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Saturday, December 22, 2012

UCLA Law Prof Lets Needy Strangers Live Rent-Free in His House: Cool or Crazy?

TolbertL.A. Times:  Letting Strangers Live Rent-Free in His House: Cool or Crazy?:

When Tony Tolbert turned 50 last year, he marked the occasion by moving in with his mother.

The decision wasn't about money. He's a Harvard-educated attorney, on the staff of UCLA's law school. And it wasn't because his mother wanted or needed him home.

It was Tolbert's response to the sort of midlife milestone that prompts us to take stock. Instead of buying a sports car, he decided to turn his home — rent free — over to strangers. 

He'd been inspired by a magazine article about a family that sold their house, squeezed into a tiny replacement and donated to charity the $800,000 proceeds from the sale. "It just struck me how powerful a gesture that was," Tolbert said. "It challenged me to think about what I could do, where I might have some overflow in my life."

His overflow was a modest home on a quiet tree-lined street a short walk from Crenshaw Boulevard. He'd lived there alone for 10 years.

Last January, he moved out and a young single mother with three little children moved in. A South Los Angeles domestic violence program chose the family from its shelter and brokered the deal. He agreed to let her pay one dollar a month, and imposed on her only one rule: "Whatever has to happen to keep things drama free, that's what I need you to do." ...

Tolbert left the good furniture for the woman who moved in. He didn't hide his grandmother's heirloom quilt or put away the fine art."I told her straight out, this is my home. I'm leaving these things for you to enjoy. I want you to be comfortable here."

That was a learning process for Tolbert: "It was a good exercise in not grasping and hanging on to stuff.... Short of them burning the house down, I had to accept that whatever they tear up, it can also be repaired." ... "I'm just a regular dude," he said. "I'm not brave. I'm not a millionaire, with houses to burn. I just wanted to do something to help somebody."

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What an outstanding example of charity. The recipient will be both grateful and accountable to the donor. The donor will have warm feelings about his generous act and its results.

This works so much better for everyone than having $20,000 deducted from your pay, of which 30% ends up as cash given to a needy person. Government's version of charity is inefficient and cold, with no warm feelings, no gratitude, and no accountability to the donor.

God bless Tony Tolbert. May he inspire 100 more.

Posted by: AMTbuff | Dec 22, 2012 10:04:28 AM

As I have learned several times over the last ten years or so, it's even better to let a homeless person move in with you. They help with the housework, they keep an eye on things when you're away, and they teach you more about life than you'll ever learn from reading editorials in the Wall Street Journal.

Posted by: Bob | Dec 22, 2012 1:42:35 PM

AMT: "The recipient will be both grateful and accountable to the donor."

I'm not too sure. As I have experienced over and over in helping people in need -- but without details, "no good deed goes unpunished." Come back in a year or two and see what's left of this guy's house. Still, it's wonderful for him to do this.

Posted by: Woody | Dec 23, 2012 8:20:28 AM

Much praise for his generosity of spirit, much disdain for his naivete. Who is insuring the house?

Posted by: William Watson | Dec 23, 2012 11:57:00 AM

Naiviete (sp) in earlier post. Apologies.

Posted by: William Watson | Dec 23, 2012 12:00:19 PM

The exhorbitant salaries of UCLA lawprofs make it possible to absorb the losses associated with this kind of behavior. "Regular dudes" can't take that risk. I hope it works out well for him.

Posted by: DAve | Dec 23, 2012 12:25:05 PM

This is an exceptional act of kindness and generosity that I shall not disparage, and will work well for the donor provided the tenants are either Responsible, or Somewhat-Responsible people.

However... What happens to the house if Irresponsible tenants decide to (fill in name of crime here) and the police decide to confiscate the house under criminal forfeiture like they are trying to do with the Motel Caswell and similar cases? Is there forfeiture insurance yet that could be purchased?

Posted by: Georg Felis | Dec 23, 2012 1:07:35 PM

Thats a good man.

Posted by: Fred | Dec 23, 2012 1:13:21 PM

I'm curious, what are the tax and government assistance implications/consequences for the family that moved it for $1/month?

