Stubborn Holdouts Trip Up Land Developers
Not all are willing to sell property to make way for 'progress'
Edith Macefield turned down $1 million to sell her 108-year-old farmhouse in Seattle, Washington. So commercial developers built a five-story complex all around her.
Last updated on: April 10, 2012 8:00 PM
Before a big office complex or housing subdivision can be built, the developer must acquire all the land on which the buildings will rise. Sometimes this means buying up a lot of small parcels of land at the site.
Such purchases are usually handled quietly, because if word gets out, the landowners could raise the price they’re asking for their property.
Occasionally people won't sell at all - at any price. Many of these "spikes," as stubborn holdouts are called in the real-estate trade, are the classic "little old ladies" - or men - who just can't bear to part with their homes or small businesses. They hold onto their places, which are called “nail houses” - as in, “stubborn as a nail.”
Here’s a classic example. In the 1960s, the Disney Company secretly bought up 11,000 hectares in central Florida for a mega-theme park. But two families simply would not sell their chunks of swampland. So Disney had to re-route a huge drainage canal around them, and both individually owned properties intrude into the Walt Disney World theme park to this day.
This “nail house” in Chongqing, China, is a dramatic example of how some property owners can stubbornly refuse to sell to developers - sometimes with dramatic consequences.
And a few years ago, a Washington, D.C., man refused multimillion-dollar offers for the two-story townhouse that he used as his architect's office. So the developer's earth-movers gouged a deep crater around three sides of him.
The holdout owner said that once the new office towers rose around him, he’d open a pizzeria. Skeptics pointed out he'd have to sell a lot of pizzas to equal the millions of dollars he'd been offered.
The pizza place never opened, and last year the owner put the property up for sale at less than half of what developers had offered him. We’re not sure whether he found a buyer.
What can a developer do to pry loose these stubborn spikes? Some get help from the local or state government, which classifies the project as "urban redevelopment." That way, officials have the authority, under the laws of what’s called “eminent domain,” to force a holdout to sell and move.
But if developers cannot get the government involved, filing suit against holdouts can sometimes convince them to give up. The builders have more money to pay lawyers than most individual property owners.
Then again, many a company has learned the hard way that it can be a very bad idea to take a little old lady to court. She and her tiny nail house in the midst of skyscrapers can make a powerful impression on a judge or jury.