Honolulu made a deal with some local lessees to condemn for them their lessor’s interest in condominium units, but then changed its mind and adopted an ordinance repealing its authority to condemn for this purpose, any lawsuit by those tenants to enforce the contract would seem to be a non-starter. As the trial judge put it in Matsuda “[a} contract requiring a sovereign to exercise the power [of eminent domain] is just as limiting as a contract prohibiting it from doing so.” And just as invalid, he thought. Sounds right to us, but what do we know?

We always thought that legislatures can adopt statutes and ordinances and then repeal them, and one legislature may not tie the hands of future legislatures, nor indeed its own. And condemnation statutes, ordinances  and resolutions are legislative acts, as the courts never tire of telling us when the issue of right-to-take arises. Which is why the courts show so much deference to condemnation resolutions. So maybe when a municipality breaches its contract to buy a carload of paper clips, that breach of contract may be a proper subject of a lawsuit. But when it adopts or repeals ordinances, that would clearly seem to be legislative action beyond the reach of courts. To put it plainly, courts may not tell legislative bodies what statutes or ordinances to pass or repeal.  At least that is what our kindly old professor taught us in law school; he called it “separation of powers,” or something like that.

But the 9th Circuit thought otherwise and ruled for the plaintiffs on the theory that under the impairment of contracts clause of the Constitution this was an actionable controversy. Why? Because this contract did not actually require the city to condemn the subject property but only to use its best efforts to condemn it – a distinction that, frankly, eludes us. So read the Matsuda opinion yourself and you tell us if you can figure out how a city’s promise to use its best efforts with itself isn’t the same as its promise to condemn.

So is that all? Not on your life. Turning to the plaintiffs’ substantive due process theory, the Court also held that “we express no opinion as to whether our decision in Armendariz v. Penman, 75 F.3d 1311 (9th Cir. 1996) (en banc), precludes Lessees from asserting a substantive due process claim in this case, where the Contracts Clause provides a specific source of constitutional protection…” Say what? Wasn’t it only yesterday (November 1, 2007, to be exact) that another panel of the 9th Circuit held in Crown Point Development, Inc. v. City of Sun Valley, 2007 US Lexis 25511, 2007 WL 319704, that Armendariz was history, gone, kaput, because in Lingle v. Chevron the U.S. Supreme Court expressly disapproved the theory on which Armendariz had been based?

It will take someone smarter than us to figure it all out. All we can do now is assume the lotus position and meditate on all the money lawyers are going to make trying to unravel all that, though it also seems proper to share with our readers the wisdom of an old British appellate lawyers’ joke about an apocryphal exchange between a Lord Justice on the Court of Appeal and a barrister arguing a case:

Lord Justice: Counsel, isn’t your submission contrary to controlling law?

               Barrister: It wasn’t M’Lord, until you spoke.

 

Update: On that Armendariz business, we recomment that you read Robert Thomas’ inversecondemnation.com blog, specifically the post entitled You’re Dead, Son. Get Yourself Buried.

Playing With the Big Boys

Thursday, January 17th, 2008

We are grateful to Professor Ilya Somin of George Mason University for picking up our blog of January 9,  2008, entitled  Jeffrey Toobin, the Eminent Domain Maven, Speaks, and discussing it on the popular Volokh Conspiracy legal blog. Prof. Somin’s entire post follows as are the Volokh Conspiracy’s readers’ comments.

