Federal Intervention in Real Estate Finance: Preemption and Federal Common Law

Abstract:     
Historically, real property law has been the exclusive domain of the states. This autonomy inevitably bred tremendous diversity in the laws that affect real estate finance. Over the last sixty years, however, the federal government has become increasingly involved in real estate finance, both as a regulator and a market participant. The courts have been forced to rely on the doctrines of implied preemption and federal common law to determine when and to what extent federal law should displace the diverse state real estate finance laws and impose uniformity. The result has been chaos.

In this article, Professor Alexander describes the history of diversity in state real estate finance laws, surveys the growth of federal involvement in real estate finance, and exposes the inconsistent and unpredictable results courts have reached in applying preemption analysis in many critical areas. He blames the multifactored analysis under the doctrines of implied preemption and federal common law for this confusion. He asserts that the present analysis affords traditional state concerns too little weight. Professor Alexander proposes a new approach to preemption analysis premised on the functional difference between federal regulation of real estate finance and federal participation in the real estate market.

Number of Pages in PDF File: 78

Keywords: federal common law real estate finance tax preemption

Accepted Paper Series