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The Myth of Ownership

This article was written by in Consumer. 24 comments.


Who really owns all of your stuff? It’s comforting to think that everything that we have in our possession, acquired by legal means, belongs to us. That’s not always the way it works, however.

The myth of ownership is expected to apply to people who buy their possessions with credit and can’t afford to keep up with the debt payments. Default on your car loans, and the bank will come and repossess the car — that the bank owns, not the driver. Ignore your mortgage payments for long enough, and the bank will foreclose on your house. The typical American dream of owning a piece of property is rarely achieved because so few families truly own their homes.

Putting aside debt, there are situations when even full ownership doesn’t guarantee you can keep what is yours. The myth of ownership applies even when no debt is involved.

The first example is the process of escheatment by your state. Property considered abandoned can be claimed by the state in which you live or in which the property resides. Savings accounts and insurance policies are some of the more common financial items escheated. If a bank or insurance company can’t contact the owner, they will hand over the funds to the state.

The owner has a chance to recover the funds from the state, but it involves a process initiated by the owner who may not even be aware that the property exists. If you think there might be something of yours out there, start the process here. Most unclaimed property will remain unclaimed — and the states count on this when they plan their budgets and spending plans.

The Supreme Court of the United States has ruled that states can exercise eminent domain in any situation where the state can prove that doing so would provide an economic benefit, and states can transfer that power to a private entity to exercise on its behalf. The result is that even homeowners who have no debt could find that the state will encourage them to leave. The state would offer reimbursement, but would act without the owner’s consent. Traditionally, highways and utilities are the reasons cited for seizure through eminent domain, but in the current legal environment, homes could be seized to make way for malls and sports arenas.

Eminent domain is one of the biggest examples of how our property doesn’t necessarily belong to us. On a smaller scale, New Jersey is now going after unused gift cards. Merchants and gift card issuers like Visa and American Express love unused gift cards. They’ve received the cash and haven’t had to provide any product. They have the most to lose by the state’s legislative decision to require issuers to forfeit the balance on unused cards after a relatively short time period. This decision was overturned in court, but the state is appealing that decision.

When our property can be relatively easily be taken from us by the state, is it really our property?

Hat tip: Darwin’s Money

Published or updated January 6, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 24 comments… read them below or add one }

avatar Darwin's Money

Crazy, huh? Will be interesting to see just how far politicians push these types of confiscation before voters revolt. We already saw it in November wrt spending our money; perhaps next election issue will be property rights.

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avatar Luke Landes ♦127,455 (Platinum)

Regardless of who’s in office, this isn’t going away any time soon. The smaller issues like the one about gift cards come and go, but the overall approach to property isn’t going to change. No state will cede eminent domain powers or abandoned property unless forced to by the federal government, and the federal government won’t do it.

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avatar tbork84 ♦1,867 (Half-Dollar)

It’s been trending this way for a very long time. The stretch is proving that it serves the public good to remove the property from private (though often members of the public themselves) hands. It would be interesting to see how many new professional sport arenas are going to be built with the growing body of evidence that they do very little to benefit the city.

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avatar PharmBoy

Because I’m a crazed libertarian, this post immediately brings to mind the issue of payment for organ donation. For libertarians, if someone voluntarily wants to sell one of his/her kidneys to another American for an agreed upon price, this should be allowed. Since it is not, the question that arises: Who owns your body, you or the government?

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avatar Will @ HackingTheBank.com ♦258 (Nickel)

The government also doesn’t sell your body. You also control where your body is and can choose to move it to the jurisdiction of another government.

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avatar jillianb ♦275 (Nickel)

Wow some crazy stuff. This brings up so many issues like the ones that have already been brought up. Personally I think it’s really about personal responsibility. Keep track of you finances, reassess your insurance and investments. If you are really nervous about it check the unclaimed property websites. If you don’t care enough about your money and property to keep it, why should you?

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avatar retirebyforty

Whatever. You can’t let that stop you from living your life. Just keep a lawyer handy.

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avatar krantcents

When the government does something that effects a lot of people, there usually is a negative reaction. Then they back off!! Unused gift cards are within your control, you can do something about it. Keep track of it as though it is money, because it is!

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avatar Robert @ The College Investor

I think eminent domain can be beneficial when it comes to public goods, such as highways. I have a problem when it is used for commercial development, such as a mall. Yes, it can contribute to the public good through taxes and new stores, but did someone really need to give up their home for it?

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avatar jim

They can’t take private land to build a mall where I live. Use of eminent domain to transfer property from one private party to another private party is against the law in my state. After that supreme court case (Kelo v City of New london right?) most states have passed restrictions on such use of eminent domain. If your state doesn’t have such a law then maybe you should talk to your local politicians about that.