[Ilya Somin, January 15, 2008 at 6:04pm] Trackbacks 

Jeffrey Toobin on Kelo: Gideon Kanner points out several factual errors in Jeffrey Toobin’s discussion of Kelo v. City of New London in The Nine, his much-discussed book about the Supreme Court. Kanner is certainly right to take Toobin to task for his claims that, prior to the Supreme Court’s issuing its decision, the case “drew relatively little attention” and “hardly seemed like the stuff of high drama.” In reality, the case had already attracted extensive press coverage and dozens of amicus briefs. Toobin is even more wrong to attribute the immense public backlash against Kelo solely (or even primarily) to the machinations of “the conservative movement.” As I note in this paper, Ralph Nader, DNC Chair Howard Dean, Bill Clinton, and liberal Democratic Rep. Maxine Waters were among those who quickly denounced Kelo when it came down. The NAACP, AARP, Hispanic Alliance of Atlantic County, and the Southern Christian Leadership Conference filed a joint amicus brief in the case supporting the property owners. I myself wrote an amicus brief supporting the property owners on behalf of the late Jane Jacobs, the famous generally left of center urban development theorist. None of the above are even remotely associated with “the conservative movement.” Nor is it likely that they took the positions they did because nefarious conservatives somehow duped them into it. It is unfortunate that one of the nation’s most prominent legal journalists would make such basic errors about one of the most controversial and widely debated Supreme Court cases of the last 35 years. Eugene Volokh previously pointed out other factual errors in Toobin’s book in a series of posts back in September. It is increasingly clear that Toobin’s much-praised book is often unreliable.

31 Comments

Update: Will miracles never cease? Jeffrey Toobin has written to the Volokh Conspiracy, saying that he had learned from the commentators’ exchanges in their posts, and that he will make changes in the paperback edition of his book. So stay tuned, cross your fingers and hope for the best.

A Boy Named Hsu Kicks Ass in Vegas

Tuesday, January 15th, 2008

For sheer up-and-down drama and a great insight into how cases are decided it’s hard to beat the Nevada Supreme Court’s opinion in Hsu  v. County of Clark, No. 46461. When Clark County created a “transition zone” height limitation over Hsu’s property adjoining the McCarran Airport in Las Vegas, it effectively eliminated the land’s utility for development under its existing zoning. In the ensuing litigation, Hsu contended that the County inversely condemned an avigation easement over his land by permitting physical entry by low-flying aircraft approaching the airport. The trial court agreed with Hsu’s argument that this was a categorical taking, and awarded $12,601,618.44 as compensation, plus $7,941,564.83 in interest, plus $1,332,500 in attorneys’ fees, and $231,990.86 in costs. But on appeal, the Nevada Supreme Court reversed in an unpublished “order” (it sure looked like an opinion to us, but what do we know?), holding that au contraire, this was only a possible regulatory taking that had to be judged under the Penn Central three-factor balancing test, and – here came the real bad news for Hsu – a taking claim like that could not be pursued in court unless Hsu first applied for development entitlements and was turned down.

 

On remand, the trial court gave Hsu until January 1, 2006, to do so. Hsu sold the property instead, retaining the right to appeal the dismissal of his case. But while all this was going on two things happened: first, there was a change in the Nevada Supreme Court personnel, and second, the Court decided McCarran International Airport v. Sisolak (Nev. 2006) 137 P.3d 1110 in which it reversed itself and held that the pertinent regulation like that in the Hsu case was a per se taking after all because it involved physical invasion of the subject property by low-flying aircraft. Hsu then argued that inasmuch as his case was not yet final he too should receive the benefit of the new rule laid down in Sisolak. However morally appealing that argument, Hsu faced the obstacle of the law-of-the-case rule under which the holding in an earlier appeal is binding in later litigation in the same case, even when it is erroneous. So the issue was whether this fell within an exception to the law-of-the-case rule. The Court’s answer was “Yes.”

 

After canvassing the law in other jurisdictions, the Court held that the law-of-the-case rule is not jurisdictional and that there are three exceptions to it: (1) when subsequent proceedings in the case produce substantially new or different evidence, (2) where there has been an intervening change in the law, and (3) the prior decision was clearly erroneous. Hsu’s case qualified under the second exception. So the case was remanded for a new trial but with a twist: though the availability of administrative remedies is irrelevant in per se taking cases in the determination of liability, it is relevant to the calculation of damages (presumably because the market would consider it) so it would have to be considered on remand in the new trial.

 

Full disclosure: Michael Berger of Manatt, Phelps and Phillips and your faithful servant represented Hsu in his first appeal, and they are pleased to see their substantive arguments vindicated if only posthumously, so to speak. As the sages might put it, a win is a win.

