Writability Survey: Is property always property in Arizona?

I.  Topic Statement

            Colonias are communities that take root within 150 miles of the U.S.-Mexico border.  But unlike standard neighborhoods or subdivisions, colonias lack the road access, plumbing or electrical services that most county codes require.  Furthermore, the occupant’s claim to title is often questionable.  Through a series of quick subdivisions and contract-for-deed lending, developers are able to establish colonias before regulatory agencies can respond.  In some cases, states do not prohibit their establishment at all. 

Hernando De Soto argues in The Mystery of Capital that the primary impediment to the development of urban slums in Latin America is not simply a lack of education or infrastructure, but a lack of legal rights.  De Soto argues that the vast amounts of capital that the poor own could serve as an engine for development, but for the fact that so little of what they own is legally recognized through a title system or business license.  In an “informal economy” their tangible assets lack an abstract legal representation.  This prevents them from leveraging those assets to create businesses or invest in their property.

This journal article will investigate the extent to which De Soto’s thesis proves true as applied to the colonias of Arizona and Sonora, Mexico.  If the majority of colonia residents in Arizona already enjoy legal representation of their property, this may call into question whether property rights alone can spur economic development. 

II.  Initial List of Sources

Adam Mossoff, What is Property? Putting the Pieces Back Together, 45 Ariz. L. Rev. 371 (2003).

A.R.S. § 11-809 (West 2009).

A.R.S. § 32-2101 (West 2009).

Andrus v. Allard, 444 U.S. 51, 65-66 (1979).

Kaiser Aetna v. U.S., 444 U.S. 164, 178 (1979).

Hernando De Soto, The Mystery of Capital, (2000).

Peter M. Ward, A Lack of Cursive Thinking, in Rethinking Development in Latin America, 271 (Charles H. Wood & Bryan R. Roberts eds., 2005).

Vera Pavlakovich-Kochi, Region: A Decade of Transborder Region Building, 14 Estudios Sociales 27, 44 (2005).

Peter M. Ward, Flavio de Souza & Cecilia Giusti, ‘Colonia’ land and housing market performance and the impact of lot title regularisation in Texas, 41 Urban Studies 2621 (1964).

Adrian X. Esparza & Angela J. Donelson, Colonias in Arizona and New Mexico (2008).

III.  What's the Law?

            In the abstract, both property scholars and the U.S. Supreme Court often refer to property as a “bundle of rights.”  They reject traditional notions of property as simply the right to exclude or the right to exercise control over a tangible object, adopting a modern property interpretation that makes it possible to focus on distinct rights associated with property.  In this article, it will be necessary to focus on the bundles of rights that both land buyers and sellers claim.  More specifically, the rights of use and transferability.

            Prior to 2000, Arizona law did not have any infrastrcuture disclosure requirements for real estate subdivisions that split land into less than five lots.  A.R.S. § 32-2101.  This allowed each subsequent owner to divide his lot into an additional five pieces, leading to an exponential expansion in the number of lots and a similar reduction in their size.  The resulting communities grew quickly and are often referred to as “wildcat subdivisions.”  This process forms the foundation of modern colonia expansion, as Arizona law does not require sellers to add basic infrastructure such as roads, plumbing and electricity, provided that sellers limit their lot splits to five pieces.  In 2000, the State Legislature enacted the Growing Smarter Plus Act, which gives local counties limited authority to regulate wildcat subdivisions that do not conform to their minimum zoning requirements.  However, subdividers automatically get approval unless the county acts within 30 days, and the county must grant approval if the subdivider provides a disclosure affidavit.  A.R.S. § 11-809.  The affidavits themselves often lack important information the county would need to make an informed authorization.

            While the legal systems of both Arizona and Mexico formally recognize ownership rights to real property and businesses, in Mexico, access to the system is limited.  In the Mexican state of Sonora, more than half of the population is employed in the informal economy.  As such, legal analysis in this area must address both the formal, or black-letter property law, as well as the more tangible working definition of property as exercised by citizens on a regular basis.

IV.  The Challenge:

            De Soto himself argues that the United States boasts an efficient property rights system that allows people to borrow against their property in order to finance business enterprises.  If that is the case, why do colonias persist within the U.S.?  Why are they growing?  Can the U.S. and Mexican legal systems adjust to better fit the needs of these communities?

One possibility is that in Arizona, while a large majority of colonia residents are “home owners,” there remains the question as to whether one should also classify them as property owners.  The use of title-for-contract arrangements often limits what a property owner can do with the land once they occupy it.  A single missed payment may cause the title to revert back to the previous owner, which means that residents may commit a large amount of resources to build equity that ultimately disappears.  (Review Esparza & Donelson).  In so doing, they also lose any capital improvements to the land.  While this contract mechanism is legally recognized, it is important to consider how the title-for-contract arrangement may impact the resident’s behavior in the De Soto context, as an occupant will not likely leverage a property they do not own through a fee-simple arrangement.

            Also important is a comparison between Arizona colonias and similar slums or informal developments around other city centers in Mexico.  It will be important to evaluate the extent to which both the U.S. and Mexican legal systems support and reflect the day-to-day exercise of property rights.  This may provide an important insight into whether the legal system is largely to blame for a lack of development, or whether there is a different cause altogether.

V.  Where Does this Article Fit?

            Many sources address the issue of colonias in the United States.  But in 2008, the University of Arizona Press published the first comprehensive study of colonias in Arizona and New Mexico.  By nature, urban development studies are largely interdisciplinary.  Although this journal article must reference work from the economic and sociological fields, its distinguishing feature is an emphasis on law, titling, and property rights.  The article will evaluate how colonias interact, or do not interact, with the legal frameworks in the United States and Mexico. 

 

Sources:

Peter M. Ward, Flavio de Souza & Cecilia Giusti, ‘Colonia’ land and housing market performance and the impact of lot title regularisation in Texas, 41 Urban Studies 2621 (1964).

 

Adrian X. Esparza & Angela J. Donelson, Colonias in Arizona and New Mexico (2008).