It costs like 1/2 of a percent of the property value.

That is how YOU pay because of shenanigans like in this article.

Well, very long faces all around the table. Title insurances pretty much have a monopoly in California -- they do most of the title transfers (which they charge for) and refuse to do so if you don't buy insurance from them.

I read up on it and technically I can transfer title without them, and should have no trouble finding a lawyer to help me...but all the folks involved live locally and it doesn't pay to piss them off (I later bought more property around town). So...I paid.

In the USA and most developed countries, we already do have a "proof of a chain of ownership". And, we've had it for hundreds of years. For example, the title deeds and transfer of title documents saved at the county courthouse.

The issue is whether the so-called "proof" is : authentic or forged, and/or conflicting with other prior claims. (E.g, is the title transfer document faked? Are the signatures from the real owners? Was the previous person who transferred the title the actual rightful owner?)

Ultimately, "proof" of ownership is a social consensus that sorts out the claims and converges on agreement of who owns what. (I made a previous comment about this.[1])

You might notice that "proof" is recursive: if we "prove" that the "proof" was valid, how do we know that proof is valid? Well, things like "title insurance" and/or a court case with a judge/jury to render a final judgement is the process to break that infinite cycle of "proof of proofs".

[1] https://news.ycombinator.com/item?id=14553867

My deeds, dating back to 1949, no longer exist. They were shredded by Nationwide. I have a certified copy but they are considered of academic interest and 'proof of ownership' is now recorded by a database row. Which is terrifying, as a simple clerical error or a system failure could ruin so many lives.

If proof is electronic, you have no recourse if computer error causes a dispute, since you do not hold any proof yourself to present as evidence!

Between tax and debt liens, fuzzy property boundaries, overlapping property addresses (there are two different pieces of property that use my address, only one of which I own) there are all sorts of weirdnesses that can result in uncertainty.

(Disclaimer: not in real estate at all, so I'd imagine I'm just scraping the surface of oddities.)

Without this principle, no ownership would ever be clear because there would always be the possibility that someone could show up later on and prove they're the real owner. It basically says that, after some point, the status quo rules.

[0] https://en.wikipedia.org/wiki/Adverse_possession

That's what the insurance is for. Even with the technology the insurance would still exist because it's silly not to buy the insurance. You are protected if the title company screws up with title insurance. In the future insurance would protect you from the "title chain" having bad data.

However, mistakes or fraud can happen. Surveys can be wrong and not noticed. Someone can steal someone’s identity.

Basically because the relevant governments are too incompetent to organize that, and/or are lobbied by title insurance companies to perpetuate the status quo.

I bring this up because it highlights an underlying trend shared between the article and my anecdote: fraud conducted in supply/demand markets hurts buyers and generally legal participants.

Even if your deal is 100% legal and proper, the supply/demand dynamics have been altered by those committing the fraud and you're getting screwed.

Eric Trump had used two anonymous LLCs to buy properties from his father's LLC for far below market rate. He was going to combine the units with another he already owned which actually made them more valuable than simple comps suggested. There were several opportunities to disclose the related party / family transaction but they both affirmed that it was at arm's length in the paperwork that they signed.

Propublica & The WaPo both published articles but I wasn't sure at the time so I remained anonymous publicly. Turns out that corruption doesn't matter and nobody cares that our president constantly commits financial crimes, so meh?

The propublica article: https://www.propublica.org/article/heres-how-trump-transferr...

I always regarded moral relativism as a lens to judge modern culture against historical cultures and norms. It turns out that it’s much, much worse to be a ‘good’ person committing a moderately bad act as compared to a ‘bad’ person who regularly commits much worse acts. That’s a bit depressing.