The Great Eminent Domain Case You Never Heard About

Saturday, January 12th, 2008

            It’s that time again, and the silly season is upon us with front-page news of yet another official hegira to the Middle East in pursuit of the elusive peace. On the one hand there are the downtrodden Palestinians who in pursuit of their just cause want no more than to liquidate Israel, and kill the Israelis along with as many Americans as they can. On the other hand, for some strange reason, the Israelis  don’t fancy being killed so they tend to fight back when attacked — an activity that all progressive thinkers know to be intolerably wicked. So what does all that familiar and depressing stuff have to do with this blog on eminent domain, you ask? Good question. It seems that according to the front page of the New York Times, of January 11, 2008, President Bush has called inter alia for “compensating Palestinians and their descendants for homes they left in what is now Israel,” (emphasis added). That got our attention because it sounds like El Presidente has wandered onto our turf, and since compensation for lost property is our bag, some comment appears appropriate.

 

We hope that this won’t come as too much of a shock to  our readers, so maybe you better sit down before going on, but in spite of all the propaganda on this subject, the Israelis have already paid for those Arab homes, at least for those of them whose Arab owners would accept payment, and have for years stood ready to pay the others if they would only take the money. We understand that this is not what you have been reading in your newspaper, nor what you have seen and heard on the tube, but that’s the way it is. Since your faithful servant is well into what’s sometimes called the “golden years,” we realize that there are many younger folks out there who have not lived through these events and may think of them as history rather than as current events, so it may be a good idea to review the bidding so to speak.

 

When Israel declared its independence in 1948 it was promptly attacked by a half-dozen Arab armies plus a bunch of irregulars under the leadership of a guy named el Kawukji. The ideological godfather of this genocidal effort was Haj Amin al Husseini, the Grand Mufti of Jerusalem, who spent World War II in Germany, helping Hitler to raise SS troops from the Moslem communities in the German-occupied Balkans. Having seen that in WW II nobody lifted a finger to save the Jews from being exterminated by the Germans, good ol’ Haj Amin figured that he could do an encore in the Middle East. And so, all those attacking Arab worthies made no bones about their aim which was to “drive the Jews into the sea” as they never tired of asserting, seize their land and keep it. The strategy of the attacking Arabs was to persuade or intimidate their Arab compatriots to leave their homes and get out of the way of the advancing Arab armies, giving them a clear field of fire, the idea being that once the Jews were duly driven into the sea, those Arabs could return to their abandoned homes and seize the homes of the departed Jews as well. What a deal!

 

But it didn’t work out that way. Even before the fighting started, Arab leaders decamped for safe places outside the British-controlled Palestine Mandate territory, and the Arabs on lower socio-economic rungs of their ladder figured out that they had been abandoned by their betters, so many of them  sensibly responded to the Arab Higher Committee’s threats and importunings and split too. But as you know, in spite of their inferior armaments and lack of modern armor and artillery, the Israelis kicked ass. With the exception of the British-led, British-armed and British-financed Transjordanian Arab Legion which captured and hung on to Judea and Samaria (which became known in the press as “the West Bank,”) the Arab armies skedaddled in large numbers. That left high and dry those unfortunate Arabs who listened to their leaders and left their homes, only to be left homeless and herded by their own compatriots into wretched refugee camps.

 

But all those heady military deeds of derring-do left Israel with a problem: what to do with the Arab properties whose erstwhile owners fled, leaving their homes behind? To deal with this problem, in 1950 Israel established an office of Custodian of Absentee Property, who took charge and under the terms of the Israeli law would return possession of those abandoned properties to any Arab owner who presented evidence of ownership. Many Arabs regained their land in this fashion. Later, under the Israeli Land Acquisition (Validation and Compensation) Law of 1953, the unclaimed Arab land was acquired by eminent domain and its record owners were paid its fair market value with interest, or at least, the money was made available to those of them who would take it. But many Arabs refused to accept their compensation. Why? Some took the extremist position that any dealings with Israel implied its recognition and they would have none of that, or they were intimidated into inaction by Arab extremists’ threats of violence. Remember that it is Arab law (including the law of our Glorious Ally, Jordan), that selling land to a Jew is a capital offense.

