Is a Creditor’s Ritual Goat Sacrifice a Coercive Collection Method Designed to Collect on a Discharged Debt?

Posted by on May 23, 2014 in Uncategorized | 0 comments



“Section 524(a) is a broad injunction power which effectively bars creditors from collecting debts as personal liabilities from a discharged debtor.”[1] It is well settled that mortgage debt survives a Chapter 7 Bankruptcy discharge.[2] Though the lender has the right to enforce its mortgage against the Property after discharge, it has no right to demand payment from the Debtor on the discharged debt.[3] Many courts have acknowledged the inherent difficulty in determining what constitutes a demand for debt. A district bankruptcy court in Colorado stated that identifying an act to force debt collection is “largely a matter of the court knowing it when it smells it.”[4] However, § 524 (j) provides for an exception to the general prohibition if the following elements are met:


1)  such creditor retains a security interest in real property that is the principal residence of the debtor;

(2)  such act is in the ordinary course of business between the creditor and the debtor; and

(3)  such act is limited to seeking or obtaining periodic payments associated with a valid security interest in lieu of pursuit of in rem relief to enforce the lien.


While the first element seems easy to interpret, the second element begs the question: what is the “ordinary course of business?” Similarly, the third element leaves broad room for judicial interpretation. Needless to say, jurisdictions across the country have come out differently in resolving these questions.


What is the “Ordinary Course of Business”?


In the matter styled In re Giles, the Bankruptcy Court of the Northern District of Georgia, noted that the bankruptcy code fails to provide a definition for the phrase “ordinary course of business.”[5] The Court noted a First Circuit decision which quipped that “[c]ourts abhor interpretative vacuums.”[6] Hence, the First Circuit articulated factors to be considered when evaluating “ordinary course of business” as articulated in § 547(c)(2).[7] Similarly, the Northern District of Georgia identified factors to be considered with regard to § 524: the timing of contacts, the purpose of the contacts, and variations in the overall pattern of contacts.[8] Giles involved a creditor mortgage banking company that had about 225 to 250 employees and 60,000 customers.[9] The Court concluded that the creditor met all three provisions of § 524(j)(2).[10] Namely, (1) the creditor had security interest on the primary residence; (2) all communication was made in the ordinary course of business (with one exception); and (3) creditor was seeking late payments in lieu of foreclosure.[11] Notably, the Court held that phone calls, letters, and property inspections (with one exception) was in the ordinary course of business.[12] The one exception was a property inspection under the auspices of a property inspection as required by HUD and the creditor left a calling card expressly stating “this is in connection with an attempt to collect a debt.”[13] The Court stated that though the act appears a prima facie violation, it must be viewed in context to determine its true nature.[14] The Court argued that the debtor wanted to make payments on the debt to avoid foreclosure and, when viewed in this context along with the creditor’s conduct, it was not an act to collect debt as personal liability.[15] The Court seemingly makes a heroic effort to avoid finding the relatively small creditor from being in violation of the discharge.[16] In fact, James B. Nutter, Sr. (the owner of defendant creditor, James B. Nutter & Co.) was directly involved with some of the property inspections and communications.[17] While, the Court may have made the right decision in this particular case, its anomalous fact patterns should have precluded publication. Though the case has yet to be cited, debtors should be weary of the precedent that it might set with regard to what constitutes  the ‘ordinary course of business’ and coercion.


In a clear example of a creditor availing itself to the safe harbor of § 524(j), we turn to a case styled In re Jones. The Southern District Bankruptcy Court of Indiana held that creditors communication with an express disclaimer as to personal liability was a matter ‘within the ordinary course of business’.[18] The Court stated that the creditor’s communication fail squarely within the exception provided by § 524(j)(3).[19] The Court noted that the communication contained the following:


(a) it was for informational purposes only; (b) as a result of the bankruptcy discharge the Debtor had no obligation to repay her debt to Countrywide; (c) the discharge protected the Debtor from any efforts by anyone to collect the discharged debt as a personal liability; (d) the Debtor could not be pressured to repay the debt; (e) it was not an attempt to collect the debt that had been discharged; (f) it was not a demand for payment…[20]


In sum, the creditor’s communication is a good example of a communication not designed to have a coercive impact on the debtor.


A Coercive Impact Likely to be Effective to Collect a Debt


The third element “seeking or obtaining periodic payments associated with a valid security interest in lieu of pursuit of in rem relief to enforce the lien” also begs for judicial interpretation. Basically, courts are tasked with distinguishing a coercive effort to collect a personal debt as opposed to an effort to modify the loan obligation in lieu of an in rem action.


The Bankruptcy Court of the Western District of Texas, stated that “it is not the intent to violate the discharge itself, but rather the intent to commit the act that violates the discharge injunction.”[21] Hence, an intentional act subjectively intended to collect a debt is not a per se violation.[22] Instead, the Court looked to the pragmatic consequences of the debt collection.[23] The Court used an example of a spurned creditor engaging in ritual animal sacrifice in order to prompt repayment of the discharged debt (apologies to goat lovers in advance).[24] The creditor sacrifices a goat in order to appease Mercury, the Roman god of Merchants, and believes Mercury will elicit debtor’s repayment. However, creditor does not publicize his sacrifice nor otherwise communicate to borrower. Moreover, he does not believe in Mercury and thinks the creditor’s belief system to be idiotic.[25] Hence, intentional performance of a useless and ineffective act cannot violate section 524(a).[26] On the other hand, if the debtor was a devout believer in Mercury or deeply committed animal rights activists then there might be enough facts to constitute debt collection.[27] The Court found that there was no coercive impact on the debtor resultant from creditor’s reporting to debt to creditor agencies.[28] In other words, there was no linkage between the act of reporting and the collection of the discharged debt.[29] Nonetheless, the Mahoney analysis seems to broaden the authority of §524 as it looks to the coercive impact on the debtor and should be adopted by other jurisdictions.[30]


Conversely, in the matter styled In re Perviz, the Bankruptcy Court of the Northern District of Ohio held a mortgage servicer (Ocwen) liable for violation of the discharge injunction when it attempted to collect a debt.[31] Ocwen argued that they:


periodically send notices to debtors not with the intent of pursuing a deficiency against them, but to indicate to debtors that there may be an arrearage and Ocwen maintains their lien rights notwithstanding the debtors’ discharge. This is done more as a service to debtors with the intent of preventing foreclosure and not with the intent of harassment or violating any statutory injunctions.[32]


The Court noted that there were numerous examples that demonstrated that Ocwen’s efforts were an attempt to collect a debt as opposed to a service. For brevity’s sake, the Court did not list such indicators in detail but posited certain questions: “how should a debtor interpret the receipt of account statements with ever increasing balances?” and “how would a reasonable debtor interpret a letter sent from a law firm wherein it is stated “that the law firm has been authorized by the creditor to take action regarding the past-due nature of the debtor’s account?”[33] These questions further the Court’s recognition that the pragmatic consequences must be considered in factual inquiry regarding an alleged discharge violation.


