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What To Do About a Holdout

There are a few real estate stories that have made it into popular culture and the story of Edith Mayfield’s house is one. Edith came to fame in 2006 when she made the papers for her decision to turn down a $1 million offer for her tiny, hundred-year-old house located in a derelict part of suburban Seattle that the news report of the time described as such: “It’s the only house on the worst block. It’s small and 106 years old. There’s a chemical plant across the street, abandoned lots strewn with garbage on three sides.” The more than generous offer came from a developer that needed the house to complete its ownership of a group of parcels scheduled to be developed into a shopping mall. 

Edith was a holdout, someone who refuses to sell for the redevelopment of an area. Many times this is a business decision, holdouts can get much more for their property than it is worth normally, but for Ms. Mayfield it was personal. “She never tried to stick it to The Man. Or to make any larger statement against development or money or anything else,” said her longtime caretaker Charlie Peck. “She wanted to die at home, in the same house, on the same couch, where her mother had died, that’s what she was so stubborn about.” She never did sell, the mall was eventually just built around her house.

Now, most of us know the Ms. Mayfield iconic home as the house from the Disney movie Up. No matter its similarity to the movie, the idea that Edith’s struggle with the mall developers inspired the the movie isn’t exactly the case. The truth is that a savvy marketer at Disney put balloons in front of the house as a promotion for the movie release and people’s minds did the rest. 

Edith Mayfields house is a well known example of something that is quite common in the development community. Holdouts are a costly hindrance at best and a complete roadblock for development at worst. Now that infill development is picking up after the pandemic slowdown, these cases of development holdouts are again on the rise. In Long Island City a retired baker has refused to sell his brick townhouse that sits in the shadow of a raised train track but granted the developers the right to build a 52 story appartment towner that cantilevers over his humble abode. 

Buying up adjacent lots and combining them into one parcel is known in real estate as assemblage. It is a difficult and risky endeavor, you have little legal recourse (besides offering more money) if someone refuses to sell. I say ‘legal’ because there have been plenty of instances of developers harassing holdouts with everything from daily in person visits to incessant construction noise. One neighborhood in Chicago went as far as to pass legislation that would fine real estate professionals who harassed residents with offers to sell. 

Oftentimes real estate companies attempt their assemblages in secret by using different LLCs to buy up each lot so no one will catch on. That strategy is complicated a bit in New York by a new law that requires everyone with interest in LLCs that own residential properties to be named. Even still, there are plenty of ways for developers to purchase parcels without revealing their true intentions.

It is really easy to see holdouts as the Davids of the world, slinging their rocks of justice at the heads of the real estate Goliaths. But there is another side to it. Much of the infill development done in cities today has an affordable housing component to it. Blocking development might seem like it only hurts the big bad developers but it can also hamper many cities’ efforts to create more affordable housing stock. In some cities there have been controversial usages of eminent domain to force the sale of properties in order to preserve affordable units. Until most of these eminent domains have been to buy up rent controlled properties before they are able to convert over to market rate but with the problems many cities have right now providing affordable dwellings for citizens it wouldn’t be too far of a stretch to think that they could use it to create affordable developments as well.

Most people don’t hold out. It is only the stubborn few that can deal with the hassle of an adjacent development that become the thorns in the sides of developers (and often reap the rewards because of it). Holding out isn’t always about money, people can get attached to places, even if they are a small house surrounded by squalor as was the case with Edith Mayfield. For most of these outliers it is this attachment that strengthens their resolve. But eventually all holdouts come to an end. Ms. Mayfield passed away in 2018 and ended up bequeathing the house to the new building’s construction superintendent because he spent so much time with her. This didn’t come without an outcry but the simple act of giving the house to one of the people that spent over a decade trying to convince you to sell it shows just how much holding out can be about principle rather than profit.

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