 

But in spite of the Arab extremists’ threats, by 1994 some 14,692 absentee Arab land owners claimed their compensation, and settlements were reached as to 200,905 dunams of land (a dunam is about 0.25 acre). A total of 9,956,828 shekels (approximately $2,457,000) was paid as compensation. In addition, 54,482 dunams of land were granted to Arab farmers as a substitute for their cultivated land – a measure of compensation that is more generous than what is available here in the good ol’ U.S. of A. If these acreages seem modest to you, remember that we are not dealing here with endless Nebraska ag land – this is the arid, barren Middle East where cultivated land comes in much smaller tracts than what we are accustomed to, and where the whole shebang could probably fit into San Bernardino County..

 

The problem was complicated (and still is) because under Ottoman Turkish, British, Jordanian and Israeli law some of the land in question was so-called miri land, a type of state-owned land on which some Arab claimants had been squatting without complying with local law and perfecting title.

 

No doubt, what happened to those Arabs who naively followed the bad counsel of their leaders was a tragedy that war brings. But in this case the war was started by the Arabs’ 1948 attempt to destroy Israel and exterminate its people. So the tragedy that befell so many of them was self-inflicted — a harsh case of just deserts.

 

To hark back to the beginning of this post, we don’t know what President Bush was thinking when he called for “compensating Palestinians for homes they left in what is now Israel,” Under U.S. law the government goes into conniption fits at the very mention of double compensation in eminent domain cases, so why plump for it over there? But the President must have meant something, even though the nature of that something is a mystery to us. If any of our readers know what the Pres was talking about, by all means let us know.

 

Oh, we almost forgot. At the time these things happened, some 800,000 Jews had their property seized without cause, and were driven out of Arab countries. But we don’t see anything in the New York Times abour President Bush urging compensation of these folks by their Arab tormentors. We wonder why. Maybe it’s just a manifestation of what Arab apologists like to call “even handed treatment” of the parties to that conflict.

A $172,000 Offer — A $26.8 Million Verdict in San Diego

Wednesday, January 9th, 2008

On Christmas Eve we blogged about a case in San Diego in which the State took a parcel located on Otay Mesa and got hit with a circa $26 million verdict. We now have some more details on that case, People ex rel. Dept. of Transportation vs. Anderson Enterprises (Anderprises).

The subject property was a pan-shaped, 58-acre tract of land with access through a road abutting the panhandle. The taking was of 2.86 acres, but — wouldn’t you know it? — the take area was over the panhandle, leaving the 54-acre remainder physically landlocked. The operative word is “physically” because CalTrans argued that there was alternative access. The owners countered by pointing out that this “access” was a so-called paper street, i.e., one existing on planning maps only, and not usable for actual access to the remainder. Also, inasmuch as CalTrans had announced its intention to take the subject property many years ago, and the apparent imminence of this taking delayed the owners’ execution of their development plans, the owners also had a so-called Klopping claim (after Klopping v. City of Whittier, 8 Cal.3d 39 (1972), allowing compensation for damages caused by unreasonable pre-condemnation delays or other unreasonable conduct on the part of the condemnor).

The jury brought in a verdict of $1.2 million for the taken land, $20.5 million in severance damages for impairmet of access resulting from the landlocking of the remainder, and $5.1 million in Klopping damages. All this on CalTrans’ offer of $172,000. We anticipate an appeal by CalTrans, so stay tuned on this one.

We reserve final judgment on what happened here until we learn more details, but on these basic facts and figures this appears to be another one of those cases where a condemning agency goes into litigational battle expecting its hopes to  triumph over reality.

 Update: For a report on this case, see Gabe Friedman, Landowners Win $26.5 Million In State Eminent Domain Case, San Francisco Daily Journal,  Jan.4, 2008, P. 1.

Jeffrey Toobin, the Eminent Domain Maven, Speaks

Wednesday, January 9th, 2008

            We perused Jeffrey Toobin’s new book, THE NINE: Inside the Secret World of the Supreme Court (Doubleday 2007), and took a look at his depiction of Kelo v. New London, appearing at 306-308. Guess what? According to Toobin, at the time of oral argument Kelo “drew relatively little attention” and it “hardly seemed like the stuff of high drama.” Really? But if that was so why did the Court grant certiorari in such a no-big-deal case only to affirm the lower court? More important, why did the Court split 5 to 4 in one of the most contentious judicial disagreements in history? Do you suppose Toobin could be wrong on that one? He could and he is.