Other Decisions Holding the Safe Harbor Provision of § 524(j) Inapplicable


In Bibolotti v. Home Mortgage Servicing, the District Court for the Eastern District of Texas, found that “four ARM Notices, two HAMP packets, one “workout options” letter, one phone call to Plaintiff, and Defendants continuous credit reporting to be acts to collect a debt in violation of the discharge injunction.”[34] The ARM notices contained payment due dates, the amount of payment, the outstanding balance and the interest rate used to calculate as such.[35] While the letters do not say “mail your check to” or “remit payment to”, everything else constitutes a demand for payment.[36] The intent of defendants was to demonstrate to debtor owed on outstanding principle balance, what new monthly payment would be, and advise of various loan modifications.[37] The Court held that creditor’s actions were an impermissible violation of the discharge violation notwithstanding an express disclaimer on all of the correspondence.[38] Lastly, the Court found disingenuous Defendants arguments that their post-discharge communication was solely for the purpose of finding out what the borrower’s intentions were for the property.[39]


In the matter styled In re Nordlund, the Bankruptcy Court of the Eastern District of California held that creditor Bank of America’s actions violated the discharge order.[40] What may be of particular importance is that the plaintiff debtor in this matter was a retired labor lawyer[41] and some of the initial correspondence actually included a disclaimer stating that debtors were not personally liable for the loan.[42] The Court found that although not all of 24 written communications over the period of ten months constituted a violation of the discharge, several did.[43] It is worth noting that the plaintiff debtor was a retired attorney and some of the creditor’s correspondence had express disclaimers regarding personal liability on the debt.


Applying the Mahoney Analysis


Building on the insightful and rye decision by the Bankruptcy Court of the Western District of Texas, it would seem that a discharge violation requires an intentional act to collect a debt and a coercive impact likely to be effective in collecting a debt.Analyzing Giles under the Mahoney Rubric is moot because the Court found that the debtor voluntarily made payments to stay in the home. At issue was the second element of the safe harbor provision, the ordinary course of business.  Thus, the need to obviate the coercive impact on the debtor was moot. Similarly, In re Jones, offers the boy scout example of precluding any scrutiny under 524(j(3). The communication had a strong disclaimer and was not designed to have a coercive impact on the debtor.


The Court’s analysis in the matter styled In re Perviz seems most analogous to the Mahoney rubric. Namely, the Court did not only look to the alleged subjective intent of Ocwen; i.e. they argued notices were sent as a service to debtors with the intent of preventing foreclosure not harassment. The Court avoided a long exegesis on the content of the letters, and instead look to the coercive impact on the debtor. The Court asked how would a debtor would interpret account statements with ever increasing balances and how would a reasonable debtor would interpret that an attorney has been authorized to take action on the debtor’s past due account. The only point of contention with Mahoney appears to be the standard used to evaluate the coercive impact on the debtor. Mahoney indicates that the test may be a subjective one; e.g. if the creditor sacrifices a goat to compel payments and the debtor believes the goat sacrifice will cause negative consequences unless the debt is satisfied. However, in one of its examples, the Perviz Court expressly uses “reasonable” indicating an objective standard. Perhaps an objective standard should be used unless it can be proven that the debtor had actual or constructive knowledge that the debtor would be coerced by the creditor’s actions. For example, if a creditor knew or should have known that a debtor was in the military and the threat of debt effected their security in the barracks, their commanding officer’s treatment thereof, and their general reputation. Then, the creditor may be held to a subjective standard as the military personnel debtor may be more prone to collection efforts.


A Mahoney analysis of the Bibolotti case would likely come out with a similar conclusion. Bibolotti expressly stated that it would consider the “overall effect of [defendant’s] contacts” on Plaintiff.[44] In other words, the likelihood that the coercive impact would effectuate repayment. In other words, the likelihood that the coercive impact would effectuate repayment. The Bibolotti Court acknowledged that there was no smoking gun as the letters did not expressly state “mail check to” or “remit payment to”. However, it analyzed the creditor’s intent in a larger factual context which was to demonstrate debtor owed outstanding principle balance, the new monthly payment, and modification options. In this context, the Court found disingenuous  the creditor’s representations that the communications were aimed at finding out what the borrower’s intentions were for the property.  Hence, the Court ignored express bankruptcy disclaimers on the communication and, instead, looked to the coercive impact that such representations would have on the debtor.


The most interesting application of the Mahoney rubric may be to In re Nordlund. The creditor’s actions were held to be in violation of the discharge injunction notwithstanding bankruptcy disclaimer’s on the communications and the debtor’s former occupation as a labor lawyer. The Court found the constant stream of communication (24 letters over ten months including demands for reimbursement for insurance premiums) were intended to coerce payment. Notwithstanding, the creditor’s intent, the Nordlund Court appeared to make no finding of fact with regard as to the coercive impact on the debtor. Under the Mahoney rubric, the Court should have considered the fact that debtor was an attorney and may have known that these collection efforts were meritless due to the discharge. Notwithstanding any bankruptcy specific legal knowledge, the attorney had the requisite legal skills to research the issue. At the very least, the former attorney should have known enough to seek professional legal guidance in regards thereto. The one fact that may be able to reconcile these cases is the diminished physical and mental capacity of the debtor attorney in Nordlund. All the same, the Nordlund Court should have expressly mentioned this fact as evidence of the likelihood of a coercive impact.




In sum, the Mahoney analysis would likely lead to similar conclusions in the aforementioned legal decisions. The one notable exception is the Nordlund decision as the likelihood of a coercive impact on the debtor is likely to be mitigated by the fact that he was legally sophisticated. Hence, the subjective intent of the creditor to collect a discharged debt from a legally sophisticated party would be moot. In other words, the legally sophisticated party would know the debt was discharged and, thus, could not be coerced. While Mahoney would seem to constrain application of § 524 in this particular instance; generally speaking, it would likely clarify and expand its application. Pointedly, most debtors are not attorneys or otherwise legally sophisticated. Hence, the creditor’s collection efforts would not be evaluated merely by their objective intent, but the likelihood that it would result in a coercive effect on the debtor. Finally, the actions of a debt collector should not be viewed in a vacuum; instead its pragmatic consequences must be evaluated to determine whether the conduct is subject to contempt.

[1] Wynne v. Aurora Loan Servs., LLC (In re Wynne), 422 B.R. 763, 768 (Bankr. M.D. Fla. 2010)(finding complaint was sufficient that alleged the existence of an order and Defendant’s knowledge and violation thereof).

