Dr. Dan Sutter: Squatters and property rights

Recent news stories detail incidents of squatting, or illegal occupation of a home. These rights violations plausibly reflect public discourse demonizing landlords, promoting rent control, and even proposing the abolition of rent.

I have no statistics on squatting and so will not call this a crisis. The rights violations are problematic regardless of the proportion of properties impacted. The prevalence of news stories suggests that squatting is frequent enough to be on editors’ radar.

Numerous factors lead to squatting. Sometimes tenants stay after a lease expires or they stop paying rent. Some people break into unoccupied houses. The most problematic cases arise when the squatter claims to have a lease; sometimes the squatter has been swindled by someone posing as the listing agent.

Conflicting legal claims typically result in the police waiting for a court order to evict the squatter. Legal resolution can take six to twelve months. Squatters also sometimes do considerable damage to a home.

For homeowners, squatting can be financially ruinous. Sometimes homeowners returning from vacation find trespassers living in their homes. Often squatters take a vacant home. Homeowners who move for a new job may rent if they cannot immediately sell the home.

Illegal squatting deprives the owner of the rental income while the mortgage and property taxes must still be paid. Property owners must pay for any damage the squatters cause and incur legal bills to secure eviction. Plus, they experience stress and anguish.

Squatting, I think, reflects a deterioration of respect for property rights driven by government policy. The CDC imposed a nationwide eviction moratorium before being stopped by the Supreme Court. Dozens of cities have passed new rent control ordinances.

The “Cancel the Rent” movement seeks to abolish rent entirely. When told that housing is a human right, people may feel justified living in someone else’s house.

Squatting illustrates how people devise ways to benefit themselves within the legal rules. Suppose you know the following. The police will not evict squatters given uncertainty over lawful possession. Lease disputes go to courts with long delays. And squatting generally is a civil matter with little danger of criminal prosecution upon eviction.

Here is a profitable strategy: Manufacture a bogus lease to live rent free for months (or years). We will hope in vain for people to not take advantage of others like this.

Fortunately, fixing this problem is straight-forward. As George Washington University’s Jonathan Turley observes, we quickly determine ownership of automobiles based on registration and identification. The police “would not allow the person to drive off and tell the owner to work it out in court.”

As Professor Turley notes, the authorities simply need to act promptly to identify
bogus leases. While squatting may not be a criminal offense, trespass, forgery, and
fraud are crimes. District attorneys who ignore property crimes encourage squatting.
A failure to control squatting will prove highly costly. Many houses for sale or rent
are vacant and vulnerable to illegal occupation. Losses from squatting will reduce
market value, which in turn will reduce building. Squatting poses a similar threat to the
market as rent control.

I suspect most communities will control squatting. Many news stories are from states such as Florida, Maryland, and Texas where property taxes largely fund local governments.

Widespread squatting would degrade property values and reduce property tax revenue. Before police or district attorneys get laid off, I suspect they will start evicting squatters.

Economic ignorance may contribute to this policy negligence. Some progressives believe that rental housing contributes to unaffordability; if not allowed to rent, owners would accept lower sales prices. But the freedom to rent makes people willing to pay more for homes, increasing home building. Government limits on construction largely drive housing unaffordability.

The victims of squatting are law-abiding citizens. The protection of property rights is a fundamental task of government. Failure to control squatting reflects a moral failure of government, one imposing extreme financial and emotional tolls on the victims.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H.
Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.