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Comment by gnicholas | Hacker News Reader

The NYT is reporting that:

> In that case, his parents’ house in Palo Alto, Calif., which was used to secure the bond, could be seized by the government.

Interestingly, the home is not located in Palo Alto, but in Stanford — which is a critical difference because it means that his parents (both Stanford faculty members) likely do not actually own the property. Stanford sells time-limited ground leases to faculty, which means that they cannot sell the property (or promise it) to anyone who is not a qualifying (tenure line) faculty member, or the university itself.

I don't know if the NYT is misreporting this, or if SBF's parents have signed a document promising something that they legally cannot make good on (grant rights in a property that they do not themselves hold). I'd guess it's the former, but who knows!

Source: I am familiar with Stanford's faculty housing programs and live in restricted faculty housing

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Lately, a 3000 sq ft house in Stanford (which can be sold on the market, but only to eligible faculty and employees) sells for over $2.5M, whereas a similar home in Palo Alto (which can be sold on the market, to any one) sells for around $5M.

As a result, while what you said is true, I don’t think it matters that much. At the end of the day, it’s an asset that’s worth millions of dollars.

When we bought a couple years ago, there was a surprisingly small difference between homes on-campus and comparables off-campus. That may have changed somewhat, but I'd be surprised if the difference were 2x.

But the bigger picture is that SBF's parents cannot have signed over the right for the government to seize the property. They do not own a fee simple interest in the land. They have a ground lease that lasts a few decades (the limit is currently 51 years, but they bought decades ago when it may have been different).

Is the house worth millions? Yes. Can the government seize it? Stanford would say no because the residents are not the fee simple owners.

I’m not familiar with the details. But I assume there exist a way for creditors (incl the government) to seize it somehow, and then sell it to eligible buyers to recover what they’re owed.

Does your Stanford home has a mortgage on it? If so, I assume you signed a deed of trust somehow.

The challenge is that not just anyone can live in it... only faculty and staff. There's a 50 year max term and even widows get booted out after their spouses pass. You really don't own the house/land... just the right to live there and re-sell it.

For on-campus housing, widows/widowers can remain for life. [1] There are other off-campus housing programs that only give 10 years after the death of the qualifying spouse.

1: https://stanfordfsh.prod.acquia-sites.com/sites/default/file...

That's good news. There was a lot of drama in the late 90s when I lived there, because a widow was being kicked out of a house on Santa Ynez. I'd guess that was on-campus and maybe the reason for a change.

As I understand, they are bonding the equity in the house, not the property itself. So there's not necessarily a contradiction - as I understand, the faculty can still accumulate equity, and if the government needs it, it can force the sale to an eligible buyer (e.g. the university) and seize the proceeds.

Yeah, I agree that it's probably something like this, and the NYT's reporting is just a bit sloppy.

Here's a 2019 source on how Stanford's faculty housing works:

"[Prof] will have to leave his house 10 years after he retires from Stanford or 51 years after he moved in — whichever comes first — at which point he will sell it back to the university, making a modest profit (appreciation is capped at about 3% per year). That means he can’t pass it down to his daughters." https://extras.mercurynews.com/whoowns/stanford.html

There are various faculty housing programs, and they differ in important ways. for example, purchasers of on-campus homes can sell to any eligible person (tenure-line faculty, generally), or to the university. Pricing/appreciation is not capped. Other programs require resale to the university, with caps.

Of course, rules may have also differed decades ago, when the home was apparently purchased.

Now this is wild. Is their property owned by Stanford? How could we get proof of this. It'd make this all completely different as you imply.

My understanding is that yes, the land is owned by Stanford. They would have granted a ground lease that lasts some period of decades when the home was purchased (reportedly in 1991). Rules may have been different then, but I don't think they were handing out fee simple interests at that time either.

This is very interesting! How come Stanford owns so many properties? It strikes me a bit odd and their own website have plenty of listings to choose from, ranging from 500k to 5m. Perhaps the reason was first to ensure that staff can afford housing, but can they at these prices?

If you could afford a $5 million house, what would be the reason to buy it from Stanford and not on the open market? Is it at a market discount considering the cap on ROI?

Would you consider the options available in the listing [0] the cheapest way to get housing in the area?

[0] https://fsh.stanford.edu/buy/homes-for-sale

Not all of the homes are subject to the ROI cap. The homes with ROI caps are sold at 50% of FMV, so the carrying cost is significantly lower than if you pay full price.

Ah so the parents are in on it then and they’re all going to run.

“Oh no we accidentally paid bail with worthless assets and didn’t touch our billions in stolen goods”

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