Monday, August 8, 2011

Who owns your house?

I think of ownership of an object as a question of who gets to make decisions that involve the object. If I own a chair, I can paint it, smash it, sell it, give it away, or move it to the attic. I don’t own my house in quite the same way.

1. You own your house. That was easy.

2. As long as you have a mortgage, the bank that holds the mortgage owns your house with you. The bank probably gave far more money to the previous owners of your house than you did. You have much more control over your house than the bank does, but the bank is essentially a (mostly silent) partner in your house ownership. If you owned your house outright, you could tear your house down or reduce its value in a more limited way, and you could sell it for whatever amount you wanted. The mortgage means you can’t do some of that without the bank’s permission. If you don’t keep paying your mortgage, the bank can kick you out and do what it wants with your house, because it’s their house too. I’m not thrilled about sharing ownership with the bank, even though I don’t want to do anything that the bank wouldn’t agree with, so I sought a shorter loan term the last time I refinanced (i.e., found a new bank to share ownership with me).

3. Your local government owns your house with you. They exercise this ownership through zoning restrictions, building codes, and building permits—these affect what you are allowed to do in the house and how you are allowed to change the house. And since failing to pay your property taxes can allow your local government to take your house, they have a similar ability to foreclose on you that the bank has, even though the local government didn’t actually pay the previous owners to turn the house from their house into your house. Or is that starting to feel less completely like it’s “your” house?

4. The state government owns your house with you, since building codes are primarily decided at the state level. But this is enforced at the local level, so it’s functionally the local government that owns your house with you.

5. The federal government does not own your house with you, according to the 3rd Amendment, at least as long its peacetime. Whew.

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