Edit to clarify my point:

It was a major scandal when Tim Geithner had to pay $20k in back taxes that he owed from his time at the IMF, similarly when one of Clinton’s nominees for the AJ position withdrew when it turned out that she owed taxes on the salary she was paying her housekeeper, similarly again Spiro Agnew resigned from the office of the Vice President of the US over something like $8k in taxes on income he didn’t report (as well as some other corruption involving bribes and kickbacks). But millions of dollars of illegally shielded income depriving the treasury of hundreds of thousands of dollars in tax revenue during the campaign merits a shrug because there are so many other scandals.

Similar mechanisms are at work when a popular athlete is caught doing something, or priests, etc. Once someone’s ego becomes invested in you, you can more easily take advantage of them and that’s an important thing to learn (and wield for yourself).

I had a family member sell me property for $1 (it was a gift). That alone isn’t fraud.

And in terms of taxes, usually far below market prices and taxed at an appraised value so the govt still gets their dollars.

The property appraises at the same price so property taxes aren't the concern, just income taxes due on the transfer.

If you read the article, the two properties were listed for sale for $245,000 and $250,000 in 1997. They are two luxury condos, literally on Central Park, in a doorman building in NYC. They were previously listed at $800k (without the ability of a unrelated party to combine them with Eric's other unit in the building). A similar unit sold for $700k in 2014.

What do you think the Fair Market Value of those condos is? More or less than the $350k that Trump sold them for? Do you think the annual real estate inflation rate in Manhattan from 1997 to 2016 is more or less than the 1.7% implied by the sale price?

Several different tax lawyers weighed in for the ProPublica piece listed above, and as well as the Washington Post piece here:

https://www.washingtonpost.com/outlook/this-trump-real-estat...

And Newsweek's treatment of the sales when it turned out Eric had applied for a permit to combine the three units to turn them into a multi-level penthouse on Central Park:

https://www.newsweek.com/eric-trump-making-penthouse-real-es...

Would you honestly be surprised if Trump was engaging in low-grade real estate tax fraud to benefit his family?

It is not unusual for real estate to sell well below list prices. Further, we don't know what other factors may have played into the price, as many real estate deals involve considerations other than price.

I have no idea whether or not fraud was involved, but there is no smoking gun here as you suggest.

The building was completed 20 years ago, Trump owned them since 1997 and is selling them now for the first time. To his son. For much less than they're worth.

> It is not unusual for real estate to sell well below list prices. Further, we don't know what other factors may have played into the price, as many real estate deals involve considerations other than price.

Yes it is. The other considerations (Eric's ability to combine them with a unit he owns on a higher floor to create a huge penthouse) actually make the units more valuable, not less. That's why fair market value is the bar, not some vague standard. The fact that they were publicly listed for $800k before being sold for 65% less to someone who would have a higher value is certainly damning.

> I have no idea whether or not fraud was involved, but there is no smoking gun here as you suggest.

Several prominent tax lawyers disagree. Why on earth would you give him the benefit of the doubt on this? His entire real estate empire was built on low-grade tax fraud: https://www.newsweek.com/trump-tax-scam-maralago-golf-756188

Google “Trump empty jewlery box” ;)

Pretty sure that house had a cupola[0], not a copula[1].

[0] https://en.wikipedia.org/wiki/Cupola [1] https://en.wikipedia.org/wiki/Copula

I have javascript completely turned off. Is there something else that governs this behavior? Because I want to block it too.

ui-path-scroll .post__article{-webkit-transition:height 1s;transition:height 1s}

They set a transition length in the css so your browser is just obeying the style sheet. Doubt there is any way to override this without a browser extension.

The reason being that that posession is not “adverse” in the sense that the person was living there with permission in exchange for rent.

Adverse possession, generally, comes into play with property line disputes, and sometimes with genuine long term squatter situations.

A core and often overlooked element however is that a license or permission to use the property means you aren’t possessing it “adversely”.

Or, maybe you just pay someone to "find" the documents, and hope the leinholder doesn't notice or doesn't care. This case seems murky enough that even a potential recovery of $1M might not be worth it for the leinholder.

