[Continued from yesterday's Part 2 and the previous Part 1.]

“He that is of the opinion money will do everything may well be suspected of doing everything for money.”

– Benjamin Franklin, who was born and raised in Massachusetts

Drive thy business or it will drive thee

So far our review of the white paper (available in .pdf here as Recap Update 72) published by my for-profit Recap Advisors at the request of the Massachusetts Housing Partnership (MHP, www.mhp.net), has hammered home the necessity for clearing LIHTC equity markets by lowering the prices to the point where new buyers come in. 

If we don’t sell it, we lose it

This will take a while:

In a market where CRA equity investment had a measurable monetary value, all non-CRA-motivated buyers—such as profitable Fortune 500 industrials, insurance companies, utilities, and so on—were largely priced out, a concentration by investor type that only now is revealed to have been dangerous for the industry as a whole.

New buyers likely to emerge in 2009 will be precisely those Fortune 500 entities with reliable earnings, of which, recession notwithstanding, there are plenty.  However, the emergence of such buyers will provide little short-term relief, because of:

·         Time delay.  It takes a fair interval of time to educate a corporation to LIHTC and to move that education through to an actual equity investment check.  If past experience (the early 1990’s) is any guide, 6-9 months is a typical decision interval.  Given the recent correction and overall reevaluation of financial risk, the interval may be longer this time.

New market entrants take many months to develop

·         Pricing at lower levels.  Entities that are not financial institutions will place no premium on CRA consideration, so they will enter the space only at prices competitive with other CFO earnings management tools, such as other tax credits.

In this, unfortunately, the LIHTC will suffer in competition with other tax credits.  When LIHTC was enacted in 1986, it was virtually the only such tax credit.  In the 22+ years since then, other tax credits have emerged as investment vehicles: historic, New Markets, energy, and so on. Compared to these new credits, LIHTC has a long delivery period (10 years), a longer risk period (recapture, 15 years), and greater relative complexity (it is the longest section of the Internal Revenue Code).

The market clearing price for new LIHTC, therefore, must be at levels well below the 2007 equilibrium, and probably below the 2008 asks of $0.85 or so.  (Section 3A)

In the paper, I was cautious; in reality, I think this market clears at $0.65.  Which leads to our next important point:

6.  Provide an underwriting cushion to handle equity price drops.  The industry faces two problems:

No dead deals, please

a.  LIHTC equity prices are much lower than they were before.

Prices that in some desirable coastal markets were above $1 per dollar of LIHTC (observed by Recap to be “hyperactivity” back in 2006) are now below $0.80 in some cases.  Observable prices now are legacy deals—properties in the pipeline from before the disruption.  Much lower price are not registering yet because fewer pipeline properties are feasible at those prices and markets have yet to accept the few that will.  Section 2E.

There went my feasibility

b.  Pipeline properties that relied on old prices will need to be re-underwritten. 

The first problem is solved by getting to a new price quickly, so that markets can clear. 

Based on pricing adjustment alone, Massachusetts’ allotment of credits will go only 77% as far as it did last year.  Fewer pipeline properties will get done in the new reality. 

Once you know that prices don’t work, the next step is apparent:

Stress-test applications at lower-than-average equity prices, at least until the market settles at an equilibrium price.  That will avoid having pipeline properties come back for additional credits because markets have moved during the allocation process

7.  Have resources available to assist pipeline properties to close.  They represent a sunk cost (by somebody) and an affordability opportunity. 

Part of that flexibility can come from recognition that simpler financing will help pipeline properties get done.  Currently, political incentives are such that funding providers are encouraged to provide a little help to many pipeline properties—that shows they are supposedly leveraging contributions from others and allows claims to large numbers of units funded.  The result, however, is complex, multi-source financing subject to many different timetables, and leading to rickety, vulnerable deal structures.  Section 4D

You think your bridge financing structure is sound?

New resources are essential because the development pipeline is long, and complex:

In an LIHTC underwriting of allocated credits, the LIHTC equity is normally the largest chunk of the capital stack, typically 45-60% of total sources.  However, it becomes a firm commitment last in the development sequence, specifically:

Make sure you do them in the right order!

