Hurting NMDs

Last Friday, Jan. 13, there were 12 Notices of Auction and Notice of Sale in one of the local newspapers. Let us set aside the why these 12 properties are on sale. (In these depressed economic times, it is unfortunate that many families are losing their homes and land. What is even more unfortunate is that some of these foreclosures may have been avoidable—if not for restrictions due to Article 12.)

Article 12 is inadvertently hurting the very people that it set out to protect. Why? Because under Article 12, only NMD can hold land fee simple. Let us face the fact that there are only a few NMDs with means to buy land fee simple. This means that those wanting to sell or are forced to sell—like the 12 properties listed on Friday’s edition of the local newspaper—are faced with very limited opportunities and limited buyers. In other U.S. states and territories that do not have land alienation restriction laws like Article 12, homeowners have the option of seeking equity loans or the ability to re-finance current loans. Homeowners are not able to avail of these opportunities. Thus, without the ability to loan against the real value of their property, they are forced into foreclosure.

This generates a buyer’s market where buyers dictate the value of your property based on what they want for it rather than what the true value of the property is in an open market. By open market we mean the sale is open to all. including non-NMDs, on similar terms.

Another “side effect” of Article 12 is if the sale amount of the property is less than the true value, the land/home owner is still expected to pay for the difference. This constitutes a double hit on the land/home owners as not only is he or she losing his or her property but is expected to still pay the difference in order for the loan to be fully paid.

Is this fair? Can it be avoided? What can we do? The answers are, it is certainly not fair. Yes, it can be avoided and yes, we can do something about it.

I know that if Article 12 is abolished, this particular “ill” will go away as an open market for land buying and selling will develop.

We have an opportunity to do away with Article 12 this year by working together to petition to allow the people of the CNMI to vote whether to retain or repeal (abolish) Article 12. There are some of us who firmly believe Article 12 is needed and good for us. I ask those with this thinking to read the Section by Section Analysis of the Covenant and the CNMI Constitution. You will find immediately that it was not the intent for it to be a permanent item in our Constitution and in fact, it says that after 25 years, we may re-visit the provision and decide what to do with it.

By the way, abolishing or repealing Article 12 does not force anyone to sell his or her land. Private property owners in the CNMI can choose to lease their land for any amount of time they want or to sell it and to decide to whom to sell or lease the land to. Abolishing Article 12 will give complete rights and absolute power to private property owners. This is not the case at this time with Article 12 in effect. In actuality, the government or public is part owner of your private property.