In fact, the Kelo argument attracted a great deal of attention, coming as it did on the heels of a revived interest by the state supreme courts in abuses of the “public use” constitutional limitation in takings of private property for private gain in redevelopment cases. Kelo was one of the best attended U.S. Supreme Court oral arguments. We are told by eyewitnesses that the line in front of the Supreme Court building started forming the day before and by the morning of argument extended past the Library of Congress to the end of the block. Tickets were in such short supply that even some of the Kelo plaintiffs had problems getting in. Your faithful servant had the same problem, and even though representing one of the amici curiae in the case, had to make special arrangements with the Court’s Marshal, only to be laid low by a health problem that put the kibosh on his trip to Washington. Moreover, at the end of the Kelo argument a mob of spectators stood up and left the courtroom. It seems to us that even if you were from Mars, taking all that in might have suggested that this was no ordinary case.

So how does Toobin explain the country’s vigorous reaction to this supposedly ho-hum controversy? It was the doing of “the conservative movement,” that’s how. It was the likes of Tom DeLay and John Cornyn, and their ilk, says Toobin, that stirred up trouble after the Kelo opinion came down. What utter nonsense! Remarkably, Toobin fails to mention that the likes of the ACLU and the NAACP had filed amicus curiae briefs solidly on Suzette Kelo’s side. Some conservatives. 

Putting aside Toobin’s absurd depiction of reality, he also reveals his ignorance of the basics of eminent domain law by stating that Kelo was no big deal because the Court found “previously that government could use eminent domain powers to transfer land to private parties – to railroads, for example.” What he does not seem to understand is that the Constitution only requires that the use be public, not the user. Private individuals and entities may freely wield the power of eminent domain for legislatively specified purposes. That includes not only highly regulated railroads, telephone companies and public utilities (which dedicate their facilities to public use and whose services may be used by all members of the public) but extends also to ordinary citizens who want to condemn an access road or a utility easement to their landlocked land (see e.g., Calif. Civil Code § 1001, Linggi v. Garovotti, 286 P.2d 15 (Cal. 1955)). We hope it won’t be a shock to Mr. Toobin to learn that he too possesses the power of eminent domain, provided he exercises it for legislatively specified public uses, and that his status as a private individual has nothing to do with that.

We also note Toobin’s report that responding to the tidal wave of public anger that followed the Kelo decision, Justice Breyer “despaired at the drubbing the Court was taking” and “took every opportunity to point out that the [Kelo] decision did not order any local government to buy land but only permitted the practice under limited circumstances.” Though we disagree with Justice Breyer’s decision, we hold him in high regard as a conspicuously intelligent individual and we have trouble believing Toobin that Justice Breyer offered so silly a justification. The Supreme Court certainly did not order Louisiana to institute Jim Crow laws in Plessy v. Ferguson, nor did it order the U.S. Army to imprison innocent Japanese-Americans in World War II when it decided the infamous Korematsu case. So what? The Court’s imprimatur on these shameful and plainly unconstitutional government acts was plenty bad enough. Even though it was the government litigants rather than the Court that were the actors in these outrages, that doesn’t change the fact that the Court validated and de facto endorsed them. Ditto in Kelo. 

Finally, we cannot let Toobin get away with asserting that in the Kelo case, New London set out “to buy” Suzette Kelo’s land. Wrong. It was not a purchase – it was a condemnation, a forceful seizure of her home. If Toobin does not understand the difference between these two modes of government actions – purchase and seizure — he probably doesn’t understand the difference between seduction and rape either.


The purpose of this blog is to provide a forum for people, whether eminent domain professionals or not, for exchange of ideas and a discussion of eminent domain news and issues. It does not provide legal advice. Questions concerning actual cases should be directed to the readers' own legal, appraisal and real estate advisers.

We reserve the right to delete comments that in our judgment are abusive or otherwise inappropriate, or that digress from the topics that are the subject of this blog.