1. Sponsor secures site control.  This requires expenditure of funds.

2. Sponsor sizes debt and/or secures permanent debt commitment.

3. Sponsor secures preliminary commitment for soft gap-filling funding.

4. Sponsor applies for LIHTC, stating an expected LIHTC equity price.

5. Sponsor wins LIHTC competition.

6. Sponsor places LIHTC at an actual LIHTC equity price.

7. If the actual equity price is ‘too far’ below projections, then sponsor returns to Step 2 and iterates until success.

8. Sponsor closes the property transaction.

The development sequence is also financially bass-ackwards:

The significance here is that Steps 1 through 4 involve expenditure of non-recoverable costs, and that the transaction does not work—in the sense of sources matching uses—until Step 6. 

LIHTC development is thus a poker game where you make escalating bets and increasing risk, and now the game’s rules have been entirely changed.

If the actual equity price is below the level needed to align sources and uses and the transaction lacks the necessary cash cushions, then the sponsor returns to an earlier stage and repeats the entire process, with no guarantee that prices will not further erode in the next cycle.  Section 3D

8.  Maximize flexibility with gap-filler resources.  Allocators should increase and concentrate any other LIHTC-compatible resources available to them.

We can divide LIHTC properties into three cohorts, each of which will need additional resources:

·       Past – Properties with pre-2007 allocations should all be closed (though there are always exceptions), but they will be under stress as resident incomes fall.  Properties expecting to refinance to address capital needs or with maturing debt to repay may turn to public sources if private capital markets remain frozen.

·       Present – Properties with 2007-2008 allocations but no equity investor may need intervention with additional credits or gap fillers to stay alive.  Some will fail to attract investment and will turn back their allocation.

You may need a little present assistance

·       Future – Properties with 2009 allocations will need more credits, given the slump in pricing.  They will also likely require more gap-fillers in the form of soft loans or grants.

All of this implies a greater concentration of affordability resources per unit of housing.  In other words, triage.  Section 4A

Some of you aren’t coming out

9.  Collect and disseminate reliable data on LIHTC markets: allocations, awards, pricing.

For an eight-billion-a-year industry, every step of which is in the public domain, we have surprisingly little good information.  We put some into the report, using the specific to imply the general:

For example, of 39 Massachusetts pipeline properties allocated in 2007 and 2008, only 8—barely over 20%—have closed with firm equity.  That means roughly 80% of pipeline properties are still lacking in solid equity, with a whole new round of allocations coming up in 2009.  For the first time in the LIHTC’s history, not only will there be a substantial pool of unused credits to be redistributed nationally, but there will be $2-4 billion of 2008 LIHTC without an equity investor, even as another $8 billion or so of new LIHTC will be allocated to states.  Section 1B

Can’t play the game if you can’t see the cards

10.  Keep the competitive process.  It harnesses market forces, even in weaker markets.  As the report put it:

We have heard calls for handing out credits on a first-come, first-served basis on the theory that competition among developers is a thing of the past.  Such calls miss the central role competition has in the success of the LIHTC program.  Competitive allocation harnesses market forces to the efficient allocation of scarce resources.  What Massachusetts must do, however, is focus the competition on the aspects critical to the success of pipeline properties—provision of equity.

Competition for resources – by developers to a state, and by states with each other – has been among the principal reasons why housing tax credits work. 

Who wants tax credits?

As I wrote two years ago:

There are investment tax credits and investment tax credits, and yet in political and programmatic terms, the LIHTC stands head and shoulders above the others.

“One of these things is not like the others, one of these things is just not the same.”

What makes the LIHTC so nifty?  A remarkable, one might almost say prescient, confabulation of features, some of which are intrinsic to fiscal tax expenditures rather than appropriated programs.

[Snip]

4.             Capped and competed.  The amount of credit is fixed, so sponsors have to compete with one another.  This leads to a virtuous-circle feedback cycle as each year’s competition is a bit fiercer than the preceding one’s.

Each time I cycle, I get better.

5.             Allocated on a use-it-or-steal-it basis.  Each state has a specified amount to spend, with uncommitted amounts returned to a national pool where other states can claim it.  As a result, each state is highly motivated to spend all of its credits.

Wanna try to steal those tax credits?

Competition is also healthy among states, because some will heed the warnings (like ours) and react faster and better. 

When there are more properties chasing less capital, the easiest to close have an advantage.  Allocating agencies should see themselves as a critical link in an aggregate value chain that works only if the awards are funded and closed.  The private sector—syndicators, developers, investors—in Massachusetts will certainly invest their efforts in crafting a revised operating protocol if they have reason to believe the public sector will approach in the same spirit.