[2] See e.g., In re McCloud, 2011 Bankr. LEXIS 743, 2 (Bankr. N.D. Ga. Feb. 1, 2011)(citing Long v. Bullard, 117 U.S. 617 (1986);Universal American Mortgage Company v. Bateman (In re Bateman), 331 F. 3d 821 (11th Cir. 2003)); In re Scantling, 465 B.R. 671, 679-680 (Bankr. M.D. Fla. 2012).

[3] Mele v. Bank of Am. Home Loans (In re Mele), 486 B.R. 546, 555 (Bankr. N.D. Ga. 2013)(citing In re Brown, 481 B.R. 351, 358 (Bankr. W.D. Pa. 2012)).

[4] Vogt v Dynamic Recovery Servs. (In re Vogt), 257 B.R. 65, 70 (Bankr. D. Colo. 2000).

[5] Giles v. James B. Nutter & Co. (In re Giles), 502 B.R. 892, 902 (Bankr. N.D. Ga. 2013). See also, Vogt v Dynamic Recovery Servs. (In re Vogt), 257 B.R. 65, 70 (Bankr. D. Colo. 2000)(what constitutes an act to force collection of debt is “largely a matter of the court knowing it when it smells it.”).

[6] Giles v. James B. Nutter & Co. (In re Giles), 502 B.R. 892, 902 (Bankr. N.D. Ga. 2013)(citing In re Healthco Intern., Inc., 132 F.3d 104, 109 (1st Cir. 1997)).

[7] Ibid.

[8] Id. at 902.

[9] Id. at 894.

[10] Id. at 903.

[11] Id.

[12] Id.

[13] Id.

[14] id.

[15] id.

[16] See generally id.

[17] See generally id.

[18] See generally, In re Jones, Case No. 08-05439-AJM-7, Adv. Proc. No. 09-50281 (2009 Bankr. LEXIS 4316 (Bankr. S.D. Ind. Nov. 25, 2009) (granting defendant creditor’s motion for summary judgment).

[19] Id. at ¶ 8.

[20] Id. at ¶8. The communication provided expressly:


The Impact of the Bankruptcy. Our records indicate that in the past you received a discharge of this debt in a bankruptcy case. Section 524 of the Bankruptcy Code tells us the discharge of this debt means you have no personal obligation to pay it. The discharge also protects you from any efforts by anyone to collect this discharged debt as a personal liability of the debtor. You cannot be pressured to repay this debt. On the other hand, the security agreement allows foreclosure if the requirements under the loan documents are not met. We also need to tell you that this communication is from a debt collector. This quick summary is not intended as legal advice. You should consult your own advisors if you have legal questions about your rights.

[21] Mahoney v. Wash. Mut., Inc. (In re Mahoney), 368 B.R. 579, 587 (Bankr. W.D. Tex. 2007)(holding that the mere reporting of credit information was not a per se discharge violation)(citing Hardy v. United States (In re Hardy), 97 F.3d 1384, 1390 (11th Cir. 1996)).

[22] Id.

[23] Id.

[24] Id.

[25] Id.

[26] Id.

[27] Id. at 588 (“shows the coercive impact of the missive, sufficient to fairly describe the act as likely to be effective to collect a debt.”).

[28] Id. at 594.

[29] Id. at 584 & 589.

[30] See discussion infra.

[31] In re Perviz, 302 B.R. 357 (Bankr. N.D. Ohio 2003)

[32] Id. at 365.

[33] Id. at 366.

[34] Bibolotti v. Am. Home Mortg. Servicing, Inc., 2013 U.S. Dist. LEXIS 69242, 36 (E.D. Tex. May 15, 2013)(finding that Defendants violated the discharge injunction and are found to be in civil contempt).

[35] Id.

[36] Id. (additional information and the structure of the letter transformed the letter from one for informational purposes to a coercive attempt to collect debt).

[37] Id.

[38] Id. The correspondence provided the following disclaimer:

[AHMSI] is a debt collector attempting to collect a debt. Any information obtained will be used for that purpose. However, in the event the debt has been discharged pursuant to or the addressee or recipient is under the protection of federal bankruptcy law, this communication is solely for informational purposes and is not an attempt to collect a debt. Id. at 39.

[39] Id. at 47.

[40] In re Nordlund, 494 B.R. 507 (Bankr. E.D. Cal. 2011)(granting debtor’s motion for contempt of discharge of violation; and also paid debtor wife’s lost wages, awarded reasonable attorney’s fees and costs, and awarded the debtor’s a total of $40,000 in emotional distress damages).

[41] Id. at 511.

[42] Id. at 513.

[43] See generally id.

[44] Bibolotti, 2013 U.S. Dist. Lexis 69242 at 29.

The Rules of Professional Conduct are Rules of Reason

Posted by on May 23, 2014 in Uncategorized | 0 comments

The Rules of Professional Conduct are Rules of Reason[1]


The Roman orator and philosopher Cicero is attributed with saying that there is but one truth: right reason. Reason is the quintessential tool of an attorney, as rules and paradigms may shift in time, but deducing the legal rights and duties therefrom is constant. There is perhaps no greater application of this skill than in the field of ethics. State bar organizations exert significant energies in articulating the rules governing professional conduct for lawyers. However, these organizations also understand the inherent limits in proscribing uniform rules to a myriad of factual predicates; as trying to do so would lead to absurd and manifestly unjust results. Because of this, state bars often try to delegate this responsibility to individual attorneys.

The Florida Bar for example, provides: “a lawyer should also aid in securing their observance by other lawyers.” The Florida bar assumes, perhaps correctly, that compliance depends upon reinforcement by peer and public opinion. The importance of this peer review is expressly reinforced in the Florida Bar Rules, as an essential element in maintaining the autonomy of the profession from undue government regulation and preserving the public interest which it serves.

The Florida Bar also provides that: “a lawyer is also guided by personal conscience.” This begs the ontological question of what is a “conscience.” Let’s start by viewing a lawyer’s conscience through a literary lens. Atticus Finch, the most renown attorney in American literature, provides the terse, “…before I can live with other folks I’ve got to live with myself. The one thing that doesn’t abide by majority rule is a person’s conscience.”[2] William Faulkner employs a stream of consciousness writing style to capture the idea of conscience in Intruder in the Dust:

Some things you must always be unable to bear. Some things you must never stop refusing to bear. Injustice and outrage and dishonor and shame. No matter how young you are or how old you have got. Not for kudos and not for cash: your picture in the paper nor money in the bank either. Just refuse to bear them.[3]

Atticus Finch’s aphorism is almost like a commandment, one which can be easily committed to memory. However, one could argue that Faulkner best captures the passion-inspired raw sentiment of a moral duty.

Robert Bolt’s play, A Man for All Seasons, documents the refusal of Sir Thomas More to endorse King Henry VIII’s divorce from Catherine to Aragon (ironically so he could marry Anne Boleyn), an act for which he was ultimately executed. Bolt provides insight into the dichotomy between ethics and conscience in the following dialogue:

Norfolk: …frankly I don’t know whether the marriage was lawful or not. But damn it, Thomas, look at those names… You know those men! Can’t you do what I did, and come with us, for fellowship?