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avatar PharmBoy

Not that I’m looking to argue, but another aside: some states are now requiring that you OPT OUT of organ donation. So, correct, they are not selling your organs, but if you don’t explicit state that you do not want your organs harvested after death, the gov’t makes that decision for you.

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avatar DonnaFreedman ♦65 (Newbie)

Maybe the government can’t always take land to build a mall, but I’ll bet it can always take land to build a freeway.
I don’t have a problem with repo men or foreclosures if someone hasn’t made payments. You signed a contract to pay so much per month. If you don’t pay, you don’t get to keep the item in question.

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avatar Steve

You could argue that you never really own anything. The government that you are complaining can take your land to make a highway, is the same government that prevents a warlord from coming and taking your property from you by force. The former is rarer than the latter used to be. Ownership is a bit of an illusion, but it’s a convenient one and we get more of it in this country in this time period than anywhere or any time else.

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avatar Tom Dziubek

Instead of gift cards, I heartily recommend going old school and gifting other people money instead. Cash: it’s the ultimate gift card.

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avatar eric ♦1,549 (Half-Dollar)

I’m all for it too but so many people think giving cash lacks tact. Shoot, I would accept it in a heartbeat! :P

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avatar Bucksome Boomer ♦236 (Cent)

That is unbelievable that the state wants to get unused gift card balances. Instead they should focus on having those cards not expire.

The only property I know that our state may routinely take is land to expand the roads. And even then there is compensation. A few years back the city we lived in bought a large number of homes just to bulldoze them and widen the road from 2 to 4 lanes.

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avatar faithfueledbennetts ♦264 (Nickel)

Yes, it is all a facade. I recently found out that a savings account opened by my parents as a kid was handed over to the State after no activity. But, when attempting to collect the money, I was told I needed both of my parents ID’s, Social Security numbers and a tax document claiming me as their dependent. Well, since I am 28 and married with kids, living in a different state and country than both of my parents, this is all pretty much impossible. They know what they are doing in making it too difficult to get what I though was my money back.

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avatar jim

The state has to take reasonable safeguards to make sure people are who they say they are. If someone could claim that money without proof of ownership then some thief would have fraudulently claimed it already and you’d be whining about how the state let someone else have your money.

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avatar tigernicole86 ♦55 (Newbie)

I live in a city where eminent domain is being practiced quite often now. There are a lot of abandoned homes and well, the city has decided to make some money off of the homes so, they’ve had contractors go out and glean everything that can be used/sold. Luckily for me(I’m a renter and the landlord is a good friend), I don’t have to worry about the neighborhood I’m in for a little bit. With the new school that’s being built across the street, we’ve actually had new neighbors moving in to the houses that have stood empty for some time now.

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avatar Practical Parsimony ♦110 (Cent)

I live a block from a hospital, in an Historic District. A man confided in me–a ciitizen was buying all the land in my neighborhood. It turns out that the board of the hospital wanted the land to expand and build a new hospital. The man buying the land had been assured that he would get top dollar for the homes. I stopped a realtor friend on her daily run and informed her. Whatever she did stopped the move to declare eminent domain and force us to sell.

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avatar gotr31 ♦224 (Cent)

Extreme measures are not the norm. Most of the population will never be affected by these types of events.

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avatar Practical Parsimony

Extreme measures? Not the norm? Neither is an airplane falling from the sky. But, the event is pretty devastating to those involved, whether directly or peripherally.

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avatar gotr31 ♦224 (Cent)

The point is that they are not common occurances to everyone in society on a daily basis. Not that they are not devastating, of course they are. You can’t live your life worried about airplanes falling from the sky nor should you live with your head buried in the sand. By the way, I applaud your awareness and efforts to stop the expansion of a new hospital in your area by such underhanded means.

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avatar big mac

Great article!

Two other examples that pop to mind of what you own is not really yours:

1) With recent discussions of the “Fiscal Cliff” the notion that people’s retirement savings can be tapped in one way or another by the Federal government is being floated again…last time was around 2009/10. Various versions come down to either converting all or some of the individual IRA/401K to Treasury Bonds, or leaving IRA/401K stand, ending further contributions, and instead force non-deductible 5% savings into a Government Savings Account (with promise to pay a defined benefit like annuity at retirement age).

2) Considering that your Social Security “contributions” are really a form of forced savings, changes to the rules over time may render your net return down to -100% (more if you consider that the promised payouts are greater than funds available long term, requiring additional taxation to pay the difference). Obviously, this will hit the younger population more than the current (or nearly so) retirees.

So, your income is not yours, and your savings are not yours.

To those who think eminent domain is not a big deal, or is not a frequent issue, do some research…especially Kelo vs New London.

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