Such leadership by Massachusetts government officials will not only help the state’s stock and stakeholders, it can help lead LIHTC allocators in other states to rethink their own procedures and policies.  There is no time to lose, else national players will perform their own unsympathetic triage and cross off their lists states whose agencies are hidebound by a delivery paradigm that is two years out of date.

Those that demonstrate syndication-friendliness will be the winners:

Whether they realize it or not, states are now competing with each other on their ‘equity syndication friendliness.’  

I’m competing to be friendly

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– Benjamin Franklin, who was born and raised in Massachusetts

An investment in knowledge always pays the best interest.

In late December, at the request of the Massachusetts Housing Partnership (MHP, www.mhp.net), my for-profit Recap Advisors released a white paper (available in .pdf here as Recap Update 72) that focused on the crisis in US affordable housing rental production arising out of the logjam in LIHTC pricing that we first described last March. 

Even a simple listing of the largest 2006 investors in LIHTC equity reveals the critical point the LIHTC equity market has crossed.  What had been an $8 billion investment industry may be as little as $4-5 billion in 2008, even though the total amount of LIHTC available will increase, indexed to population.  (Section 2C)

We at Recap think the report is important, as in this hiatus before President-Elect Obama is inaugurated, stakeholders are buzzing with possible stimulus packages, and if we are going to spend billions, we ought to spend them smartly.

The white paper’s published! The white paper’s published!

The crisis in affordable housing production.  As we put it in the report’s opening:

As the nation and the Commonwealth come to grips with the most tumultuous financial environment in at least thirty years, the LIHTC industry is facing:

·         A sudden and pervasive withdrawal of credit and global repricing of risk.

·         The largest downward correction in LIHTC pricing in the program’s history.

·         Massive and ongoing consolidation in the banking sector, which until recently was the all-but-exclusive consumer of LIHTC equity investments.

Put these factors together and it is clear that the LIHTC and affordable housing world in 2009 will be vastly different than the equilibrium which prevailed through the end of 2007.  Further, no one can say with any certainty when equilibrium will return and at what price levels.

For affordable housing production, this is a crisis for the pipeline:

It’s cold for developers if equity isn’t flowing through the pipeline

As I’ve described elsewhere, housing tax credits work because:

Investment tax credits — including the historic tax credit and the LIHTC — by their very nature create a market mechanism, because the amount of credit is so large that a typical real estate sponsor cannot consume it personally.  Hence the sponsor is sent to the capital markets to find soft equity, which means there is (a) a market dynamic between buyer and seller, and (b) the manifestation of an investment banker who makes a business structuring buyer and seller investments.

This worked fine until very recently, because (as the report puts it):

Until the end of 2007, LIHTC funding was supply constrained—that is, demand for LIHTC equity vastly exceeded supply of awards, and demand for LIHTC allocations vastly exceeded supply of allocations.  During 2008, that polarity completely reversed.  Now, supply of awarded LIHTC equity greatly exceeds demand.

This is a gigantic challenge, because sellers have to sell, whereas buyers do not have to buy. 

I don’t feel like buying

·         A ’seller’ of LIHTC equity—that is, a sponsor with an award—must convert the LIHTC into cash through equity syndication in a limited time window or lose the LIHTC entirely.

·         A ‘buyer’ of LIHTC equity—that is, a corporation with pre-tax earnings seeking to manage after-tax earnings and cash flow—can either buy something or do nothing.

This imbalance was tolerable only when demand vastly exceeded supply.  Now that it is not, something akin to desperation is setting in among some categories of developers.  (Section 3C.)

Still moving toward a closing!

Nine months ago, I wrote:

As of March, 2008, nobody knows what $1 of 2008 LIHTC will be worth, because by far the majority of investors who will eventually buy it are deferring their purchase decisions, and may do so for the next several months. Right now the effect on our industry is about the same as if the air-traveling public had elected to stay home for six months.

What if nobody wants to fly?

When demand falls, prices also fall until there emerges a new body of consumers who support a new lower price. Where will they come from, and at what level will prices stabilize? While prices are falling, what does that mean for current participants, especially lenders and investors?

Remarkably, the situation is no better today; as the report notes:

Best expert estimates suggest that, whereas in every year from 1988 through 2007 all allocated LIHTC was sold and closed, the nation as a whole will end 2008 with a substantial inventory of unsold LIHTC—perhaps $3-4 billion worth, or 40% of the 2008 allocations—where allocating agencies have awarded LIHTC to developers, but developers have been unable to secure a firm equity commitment much less close.

