Entry 8

Today was land law lecture day. Well I two land law lectures, so I am running with it. The first thing you need to know about land law is that it is anal. What I mean by this, is while land law is common law (make no exception to it), it relies on statute law (apparently). The reason why the relationship with statue is essential to making land law anal, is simply that land law doesn’t give a hoot to what is just. If you have your contract forfeited in a mortgage on day one and have no clause in the contract to only forfeit if you default on your terms of repayment. Then tough luck. You may be able to go through other legal options, but not land law. As I said before, it’s anal. For me, I prefer this to a degree. I can be pedantic (not just because it rhymes with my name) and entirely facetious when arguing about…well almost anything. It comes naturally to me. The only possible issue ahead is that terms in land law are for land law only. This could cause some confusion in the future.

Today we focused on proprietary rights with land and going through the different types of possessions of land. The one type of right that stood out to me was options right. Options are giving the person a right to purchase at a pre-agreed price in the future, regardless of the market rate. The reason that this stood out to me is that I have seen this before at home (dining table chat between my parents) and in the office. Options are used in the futures markets (and in other financial markets) and are a financial tool used to guarantee a win essentially (they have a high cost, so not available to most people). If you think the market is going one way up, you go long on the asset and then place a put option at the price you are willing to leave the market at. If the price goes beyond that, don’t use the option and sell higher. Market collapses, and you messed up, use your option to make money still (or reduce losses). The real question is who on earth is going to give you an option? In financial markets, there are loads of firms (depending on jurisdiction), but why would you do it with land? In the UK at least, prices are tending to go up. The only reason I could imagine it in was during a sale of a large piece of land where the seller would have an option to buy back at a particular rate, but honestly, I would be wary of such an offer. If the option is not worth it, they won’t use, so the result is that the piece of land was not worth it, and if it is good then you will get stuffed (or the holder of the option is an idiot). So if you are more of a risk taker, try and pay a higher rate and secure your future.

Take an example from football, Dani Carvajal moving from Real Madrid to Bayern Leverkusen in 2012 for roughly 5M Euros, and then being sold back a season later for 6.5M Euros. You might say Leverkusen did well, 1.5M profit, but if you look at his market value of 10M at the time and it is one year into a five-year contract. Could have done a lot better. So if you can afford to purchase a call or put option, you should be making bank.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s