More: And when we stand before God, and you are sent to Paradise for doing according to your conscience, and I am damned to hell for not doing according to mine, will you come with me, for fellowship?[4]

Ethics is an extrinsic institutionalized system of morals and thereby must be ripe for exploitation, lest it become irrelevant. Conscience is an intrinsic compass that transcends societal constraints and is, thus, immune to the moral stagnation of an institutionalized value system. More represents an ideal conscience as he sacrifices his life for a deontic value.

Furthermore, Bolt illustrates that an abeyance of one’s conscience does not create a mere chink in an individual’s moral armor, but results in collective moral detriment:

Wosley: …your conscience is your own affair; but you’re a statesman… explain how you as Councilor of England can obstruct those measures for the sake of your own, private, conscience.

More: I believe, when statesmen forsake their own private conscience for the sake of their public duties…they lead their country by a short route to chaos.[5]

When focused properly, the literary lens can be an incredible tool for enhancing our view of ourselves and the world around us; however, the idea of conscience cannot be distilled from a literary analysis alone. Notwithstanding the aesthetic merits thereof, literature’s scope is usually limited to a pedagogical starting point. Take for example, the closing scene of Inherit the Wind Henry Drummond’s picking up the Bible in one hand and Darwin’s On the Origin of Species in the other, balancing the two and placing them together in his briefcase.[6] Its application helps identify competing policies, e.g., tradition v. progress, but does not provide the analytical tools to hone its scope and application. Conscience is ultimately a subjective state of mind that must be ballasted by reason. In the context of a lawyer making a decision regarding ethics, it requires a good faith effort to analyze the obligations owed in a given situation, the effect upon the parties involved, the effect on the greater legal community, and the effect on institution of law.[7] Needless to say, balancing these competing polices may still result in uncertainty. That said, the ultimate obligation is to the institution of law and maintaining the integrity thereof. By the “institution of law”, I am describing the need for order in a civilized society which must not only be protected from internal corruption, but in a constitutional democracy, promote public confidence and trust. The Rules of Professional Conduct seem to echo this sentiment as they provide that: “a lawyer should cultivate knowledge of the law beyond its use for clients and employ that knowledge in reform of the law.”[8]


[1] Rules of Professional Conduct Preamble: A Lawyer’s Responsibilities, Florida Bar Rules at Chapter 4: Scope [hereinafter RPC].

[2] Harper Lee,  To Kill a Mockingbird 105 (1982).

[3] William Faulkner, Intruder in the Dust  201 (1991) .

[4] Robert Bolt, A Man for All Seasons 132 (1990).

[5] Id. at 22.


[6] Jerome Lawrence and Robert Lee, Inherit the Wind 129 (1960).

[7] RPC, supra note, at 1 (“many difficult issues of professional discretion can arise outside the express content of the Rules of Professional Conduct. Such issues must be resolved through the exercise of sensitive professional and moral judgment guided by the basic principles underlying the rules”).

[8] Id.

The Changing Role of Lawyers in Residential Real Estate Transactions: Are Lawyers Really Needed?

Posted by on May 21, 2014 in Uncategorized | 0 comments




Residential real estate transactions are now being preformed with the assistance of real estate brokers, title companies, escrow or closing agents, without attorneys.[1] Real estate transitions require tasks that were once the sole province of attorneys. For example, attorneys were charged with document creation, including the preparation of deeds, mortgages, releases, transfers and other instruments affecting title to real estate, and advising persons, firms and corporations as to their legal rights in connection with the conveyance of residential real estate.[2] However, attorney involvement is now thought to be costly and outdated as many forms and procedures have been standardized. This article argues that conveyancing requires the application of abstract legal principles thereby affecting the rights and duties of others.[3] Thus, the performance of certain tasks in conveyancing in real estate transactions by nonattorneys should constitute the unlicensed practice of law. On the other hand, the opposition arguest that these archaic prohibitions are nothing more than the profession’s attempt to protect its monopoly on real estate transactions.


Whether the profession’s motive is profit or professional ideals, attorney involvement generates a net benefit both individually and collectively. The article concludes that attorney involvement improves a borrower’s ability to identify and access risk when purchasing a home. Conversely, opponents argue that consumer’s demand less costly and more efficient real estate transactions. However, removing the attorney from the process only ripens the transaction for exploitation including, but not limited to, high interest rates, exorbitant broker fees, and predatory lending. The exploitation will lead to an increased likelihood of default and foreclosure thereby causing significant financial hardship for the buyer. On a greater scale, multiple foreclosures “adversely affect[] neighborhoods and cities by reducing surrounding property values, increasing crime, and eroding municipal tax bases.”[4]


This brief article is broken down into two sections. In the first part, it identifies the players involved in a residential real estate transactions. It describes their roles and incentives in contrast to the attorney’s independent duty of professional care. In the second part, the article illustrates the attorney’s unique ability to identify, manage and mitigate risk for her client. The article concludes that an attorney’s incentive to represent her client in a disinterested and professional manner is a needed insurance against a multitude of risks in a residential real estate transaction.


1. The Players


The Players involved in a residential real estate transaction once contained a limited list whose motives could be readily identified and whose actions could be forecast with some degree of certainty. However, with the advent of mortgage backed securitization and debt fracturing the list is potentially limitless including: originator, issuer, depositor, servicer, master servicer, super senior tranche investors, and mezzanine tranche investors (to name a few). Nevertheless, the following is a list of some of the familiar faces.[5]


1.1.  The Lender (Buyer’s)


The buyer’s lender originates the loan and sends the funds to the closing. Traditionally, the lender held, owned, and serviced the note until its maturity. However, the majority of loans are now serviced by mortgage servicers specializing therein. The resulting fracture of the mortgage debt has created institutional frictions resulting in a market failure of sorts.[6] The resulting competing incentives between mortgage servicers, distressed borrowers, government interventions and investors has resulted in a well-documented history of unsafe and unsound foreclosure practices.[7]


1.2. The Listing Real Estate Agent


The salesperson who lists the property, analyzes the market, determines the property value, and markets the property on behalf of the seller. The listing agent typically works on commission and only receives payment upon consummation of the sale.[8]


1.3. The Selling Real Estate Agent


The selling agent works on behalf of the buyer. This agent reviews and analyzes local listings to determine what properties meet the client’s preferences. The agent develops a relationship with buyers as they guide them literally through the homes and figuratively through the home buying process. This is the player who will most likely know the names and ages of a buyer’s children and what school they would attend in the local district.


1.4. Title Company


The title company performs a title search and prepares a report to seller or seller’s attorney advising her to clear title defects or provide insurance therefor.