Posted by: dmitryb | Dec 23, 2012 1:17:10 PM

"...they teach you more about life than you'll ever learn from reading editorials in the Wall Street Journal."

You must have never actually stopped and actually talked to a homeless person for more than fifteen minutes.

I did plenty of times while I was in college, and still do from time to time. What did I learn? First, many of them need medication. But most are quite coherent and love to talk. One guy was my age, not homeless as he was living with his mother. He just didn't believe there was anything out there for him, had been unemployed almost his entire adult life. And that's why he's out begging for change, he has never worked out some kind of way of getting and holding down a job. I think if you asked the guy if he had some life wisdom, he'd probably look at you like you were crazy, or maybe he'd hustle your dumb ass.

But prove me wrong. Buy a dude some smokes some time and burn a few with him, and then come back and share with us all the brilliant life lessons you picked up.

Posted by: Ben | Dec 23, 2012 2:05:56 PM

Who knew I would find the best Christmas story in the very last place on earth I would expect to find it?: On a law professor's blog about another law professor.


Posted by: Ed Sodaro | Dec 23, 2012 2:55:31 PM

Single mothers, who have been abandoned by the fathers, are a special class of needy people. They should be helped, but not with money, so as not to encourage single parenthood.

Posted by: Clive Lewis | Dec 23, 2012 3:14:00 PM

The last fellow I harbored rent-free was a live-in campaign aide during my 2008 congressional campaign. He lingered on afterwards for several months, having no home he wanted to go back to.

Sixth months after his departure he murdered two men and a ten-year old boy up in Aroostook County. I found this surprising.

Posted by: John Frary | Dec 23, 2012 3:36:08 PM

I have opened my home to others - and have received rewards and punishments for it. There are some regrets, but I would never give up the riches it has brought me, either.

Posted by: Hammerbach | Dec 23, 2012 3:57:46 PM

"I'm curious, what are the tax and government assistance implications/consequences for the family that moved it for $1/month? "

There is no tax deduction for the use of property to start with. The operating expenses could be deductible if paid by the donor on behalf of a qualified 501(c)(3) organization, which the lady and three children are not. I have no idea what "government assistance implications" of anything are.

Posted by: willis | Dec 23, 2012 4:56:48 PM

"They help with the housework, they keep an eye on things when you're away, and they teach you more about life than you'll ever learn from reading editorials in the Wall Street Journal."

I really, seriously doubt that. Most of these people are mentally ill. Editorials from the New York Times, however, are a different matter. All of those people are mentally ill.

Posted by: willis | Dec 23, 2012 5:00:28 PM

Crazy AND Cool. Real Love is Crazy. It seems he has moved his treasure to a safer place.

Posted by: Mike | Dec 24, 2012 5:48:40 AM

My Civil Procedure professor in law school, ages ago, read us a story about a lawyer meeting a homeless man who claimed to be a law-school graduate. I can't find the story online, but no doubt this is a reference to it from a recent blog:

In fact, months after this assignment, our Legal Process professor told us a story about Pennoyer. He was in New York’s Central Park and encountered a homeless man. Upon learning that he was a law professor, the man informed my professor that he had gone to law school. He then went on to recount the facts and relevance of Pennoyer with gusto.

Posted by: Bob | Dec 24, 2012 9:10:54 AM

Thank you for bringing this great story to us. Given our location, though, let's consider the tax implications. I recall from your series on Rahm Emanuel's rent free living that:

1. The owner is making a gift that, if it exceeds the annual exclusion or other exemptions, must be reported on a gift tax return. (As noted above, no charitable deduction is permitted for gifts to individuals.)

2. The owner has imputed income when the deemed gift is "paid" to him as rent. If the renter is not related to the owner, though, he can depreciate the house as rental property. (This is similar to the below-market loan treatment under 7872).

3. When he sells the home, the owner is not eligible for the Sec. 121 exclusion.

4. As a practical matter, the owner should ignore all of the foregoing points and not report any of this (although the publicity doesn't help).

This comes up when parents let their 25 year old kids live rent free.

Posted by: Yo Gabba Gabba | Dec 26, 2012 4:12:55 PM