Optimal statute of limitations under land development timing decisions

Jyh-Bang Jou () and Charlene Tan Lee ()
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Jyh-Bang Jou: National Taiwan University
Charlene Tan Lee: National Central University

The Annals of Regional Science, 2019, vol. 62, issue 1, No 1, 20 pages

Abstract: Abstract In a recording title system, a landowner faces two risks: the risk of a claim from a previously dispossessed owner and risk of being dispossessed by adverse possession, squatting, or encroachment. In this study, we build a real options model to investigate the issues regarding the optimal statute of limitations. In the absence of any uncertainty, a longer statute of limitations delays land development, and thus a regulator may allow for a more lenient policy of statutory limitations for land located in the suburb than in the city center. At any given location, greater uncertainty in urban rents will cause a landowner to wait longer. Anticipating this outcome, the regulator should shorten the statute of limitations to increase the likelihood for the current owner to retain title.

JEL-codes: G13 G31 G32 R52 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s00168-018-0876-3

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