1.5. The Closer


Typically, the title company provides the closer who performs the following functions:


  • collect all figures from the Seller’s attorney, Buyer’s attorney, lender and title company, and issue a document compiling the same in what is typically referred to as a HUD-1, RESPA or Settlement Statement.
  • collect all funds at the closing and issue checks as per the final Settlement Statement
  • coordinates with the Buyer’s lender and fulfill any requirements they demand at closing;
  • send for recording any pertinent documents including the Deed, Release of Mortgage, and etc.
  • ensure all documents are collected to clear certain exceptions raised in the title commitment.[9]

1.6. The Home Inspector


The home inspector is an essential part of bridging the information asymmetries that exist between the seller or the buyer. Of course, the seller is more likely to know about defects in the home that would preclude a sale or otherwise depreciate the home’s value. Hence an inspector is able to provide information regarding the physical condition of the home upon which the buyer may base her bid.


1.7. The Appraiser


Appraisers are usually licensed by their particular state to access real estate and provide a valuation based upon different factors including but not limited to: location, school district, neighborhood property values, and amenities. Often times, the seller does not hire an appraiser and lists their home based on the valuation of the listing real estate agent. An appraiser may be hired by the lender to evaluate the property and the likelihood of a return on their investment (i.e. the amount of principal loaned at a particular interest rate).


1.8. The Broker


Generally speaking,  brokers are responsible for “bring[ing] the parties together, negotiat[ing] business terms, and assist[ing] the parties in preparing for closing by ordering inspections of the property and performing similar tasks.”[10] Market competition has forced many brokers to provide advice regarding issues including but not limited to mortgage financing, zoning, land use, and title insurance.[11] Wouldn’t consumers rather have a broker giving the “same” advise regarding these issues that an attorney would provide, especially if they are at a lower costs?


1.9. The Attorney (the Buyer’s)


Braunstein distills the lawyers role, or previous role, into the following:


Lawyers should be involved in drafting the brokerage contract, negotiating and drafting the contract of sale, performing the title search, advising the parties as to survey results, taking curative action to make title marketable, drafting the mortgage and the bond or note it secures, as well as the deed, obtaining title insurance, and preparing a closing statement as well as any other incidental paper work, such as the Truth-In-Lending form.[12]


With the standardization of forms and procedures, Braunstein argues that these tasks traditionally delegated to attorneys can now be performed by the other players.[13]

However Braunstein ignores the truism that attorneys are more sophisticated with regard to the legal repercussions of legal issues.[14] Even assuming that increased sophistication is minimal, most residential transactions involve consumers who are investing all of their resources into a home purchase. Hence, the additional costs involved with a legal fee may be a prudent investment to insure against the risk of any negative legal ramifications. Second, and more importantly, the rest of the players have significantly less skin in the game. For example, if a broker gives you bad advise, the negative repercussions are limited. Hence, a broker will ultimately compromise a consumer’s interest if the potential gain of giving bad advice is greater than the risk of getting caught and the negative repercussions thereof.[15]


While it may be argued that lawyers, and for that matter all rational actors, operate under the same formula of risk vs. reward; the risk of negligent or improper conduct  is substantially greater for attorneys.[16] Namely, attorneys are subject to professional discipline by state bar organizations for conduct inapposite of its professional duties. What does this mean? It means that attorneys could lose their privilege to practice law and have no means to pay back over one hundred thousand dollars of student debt incurred in securing that privilege. Assuming an attorney is not disbarred, but publicly reprimanded (or even merely investigated); it would still adversely affect an attorneys reputation and credibility.


Conversely, Michael Braunstein argues that the role of attorneys has been marginalized in residential real estate transactions. He performs a rather cheeky analysis of the current academic literature. He largely dismisses the role of attorneys in real estate transactions as archaic, self-interested and money-grabbing. His 1997 work, of course, predates the housing bubble and resulting  mortgage foreclosure crisis.


Greek philosopher Longinus said that sublime impulses need the curb of stability, as often as they need the spur of inspiration. In other words, the assembly line standardization of  real estate transactions created a positive feedback loop with the secondary mortgage market[17] (a clever but unproven means of increasing the liquidity of valuable long term assets like mortgages) creating catastrophic results.[18] Thus, an attorney’s role would have curbed the ease and efficiency with which the residential real estate transactions. Let’s assume the attorney’s role was completely arbitrary and they would not even be able to advise prospective homebuyers of the risks of debt fracturing, unsafe mortgage servicing, and securitization. For example, all real estate transactions were required to have an attorney perform stand on his for thirty minute a day for three consecutive days prior to closing. This completely arbitrary measures would have most likely curbed or mitigated the effects of the housing bubble. Hence a disinterested actor’s ability, even if completely arbitrary, would be able to slow down these novel and unproven transactions. Institutions and ideas that are otherwise thought to be archaic would have curbed the clever financial engineering and resultant supply of capital that facilitated the housing bubble. Lewis Mumford describes a similar phenomenon regarding the drive for development as “[a driver] rolling backward downhill, continued on [his] course because [he] preferred the sensation of motion, even if it were backwards, to the recognition of his inability to reverse the direction and go forward.”[19]


Lastly, an attorney not only has a duty to her client, but the institution of law itself.[20] Lawyers are to cultivate their knowledge of the law and employ that knowledge to reform the law.[21] Moreover, a lawyer is guided by her own personal conscience and the approbation of her professional peers.[22] An attorney should ask themselves not only “is this legal?”; but also “is this right?” and “does the law need to be changed?” For example, attorney involvement in real estate transactions connected to the secondary mortgage market may have begged greater questions regarding the relevant law and the possible need for reform.[23] While these considerations may have thwarted some real estate transactions, or none at all, they at least require contemplation. The time afforded to contemplation is a very real transaction costs which could have helped curb the housing bubble.




2. The Buyer’s Lawyer as a Risk Manager


Mallowy and Klapow argue that lawyers are hired not only to apply legal principles but also identify and manage risks of a particular transaction.[24] Lawyers are typically charged with negotiating and drafting the contract of sale, draft or review the financing documents, and figuring out title issues.[25] The parties ordinarily include contractual provisions for the following: marketability of title, risk of loss, earnest money, fixtures, contingencies, easements to the seller, time for performance, proration, type of deed to be used and estate passed, and other terms.[26] This article looks to two of the most important of these provisions: risk of loss and marketability of title.