Statutes enabling such suits are custom-tailored for removing clouds. If the lenders don't have their paperwork in order, the judge can sever the mortgage from the note, turning it into an unsecured debt.

In my friends building the largest penthouse's tenants were paying $6k/mo then the Chinese (mainland) owner disappeared - hasn't been seen for a few years now. Someone bought the tax lien so I guess they will get a huge condo for some token amount. (No mortgage)

(Article says "UK" but the UK has two separate property law regimes and title registries, so they may not include Scotland)

https://www.gov.scot/Publications/2018/06/2736/355007

Finding out who actually owns anything has been recognised by many people as being a problem for a while:

http://www.andywightman.com/archives/category/who-owns-scotl...

Scotland has very old and very weird landownership laws.

In practice Persons with Significant Control is not adequately enforced. Lawyers routinely write in things that aren't people in the PSCs field (e.g foreign company names) for a company and there haven't been any negative consequences for that.

I believe a willing government can and should enforce these rules by concluding that if, in fact, this company has assets but it's controlled by non-human entities, well then the government will seize its assets and add them to the treasury. No humans will be deprived of any assets by doing this so that's fine. When invariably an actual human squawks that their stuff is being taken we've found the actual Persons with Significant Control, they're welcome to pay some token fee, say, £100 000 for the wasted time and effort, and fix their records or we'll keep their stuff.

It even features keyboard scrolling (in Safari on macOS) which theoutline.com doesn't do.

It reads like he was quite ready to undercut Rosa and Adrian and take up payments with the original lender, only that he was unable to untangle the mess, and Adrian beat him to the punch by essentially forging some documents.

Note that the UK has several registries, since it is very old and the registries cover the historical countries which make up the UK. "The Land Registry" is actually just a land registry for England and Wales, and dates back to 1862. For most of that history the situation has been that registration was entirely voluntary, but registrations trump other paperwork. So if you have a Land Registry entry which says you own this field, but I have a piece of paper that says I own it, tough, you own the field. These days most land will have been registered, transfers for money that aren't registered are now void in England, if you pay me $5M for the paper deed for a farm in Cornwall, but don't register in the process that's a waste of the $5M since I still own the farm afterwards. This ensures you pay the taxes ("stamp duty") owed on land purchases, if you don't pay you can't register, and if you don't register you don't actually own the land.

[ Edited: Fixed unclear example ]

That would be truly remarkable, given that there are only 50 states (the District of Columbia is not a state). I don't know if each U.S. federal polity is governed by different title rules, but it wouldn't surprise me, since areas such as American Samoa, Puerto Rico & Washington, D.C. have radically different histories: American Samoa was ceded by her native rulers; Puerto Rico was conquered from Spain & the District of Columbia was ceded by Maryland, ultimately from land granted by a royal English charter.

I think it's important to note because the United States are more complex than commonly understood.

But that's just naming. My point is that these policies are set at the "state" level (even for things that aren't states) or sometimes lower than that.

Many people refer to Australia as "the 52nd state".

From my discussions with people who work there I understand that our countries are a few decades ahead of most other countries, including those on the other side of the Atlantic.

I agree it was fascinating, though.

It shouldn't be too hard to put a face to the victims: take a look around you. This kind of disparate fraud impacts all of the non-beneficiaries. That includes me, you, your aunt and uncle, etc. etc.

Also worth noting that, broadly speaking, the same general class of folks harmed by this practice were also helped by other "bank errors" in their favor. (By that, I mean the wealthy. People who can afford to be shareholders in banks.) So it's doubly hard to feel bad, since, by and large, the wealthy have never been doing better.

The most likely answer though is not a lack of creativity - because its very hard to imagine the harm caused by these, relatively, arcane legal instruments.

There is a harpers article linked in the story, it should be illustrative of the clear harm being done to normal people, and how corporations made a calamitous end run around legal procedure - the same issue which is happening today (the "two-fer" paragraph).

