LOS ANGELES—The real estate industry has been accused more than once of failing to move forward. Crowdfunding was the first industry to illuminate the primitive nature of the industry, and in the last three years these technology firms, which have brought technology to real estate, have catapulted the industry forward. Now, real estate lawyers are shining a light for the need for uniformity in finance law.
Earlier this week, Kathleen Smalley, a partner at Locke Lord LLP, wrote a UCLA Economic letter about the need for uniformity in real estate finance law. When asked why the industry hasn't evolved its approach to finance law, she says that it is likely because of the uniquely localized nature of the real estate business. “I think that there is a long tradition of doing things locally, and for so many years, financing was local as well. You have a lot of people with a lot of habits that would have to be changed and you are used to having local control of these rules, so that is a huge part of it,” Kathleen Smalley, a partner at Locke Lord LLP, tells GlobeSt.com.
It isn't only the localized nature of the industry, but also the cyclical nature that prohibits speedy implementation of solutions. “I also think that the way the boom and bust cycle plays out contributes to it,” says Smalley. “Real estate is such a cyclical business and we have these bust periods when a lot of legislatures get interested and motivated to do something about the plight of borrowers, and they come up with some new method of protecting the rights of borrowers and I think that those don't get tested out until the next cycle because it is rare that a legislature will move quickly enough to matter for that particular phase of the cycle. So, it is probably that people are responsive to the boom and bust and yet there is a delay in seeing how new solutions play out.”
The most recent economic downturn is a great example. Local markets dealt with the mortgage crisis very differently. “There was a fair amount written in 2008 and 2009 about how the mortgage crisis played out differently in different states,” Smalley explains. “In a state like Florida, where you have to have judicial foreclosure, people felt like they didn't get through it fast enough than in a state like California where you have nontraditional foreclosure. It took so long for the distressed properties to move out of the hands of distressed borrowers and back into commerce.”
Even today, there is no uniformity in real estate finance law that could help streamline the recovery process in another crisis. Read more about the need for uniformity in Smalley's interview.
LOS ANGELES—The real estate industry has been accused more than once of failing to move forward. Crowdfunding was the first industry to illuminate the primitive nature of the industry, and in the last three years these technology firms, which have brought technology to real estate, have catapulted the industry forward. Now, real estate lawyers are shining a light for the need for uniformity in finance law.
Earlier this week, Kathleen Smalley, a partner at
It isn't only the localized nature of the industry, but also the cyclical nature that prohibits speedy implementation of solutions. “I also think that the way the boom and bust cycle plays out contributes to it,” says Smalley. “Real estate is such a cyclical business and we have these bust periods when a lot of legislatures get interested and motivated to do something about the plight of borrowers, and they come up with some new method of protecting the rights of borrowers and I think that those don't get tested out until the next cycle because it is rare that a legislature will move quickly enough to matter for that particular phase of the cycle. So, it is probably that people are responsive to the boom and bust and yet there is a delay in seeing how new solutions play out.”
The most recent economic downturn is a great example. Local markets dealt with the mortgage crisis very differently. “There was a fair amount written in 2008 and 2009 about how the mortgage crisis played out differently in different states,” Smalley explains. “In a state like Florida, where you have to have judicial foreclosure, people felt like they didn't get through it fast enough than in a state like California where you have nontraditional foreclosure. It took so long for the distressed properties to move out of the hands of distressed borrowers and back into commerce.”
Even today, there is no uniformity in real estate finance law that could help streamline the recovery process in another crisis. Read more about the need for uniformity in Smalley's interview.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.