2.1.      Risk of Loss


By far the most amorphous and ambiguous of the aforementioned issues in a contract of sale is ‘risk of law’. The risk of loss has become all the more complicated by the advent of the secondary mortgage market. Though the process of debt fracturing and securitization is too complicated to explore herein, it involves multiple stakeholders with competing incentives and sometimes non-rational behavior.[27] Hence, it takes an attorney to be able to sufficiently identify and mitigation potential risks. More importantly a knowledgeable attorney will not only be able to identify risk but also be able to identify uncertainty. Namely, the secondary mortgage markets presents significant information barriers which creates uncertainty that cannot be sufficiently hedged against. Statistician and popular writer, Nate Silver quips that these “unknown unknowns” (uncertainty) must be distinguished from “known unknowns” (risks).[28] One of the most apparent, but difficult to detect, risks is defects in title. However, this risk can be mitigated by title insurance. Title insurance is important to hedge against any defects that might impair title. Hence, it is part and parcel of commercial transactions.[29] Thus, it would follow that a residential homebuyer should also secure title insurance as a home purchase as it is typically the most important financial decision in the respective homebuyer’s life.[30] A skilled attorney will be able to evaluate a title abstract and determine the type title insurance that may best meet her client’s expectations.



2.2.      Title Search


The title search involves searching the recording system for adverse interests to ensure the asking price is a proper reflection thereof. A title search is not dispositive and only provides a probability of what the title is likely to convey in a transaction. Many different factors may complicate the title search including but not limited to: the length of title search, the availability or readability of public records, and inability to check for formal defects in recorded documents. [31] A title abstract is an analysis and summary of information collected from sources like public records and real property tax rolls that attempt to flesh out all interests in a particular property.[32] The title abstract makes no conclusions regarding the title and it is up to the reader to determine if the information therein confirms their value assessment of the property. This begs the question of who needs to evaluate that information: an attorney? Or can one of the other players do it a lower cost?


Mallowy and Klapow described the confirmation and assurance of title as one of the most important areas of risk in a real estate transaction. [33] Typically, the title contemplated in the transaction is a marketable title in a fee simple interest in the land, however, confirming and assuring title is difficult.[34] The recording system provides only evidence of the quality of title and is not dispositive.[35] Hence, there are “off-record”[36] risks to title and thus ‘unknown unknowns’ which have to be sufficiently insured against; e.g. adverse possession and mistakes by recording office. Conversely, there are “on-record” risks like forged documentation and fraudulent conveyances that almost no amount of diligent research could uncover.[37]


There are two main reasons which an attorney should be tasked with evaluating the title abstract or the abstractor’s opinion thereof. First, the attorney is best trained to predict legal consequences of the title conveyance and, thus, suggest adjustments to the asking price or any insurance that may be needed. Second, the uncertainty inherent in the title abstract is ripe grounds for malfeasance and attorney’s professional conduct is the best safeguard against this risk. In sum, there is a shifting rubric used to evaluate the risk involved in title assurance. Thus, it is important for an attorney to be able to identify the risks, theorize the legal repercussions thereof, and calibrate the proper amount of insurance thereagainst.





Individual homebuyers benefit from attorney involvement because an attorney is the buyer’s only disinterested advocated whose payment is not based on consummation of the sale. Moreover, attorneys are uniquely able to identify and manage risks because they are the only party able to accurately predict and foresee legal consequences. Even assuming risk is minimal, the increased insurance against risk is a good investment for homebuyers who are often making the most important financial decision of their lives. Similarly, states should enforce UPL laws against nonattorneys practicing law in real estate transactions. UPL laws help prevent collective action problems like predatory and subprime lending by requiring a professional who has not only a duty to his client but the institution of law itself. This duty is not high-minded rhetoric cloaking ulterior motives, but an enforceable one that when neglected could result in professional consequences from public reprimand to disbarment. Thus, attorneys have significantly more skin in the game than any other of the players and their involvement will ensure that a buyer’s interest is fully protected.



[1] Robin Paul Malloy & Mark Klapow, Attorney Malpractice For Failure To Require Fee Owner’s Title Insurance In A Residential Real Estate Transaction, 74 St. John’s L. Rev. 407, 418 (2000)[hereinafter Mallowy & Klapow].

[2] Michael C. Ksiazek, Note, The Model Rules of Professional Conduct and the Unauthorized Practice of Law: Justification for Restricting Conveyancing to Attorneys, 37 Suffolk U. L. Rev. 169, 175 (2004)(citing Mass. Ass’n of Bank Counsel, Inc. v. Closings, Ltd., No. 90-3053-C, 1993 Mass. Super. LEXIS 239, at 4 (Sept. 2, 1993) (ruling conveyancing constitutes practice of law). For a more nuanced definition see Michael Braunstein, Structural Change and Inter-Professional Competitive Advantage: An Example Drawn from Residential Real Estate Conveyancing, 62 Mo. L. Rev. 241, 263-64 (1997) (examining attorneys’ role in real estate transactions).

[3] Accord Shortz v. Farrell, 193 A. 20, 21 (Penn. 1937)( “Where . . . a judgment requires the abstract understanding of legal principles and a refined skill for their concrete application, the exercise of legal judgment is called for.”); Wash. Ct. R. 24(a)( The practice of law is the application of legal principles and judgment with regard to the circumstances or objectives of another entity or person(s) which require the knowledge and skill of a person trained in the law); Ethical Consideration 3-5,  American Bar Association Model Code of Professional Responsibility, (last visited April 9, 2014)(the practice of law relates to the rendition of servicers for others” that calls for a lawyer to use “his educated ability to relate the general body and philosophy of law to a specific legal problem of a client.”).


[4] See Dan Immergluck & Geoff Smith, The External Costs of Foreclosure: The Impact of Single-Family Mortgage Foreclosures on Property Values, 17 HOUSING POL’Y DEBATE 57, 57- 60 (2005)[hereinafter External Costs] (finding “that each conventional foreclosure within [one] eighth of a mile of a single- family home results in a 0.9 percent decline in the value of that home” and noting study that found city costs of $27,000 per foreclosure); Dan Immergluck & Geoff Smith, The Impact of Single-Family Mortgage Foreclosures on Neighborhood Crime, 21 HOUSING STUD. 851, 862 (2006) (calculating that a 1 percent increase in the foreclosure rate in a census tract yields a corresponding 2.33 percent increase in violent crime rate).

[5] See Who Are All The Players in a Real Estate Transaction? Law Offices of Hoy & Shalas, ltd.; (last visited May 17, 2014)[hereinafter Hoy & Shalas].

[6] Accord Dan Magder, Mortgage Loan Modifications: Program Incentives and Restructuring Design, Peterson Institution International Econ. at 1 (Nov. 2009); Diane Thompson, Foreclosing Modifications: How Servicer Incentives Discourage Loan Modifications ,  86 Wash. Law Rev. 755, 774 (2011).