If you need faces, realize that people were foreclosed on when they should not have been, those deeds were NEVER legally owned by the banks because the banks and their intermediaries didn't follow up on the paper work.

Yet those people got evicted, and banks claimed ownership.

An economy is largely predicated on working systems of assessment and legal redressal, more so for First World economies.

And this happens because, as you said, its hard to imagine the harm being caused.

That's not what happened here, though; the homeowner managed to avoid foreclosure despite not servicing the mortgage, precisely because the banks messed up the paperwork.

There are victims in the overall saga: people who were missold mortgages that they were never going to be able to service, at rates higher than they were entitled to, who lost their savings as a result. But they don't feature in this story.

But that story has been written, as have pages upon pages of what happened.

Reading through it all and being well informed will likely be the realm of a few people, the best we can hope for is to be directed to other resources.

Your second paragraph: you relate "general class of folks harmed by this practice" (ie everyone) with "the wealthy" ...? Can you explain that, I'm a bit confused.

But it is my contention that the top 1% are doing quite well. You do not need to feel bad that a handful of their bets paid off poorly, any more than you should feel bad upon hearing that the eventual winner of a poker tournament lost a hand at the first table.

But if you start chipping away at this trust, it’s 10x harder to earn it back, and in my opinion, once it reaches a tipping point, enough people figure out its every man for himself and gaming the system snowballs irreversibly.

Then you have a system like many poor countries, where you have no idea when you could be dragged into court and bled dry because someone disputes your claims and you don’t have the political (bribes/connections) clout to defend yourself.

The taxpayers did not lose money in the bailouts . . . they didn't get acceptable risk-adjusted returns, but they didn't lose money.

You don't need to be wealthy to have a financial interest in the financial sector. You need only to have a retirement plan.

https://news.ycombinator.com/newsguidelines.html

Edit: it looks like you've been using this site primarily for that. That's an abuse of HN and actually something we ban accounts for. Please review the guidelines and use HN as intended from now on.

There is a natural equilibrium found in a free market. Those who can produce cheaper and better quality make money.

Watch a nature documentary some time. One with predators, or diseases, or parasites.

> Watch a nature documentary some time. One with predators, or diseases, or parasites.

Isn't predation typically cross-species? What exactly is your point here?

I thought it was obvious: Every individual organism in the natural ecological system, often has a strong incentive to screw over the others.

This is inherent in a universe where there is a limited amount of matter and energy, inhabited by organisms who can grow in population without limit.

Once all the matter and energy are occupied by organisms, the only way an organism can increase its population is by screwing over other organisms for their matter/energy. This is the rule of nature, but not just "trees and animals"-type nature. It's encoded into the very laws of physics which say the universe is limited, but organisms can replicate without limit.

This was also the rule of humanity up until the Industrial Revolution. It's just that a lot of people have forgotten it since then.

If imperfect utilization of resources is is a cancer, what words do you reserve for war, genocide, or starvation?

Many many many things worse in this world than a confusing legal battle over an old home. No systems are perfect, but free markets sure are pragmatic!

The legal battle over some obscure bit of private property is not the worst bit of capitalism, I didn't say it was. But it's an absurdly obvious example of how capitalism is a failed system.

In stark contrast, one should walk into an econ forum, and see how people discuss the economy.

Its about jobs, or labor figures, and compliance and regulation are things which just "work", or are to be avoided due to additional costs.

I've come to the conclusion that

1) Economics is currently only as usfeul as the soundbite it generates

2) Economists are people with excellent working compasses, when people are looking for where they lost their keys

Imagine buying your dream house (a figurative one only coincidentally related to the article), turning the doorknob and it comes off in your hand. You flick the light switch but no lights, and it collapses into the panel. Touch the wall, and your finger pokes through. Completely broken, disintegrated, nested with termites and other creepy crawlers. The "inspectors" told you everything was fine.

That is our world, and this life.