This situation is without precedent, and its consequences are likely to prove troublesome to the stabilization of 2009 LIHTC equity prices. Trouble will intensify as the sponsors (and their allocating agencies) of properties with overhanging unsold LIHTC realize that if they do not sell the commodity, at any price, then they will simply lose it back to the national pool.  (Section 2F)

Beyond the immediate challenge for the development pipeline – roughly two vintages’ worth of allocations, the ‘07 and ‘08 years – we also face the prospect of vanishing value for the nation’s most important rental housing production resource:

Today, the Low Income Housing Tax Credit (LIHTC) is the nation’s most important affordable housing financial resource.  Historically, Massachusetts has been among the nation’s leaders in innovative use of the Low Income Housing Tax Credit; the state has always consumed its full allocation and its allocating agencies have garnered numerous NCHSA awards of excellence.

This leads into our recommendations:

1.  Participate with stakeholders in a collective response to the crisis.  Shared interests should trump parochial or competitive interests.  As we put this recommendation:

Sponsors, syndicators, and lenders know as well as anyone the specific barriers to quick deployment of LIHTC.  Since we no longer have the luxury of a rising market that allows all deals to eventually get funded, we need to collectively reevaluate the allocation process. 

More than one of our sources told us, in the plainest possible terms, that it would not review LIHTC properties in one or more states because the state had a reputation for being procedurally difficult. 

Who  has the upper hand now?

We started with this recommendation because of our target audience – namely, state allocating bodies.  Unlike developers, syndicators, and investors, all of whom have been coping with the credit crisis for a year now, the allocators are insulated both by their secure employment in the government sector and because as salaried executives, they are used to process, whereas program participants are used to outcomes.  Deals close or they do not.  That downside risk has been alien to allocating agencies, because for over two decades, states have had the upper hand in LIHTC allocations: they offered, and the market eagerly accepted.

Sponsors would queue up, equity would always be ready to invest, and allocators could pick and choose while stretching credits dollars ever thinner.  In a rising market, that is a rational and efficient use of subsidy dollars.  (Section 4B)

Things are different now:

Now the market is contracting.  Many deals will not close.  Unless we change the process to concentrate subsidy resource effectively, we will allocate LIHTC that will go unused, thereby wasting federal resources designated for Massachusetts.

States need friends:

Procedures and approaches that worked when LIHTC equity investors could be found for virtually any award of credits have led to an imbalance that fails miserably when LIHTC equity is undersubscribed.  (Section 1B)

There comes a time when states need friends

Those readers who have not dealt with long-incumbent bureaucracies might think such statements obvious.  Yet, for those who for decades have simply had to raise an eyebrow for the world to come running, it is incredibly difficult now to shift to having to negotiate and sell.

Using new mental muscles: learning how to negotiate and sell

2.  Avoid incentives that align against equity markets.  Rather than lose credits to a national pool, every state should spend its resources within that state.  As the report puts it:

State allocation criteria will not be able to overcome the pressure from investors, at least in the short term.  So, making allocations to deals that are unattractive to investors will simply mean allocations go unused for lack of an investor. 

A marketplace where you easily sell everything you produce is qualitatively different from one where some goods rot because they are totally unsold.

As Recap documented two years ago, by the mid 2000’s LIHTC pricing had reached its apex and its ultimate buyer: the profitable financial institution which also placed meaningful monetary value on maintaining an Outstanding CRA rating and hence consumed substantial LIHTC equity to assure itself of that Outstanding.

Once you get past the gag reflex, these credits are Outstanding!

LIHTC not used by one state reverts, after a roughly two-year interval, back to a national pool and is reallocated to states with excess demand. 

The national pool in 2006

Until recently, this was a minuscule pool: now it is likely to be enormous, with huge consequences for the program nationally.

The national pool in 2010

A program whose investment products had become almost nationally standardized is about to separate into layers of desirability:

The market’s centrifugal force will separate LIHTC by desirability

Given new investor sensitivity to deal attributes and an investor-centric pricing market, we can expect greater price differentials to emerge.  A likely spectrum appears to be from $0.60 to $0.80.  Pipeline properties at the high end of the pricing range will have four or five of the features in Section 3E –strong markets, uncomplicated financing, well-capitalized developers, agency support, and CRA area.  Pipeline properties at the lower end, to the extent they are feasible, are likely to have only one or two features.  Pipeline properties with just one or none of those features will not close.

Will not close is syndicator-speak for die. 