[7] See, e.g., Interagency Review Of Foreclosure Policies & Practices, at 8, Off. Comptroller Currency, Office Thrift Supervision & Fed. Res. Sys. (2011), available at [hereinafter Foreclosure Policies & Practices](In 2010, the four federal bank regulators-OCC, OTS, FRB, and FDIC-conducted on-site reviews of the foreclosure policies and procedures of 14 major servicers); On Mortgage Servicing: Hearing Before the Subcomm. on Financial Institutions and Consumer Credit, Subcomm. on Oversight and Investigations and the H. Comm. on Financial Servs., 112th Cong. 3 (2011) (statement of the Fed. Res. Bd.) [hereinafter Fed. Res. Bd. Statement] (In July 2011, the Federal Reserve Board and other bank regulators conducted a horizontal review of same servicers); Press Release, Department of Justice, Federal Government and State Attorneys General Reach $25 Billion Agreement with Five Largest Mortgage Servicers to Address Mortgage Loan Servicing and Foreclosure Abuses (Feb. 9, 2012), available at (Five major servicers entered into a settlement agreement with 49 state attorney generals and the federal government for unsound and unsafe foreclosure practices).

[8] Hoy & Shalas, supra note ?.

[9] Hoy & Shalas, supra note 5.

[10] Mallowy & Klapow, supra note 1, at 422.

[11] Id.  at 421.

[12] Michael Braunstein, Structural Change and Inter-Professional Competitive Advantage: An Example Drawn From Residential Real Estate Conveyancing, 62 Mo. L. Rev. 241, 243 (1997).

[13] Id. 247. (“[T]he residential real estate transfer is a routine, standardized transaction, in which lawyer involvement is hardly ever required.”).

[14] See Ksiazek, supra note 2, at 177 (“laypersons should be prohibited from engaging in conveyancing have focused on the risks of, and potential for, adverse consequences to the client, arguing that layperson conveyancers inherently fail to recognize and account for complicated issues only the trained lawyer is adequately capable of spotting, disclosing, and managing.”). But see generally, Braunstein, supra note 12 (with the advent of standardized transactions and title insurance, the marginalization of attorneys in residential real estate transactions was inevitable-also noting the trend is towards less lawyers).

[15] Cf. Ksiazek, supra note 2, at 169; Braunstein, supra note ?12, at 243-244 (broker is interested in securing a sale as they are paid on commission as opposed to an attorney who is paid regardless of the consummation of the sale).

[16] Cf.  Ksiazek, supra note 2, at 169 (A dual trust is imposed on attorneys at law: they must act with all good fidelity both to the courts and to their clients).

[17] The secondary mortgage market went from nonexistent in the 1970’s to an industry whose activity measured close to a trillion dollars per year circa 2000. Mallowy & Klapow, supra note 1,  at 413.

[18] External Costs, supra note 4, 57-60 (“The resulting high rate of foreclosure’ has undermined national and global economies”).

[19] Mumford, Lewis. City Development: Studies in Disintegration and Renewal 51 (1945).

[20] See e.g. Preamble Fla. R. Prof. Cond. (2014).

[21] Id.

[22] Id. See, e.g., Mallowy & Klapow, supra note 1,  at 443 (arguing for a higher standard of care with regard to a lawyer’s duty in real estate transactions and even extending, in certain circumstances, their duty to non-clients).

[23] Indeed it was legal reform that allowed for mortgaged backed securitization. Mallowy & Klapow, supra note 1,  at 435. (“[M]any regulatory reforms and market integrations of the past two decades, ha[ve] radically and irretrievably altered the way in which the residential real estate market operates.”).

[24] Mallowy & Klapow, supra note 1,  at 422.

[25] Id.  at 422.

[26] See Braunstein, supra note 12, at 245.

[27] Cf. Gretchen Morgenson, So Many Foreclosures, So Little Logic, N.Y. TIMES, Jul. 5, 2009, at BU1 (quoting Professor Alan M. White’s conclusion that in many cases the decision to foreclose “is not rational economic behavior” based on his study of almost 32,000 liquidation sales conducted in June 2009, for which the average loss was 64.7% of the original loan balance).

[28] See generally, Nate Silver, The Signal and the Noise (2012)(borrowing from a former secretary of defense Dick Rumsfeld quote).

[29] Mallowy & Klapow, supra note 1,  at 427.

[30] Id. at 427.

[31] See Braunstein, supra note 12, at 245.

[32] Id. at 435.

[33] Id. at 427.

[34] Id. at 427.

[35] Id. at 427.

[36] Id. at 431.

[37] Id.  at 432.

All Saints Neighborhood: Still Room for Growth

Posted by on May 21, 2014 in Uncategorized | 0 comments


Just what local Tallahassee hipsters did not want to hear. But this trendy spot is still prime for growth and presents a great investment opportunity. All Saints Neighborhood (ASN) is the epicenter of hipster culture which is thriving in Tallahassee, an imitation of similar movements in Brooklyn and Wicker Park. While Brooklyn has undergone significant gentrification pushing the hipsters to Bushwick, the gentrification process has just begun in Tallahassee. Although ASN has experienced some development, it still has plenty of opportunities for growth. And while it is unfortunate that ASN’s organic growth may be subject to some corporate development, it is an inevitable fate and will ultimately benefit the entire neighborhood.

The phenomenon is not unique to Tallahassee and has occurred in a myriad of other cities at different times. Tallahassee, particularly ASN, possesses a significant  amount of Avant capital. As used herein Avant capital describes an asset that is derived from original or innovative thought. Avant capital is a unique type of asset because it generates significant positive spillover and its producer is typically ill-equipped or otherwise unable to capitalize on it. In Tallahassee, Avant capital is produced by writers, artists, musicians, chefs, extreme sports enthusiasts and fashionistas. Their “production” while not always readily translatable into profit (or even forecasts of profits) has great value. Moreover, its producers are unable to fully capitalize on their product thereby generating spillover positive externalities. The surrounding community gets a free-ride on these externalities (which as described further below presents a great investment opportunities for investors seeking a high return investment with moderate risk).

ASN: A Brief History

ASN is experiencing significant growth as up-scale apartments have recently been built and populated by young professionals. As recent as ten years ago, ASN was nothing more than a dilapidated industrial district with a twenty-four hour coffee shop (All Saints Café) and a few automotive body shops. Across the street from All Saints Café was Railroad Square, a collection of warehouses filled by artists, hippies, spiritualists, and extreme sports enthusiasts. All Saints Café was run by two local men dedicated to maintain a refuge for local hipsters and a center of counterculture. The 24 hour Cafe played independent music, served vegan cuisine, often served as a place to sleep for down-on-their-luck Tallahassee youth. It was widely thought that the Cafe teetered precariously on the edge of financial ruin. Nonetheless, the Cafe remained opened up 24 hours a day, seven days a week; and become a beacon of independent culture featuring local artists, chefs and musicians. Although the growth and development of All Saints Neighborhood obviates any sort of atomistic explanation; however, if pressed for a root cause, I would look first to All Saints Café.

ASN: A Brief Survey

Not only is ASN a prime generator of this Avant capital, it has been the center piece in creating synergies which has increased this capital. Railroad Square, a potpourri of hippies, artists, spiritualists and outdoor enthusiasts, has become a thriving commercial district. Railroad Square’s renown is due in large part to its First Friday Art Walk. Tallahassee residents, whether aficionados or merely looking to have a drink, descended upon Railroad square every month buying local art, food and drink. The resulting influx of capital has turned this area into a super-chic, growing commercial district.

Some of ASN’s features are so hip it literally hurts deep inside my lawyerly an ultimately unhip self. For example, the AMTRAK station across from All Saints Café has been converted into a single theatre cinema. And what do they play? Indie films, of course! Similarly, the Fermentation Lounge features obscure beers crafted locally and from around the world (I’m sure they all taste the same but they have cool labels and clever names).  Also, the Grain offers “casual urban cuisine”-I think this means Applebees only “cool”. And I don’t mean that in a pejorative since–it is “cool” and “cool” sells. Grain’s website can be found easily online and the layout has a crisp and fresh design.[1] Self-identification and community -awareness are indicators of a strong independent community and continued, sustainable growth. The Grain’s website has a tab entitled “The Neighborhood” which features a map of over twenty (including two gas stations) shops in ASN. Instead of competing with each other, these shops seem to realize that working collaboratively creates synergies from which everyone benefits.

Developers have already capitalized on the low property values in and surrounding ASN. Developers, Peter Rosen and Corri Byrne, have completed The Cloisters in Tallahassee. The tri-level units are reminiscent of the quaint housing in Charleston, Savannah, and New Orleans. The units alternate facades of aluminum siding and brick. The Cloisters boast a trendy and walkable community featuring popular local spots like the Fermentation Lounge. The Cloisters feature one bedroom units from around $150,000 to three bedroom  units for around $250,000.[2] Adjacent to the Cloisters is a vacant lot and across the street is an older house that appears to be rented out by local students.

Traveling west along St. Francis there are alternating lots of new structures and vacant lots. These structures, though multi-unit housing, are not part of larger development. Hence they have kept some of the charming vestiges of ASN including old growth trees and beautiful stone work. The on-facstreet parking slows traffic and contributes to the sense of community.

Parallel Movements: “Keep Louisville Weird”

This sort of self-identification and awareness has been evident in other neighborhoods. For example, the Highlands Neighborhood in Louisville, Kentucky, has become intertwined with the theme of “Keep Louisville Weird.” In fact, this slogan was adopted (or crafted) by the Louisville Independent Business Alliance that advocates for citizens to “buy local first.”[3] LIBA attempts to preserve the unique character of Louisville and support local businesses.[4] The Highlands is the quintessential example of LIBA’s efforts. During the 1980’s many artistically oriented entrepreneurs were attracted to the area due to its low rent and beautiful, historic facades. At the same time, young professionals were moving to the Cherokee Park area to take advantage of this Olmsted-designed park.[5] The Highlands evolved into an area known for its independent coffee shops, music stores, book stores, restaurants, bars and clothing shops. Amazingly, many of these shops have thrived and even opened multiple locations. The “Keep Louisville Weird” movement continues to thrive as a new influx of young professionals attempt to strike the precarious balance of slaving away at the office and staying cool.  The “Keep (insert city) weird” has been successful in other cities and led to sustainable development which generally creates positive externalities namely increased property values.

Comparison and Analysis: West Midtown Atlanta and the Rainey Street Historic District in Austin 

ASN has significant potential to develop as an epicenter for young professionals. The phenomenon itself is by no means unique to Tallahassee. Take for example an area of Midtown Atlanta where mixed used housing is popping up across from abandoned lots in an area once devoted to industry. M Street Apartments feature loft apartments amid on-site retail stores in West Midtown.[6] Amidst an industrial wasteland have popped up local restaurants, cafes, gyms, and bars. Notably, Octane Coffee seems to offer a bastion for hipster culture and offers a respite form the Starbucks along Peachtree Street. The nearby restaurants all offer contemporary American cuisine; namely, clever twists on Southern Comfort food. Lastly. M. Street Apartments offer a short walk to Georgia Tech University and a short drive to Piedmont Park whose layout and amenities could fairly be compared to New York’s Central Park.

Austin’s Rainey Street features historic buildings converted to restaurants and bars. The bars feature generous decks and porches for outdoor dining and drinking. The neighborhood has largely retained its historic character and the combination of a contemporary artistic flare has made this area one of the most popular in all of Atlanta. Food trucks  in Austin are means for aspiring restaurateurs to get into the industry with relatively low overhead. And Austin welcomed the food truck movement with open arms. It seems that some food trucks have taken up semi-permanent residency in an empty lot on Rainey Streets; no doubt taking advantage of the popularity of hungry bar hoppers. Some of the food trucks have become food huts built with an assortment of two by fours and aluminum siding. What it lacks in ambience it makes up for in a wide variety of fusion cuisine. This empty lot can only be compared to a favela replete with stray cats sleeping on the plastic tables during the day. In sharp contrast, sits the Skyhouse Apartments which dominate the skyline above Rainey street and asks its potential residents to “elevate [themselves] to a higher standard of living.”[7] It offers a rooftop pool and notes the “eclectic” (code for hipster) lifestyle on Rainey Street. A little further south, closer to the Colorado River, sits a similar development, Windsor on the Lake.[8] These developments have been, or will, be filled by childless, young professionals in an above average earning bracket. Their discretionary income will be spent living vicariously through hipsters by buying their food, poetry, music and art. This recurring ethos of buying local (or keeping (insert city) weird) of the community will actually increase the value of the development as it will free ride on the growth and development of the local bars and restaurants.


In summary, this same phenomenon of Avant capital occurred in West Midtown Atlanta and the Rainey Street Historic District. Investors were able to capitalize by investing money in development before the fervor abated. ASN has the same potential as West Midtown and Rainey Street; and needs development to strike while the iron is hot. ASN could potentially be a neighborhood filled with young professionals whose consumer dollars would stay in Tallahassee by supporting its local restaurants, bars and cafes. The same buy local ethos of other communities will allow consumer dollars to stay in and reinvest in ASN. Developments in ASN will get a freed ride on this ethos as property values are likely to increase. Hence investment in real estate in ASN may be a prudent investment opportunity presenting moderate risk and a high potential return. This initial survey demonstrates that further analytical review is warranted.




[1] The Grain, (last visited May 16, 2014).

[2] The Cloisters of All Saints, HomeSalesOfTallahassee, (last visited May 19, 20150.

[3] LIBA’s Mission, Louisville Independent Business Alliance, (last visited May 16, 2014).

[4] Id.

[5] Yeah, the dude who designed Central Park in New York. Olmstead was commissioned to design a system of parks and parkways for Louisville in 1891.

[6] M Street, (last visited May 20, 2014).

[8] Windsor on the Lake, (last visited May 19, 2014).