It used to be that winning the allocation won you a successful deal.  Now, winning the allocation means only the chance to spend more money with no certainty of surviving to an equity closing.  The winnowing, we think, is going to be severe:

Some of your deals are going to  be blown away in the wind

We thus foresee roughly a four-tier pricing structure conceptually as follows:

If this tiering shakes out, not only will better tiers command more favorable prices, their prices will stabilize first. 

Several of my professional friends who are equity syndicators have told me that sponsors who spurned them years ago have been sending large packages of interesting properties to syndicate, only to find that the syndicators too are stymied, because the investor appetite is lacking:

With some exceptions, properties in lower-tier markets will be disfavored by national investors, who can tacitly redline entire states and regions because they are interested in yield without being bothered by CRA footprint considerations.  (Section 3G)

Red-lining by creditworthiness is rational – and legal.  Only redlining by race or ethnicity is illegal.  Some states could be entirely shut out of LIHTC awards. 

Unused LIHTC means wasting federal subsidy dollars.  Massachusetts should avoid scoring criteria that, for instance, advantage weaker sponsors, favor complicated financing structures, or add unnecessary deal costs.

Unused LIHTC will go back to the national pool, and flee the state.  Isn’t it better, therefore, to sell your state’s LIHTC at a low, low price rather than lose it entirely?

What’s it worth if it’s not yours any more?

[Continued tomorrow in Part 2.]

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One acre = one football field … so where do you mislay one?

From our friends in the Boston Globe’s it-can’t-happen-here department comes a tale that, beyond being entertaining in its own right, also illustrates just how important are reliable title deeds and such mundanity as precise surveys.

The deed is vague, but Michael Kosinski wants to know where the two acres his family purchased 49 years ago in Ipswich are located. The town has been collecting taxes on the property but has no records that pinpoint the site. How does land just disappear?

Michael Kosinski remembers as a teenager driving with his father to look at two acres of land his family had purchased west of town. His memories of that trip include turning off at the Clam Box restaurant on High Street and a road covered with shells.

Today, 35 years later, Kosinski is again looking for that land, but this time no one knows where to find it. His father and mother have both passed away, and the Town of Ipswich, which once owned the land and has been collecting taxes on it for the past 50 years, can’t locate it.

”The lot exists,” said Frank Ragonese, the Ipswich tax assessor.

Does it? 

”It just can’t be pinpointed.”

Normally, when I buy an object from you, you physically hand it to me and I take it away.

I bought ‘em, I’m taking them home

This physical-possession approach to settling a bargain fails with land, which cannot move.  So when we talk of transferring property, we actually exchange universally accepted symbols of ownership, but this symbols are only as good as the respect they garner from observers, and that in turn rests on verifiability.  Developed real estate markets have evolved several species of ecota that efficiently enable real property to change hands:

1.       Survey.  Precise and replicable (hence verifiable) point-by-point enumeration of a property’s physical boundary (called its “metes and bounds“), so that anyone can repeat the Musgrave ritual of stepping off precisely where my land begins and yours ends.

2.       Title deed.  Written instrument that conveys legal ownership of a plot of land.

3.       Title registration.  Publicly available disinterested and unique record of how land is divided, and who owns each plot.

4.       Title insurance.  Financial policy that introduces a financially collectible party (the surety) who will pay a stipulated sum (greater than the land’s value as improved) if the insured’s title to the property is later overturned.

All this lovely (and efficient!) intellectual infrastructure topples into a swamp of uncertainty if that original survey is flawed … or if the landmarks used to set its metes and bounds no longer exist.  In old New England, that can be a problem:

Title researchers say land boundaries in the 1800s used to be identified by stone walls, creeks, or the names of adjacent property owners, but over time these reference points move away or disappear, and property lines become fuzzy or nonexistent.

As time passes, ambiguity creeps in:

Jon S. Davis, a real estate lawyer with Stanton & Davis in Marshfield, said he is working on a case now in Middleborough where two people have deeds written so vaguely that they appear to give both individuals ownership of the same piece of land.

Thus the survey process has broken down.  How about the title deed?  Shouldn’t the Town of Ipswich know what’s up?

The town of Ipswich mailed the Kosinskis tax bills that seemed to indicate officials knew where the property was located.  The bills, totaling just $16 a year, identified the property as Lot 38 on Tax Map 13.  But there is no Lot 38 on the map, which inexplicably skips from Lot 37 to Lot 39. Town officials say Lot 38 doesn’t show up on any of the maps they have dating to 1977.

The crying of Lot 38 …

Older maps apparently were discarded.

One might think that continuity of records would be critical for a records office.

Mr. Kosinski, who works as a landscaper in St. Petersburg, Fla., believes the town should tell him where his land is or give him 2 acres of town-owned property in the same area. He says the town effectively lost the land.

”You would assume the town of Ipswich wouldn’t sell something unless they knew where it was,” he said.

But Ragonese, while sympathetic to Kosinski’s position, said it’s not the town’s responsibility. ”As the owner of the property, he should be telling us where it is,” he said.

That’s what deed books are for, and the town has thrown its out.

The town owned the lost property around 1950.

“No, no, it’s not the office that’s lost, it’s the property!”

Records show the town seized the land for nonpayment of taxes in 1948 and then sold it at a tax auction to Leonard Coffill of Peabody seven years later. Coffill sold it to Kosinski’s father in 1956.

The town’s reclamation of the land interrupts the normal chain of title insurance — and, I would argue if I were representing Mr. Kosinski, means that the town has in effect guaranteed title to a specific piece of property that it is now up to the town to identify and validate, or compensate Mr. Kosinski.

Coffill, 79, said he bought the property on a lark, paying less than $50 at the tax auction. He said he went out to look at the land after buying it, but doesn’t remember much. Like Kosinski, he recalls it being near the Clam Box restaurant and he remembers a road covered with shells.

He drove back to the area recently and had a hard time getting his bearings. He suspects the two acres have been absorbed into someone else’s property.

”It’s just a mystery,” Coffill said. ”If two acres were lost, they were probably lost for a reason.”

Ambiguity not only cripples use (and hence impairs value), it imposes costs both procedural and financial to perfect the title:

The logical next step in a situation like this would be to hire a title researcher to locate the property, but the deed is so vague that Kosinski could spend $5,000 to $10,000 and still not find out where the land is.

”It’s like trying to find a needle in a haystack,” said Kim Arena, assistant registrar at the Essex South Registry of Deeds in Salem, where Ipswich land records are kept.

Following the trail leads into a dusty archive of old maps:

Maps of the area show a Muddy River, sometimes called the Muddy Run. Today there is little evidence of a river or even a creek. Historically, it was an area that wealthy landowners in town would use to harvest wood for their fires.

The Clam Box restaurant, which both Kosinski and Coffill remember from their trips to the property, is on the south side of High Street. On the north side is Paradise Road, which leads up toward the Muddy River area. It meanders past a gravel pit and then dead-ends at an overgrown dirt road covered partly by shells.

The dirt road connects with Mitchell Road and has a trail off of it leading through woods to railroad tracks that bisect the area. The land is undeveloped, marshy in places, and very buggy.

Kosinski’s property is difficult to find because the deed provides no reference points, just the names of four adjacent property owners — Aaron Ross, John Wise, Andrew Russell, and a man identified only by his last name, Mitchell.  Registry records indicate the four men were major landowners in the area in the late 1700s and early 1800s.

Trying to locate Kosinski’s property by tracking an adjacent property is very difficult. The Globe found several parcels of land owned by Aaron P. Ross in the Muddy River area, but only one parcel had a deed that seemed to link up with Kosinski’s property. It referred to a 2.5-acre woodland lot at Muddy River and listed as one of its abutters Daniel Haskell, who owned the Kosinski property in the early 1800s.

The Globe traced the owners of the Ross property through deed transfers from the early 1800s forward, but the trail went cold in 1908 with an owner named Mary F. Ross of Ipswich.

At the Globe’s request, Arena, the assistant registrar, scoured Registry deeds and probate records and found evidence the property may have been seized and sold by a sheriff. It’s not clear if it’s the same property because the description differs in significant respects, but Arena is convinced that with enough research the abutters to Kosinski’s property could eventually be tracked down and his land pinpointed.

”Properties just don’t disappear,” Arena said.

Ownership can if the system breaks down.

”If you’re willing to spend enough time [Time is money. -- Ed.] and you have the right skills, you’ll eventually be able to gather enough evidence to find them.”

The point of this little comedy is not Mr. Kosinski’s plight, but rather how neatly it illustrates the critical importance of crisp, reliable, standardized execution of property conveyancing and title registration.  Without them, property is virtually valueless, and certainly dead capital.  Nations struggling to establish effective real estate capital markets devote very substantial efforts to establishing the property deed registry that we in developed nations take for granted.

Lot 38, where are you?

Officers have been dispatched to deal with your problem

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