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The bundle of rights is a metaphor to explain the complexities of
property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, r ...
ownership. Law school professors of introductory property law courses frequently use this conceptualization to describe "full" property ownership as a partition of various entitlements of different stakeholders. The bundle of rights is commonly taught in US first-year law school property classes to explain how a property can simultaneously be "owned" by multiple parties. The term, "bundle of rights," likely came into use during the late 19th century and continued to gain ground thereafter. Prior to that, the idea of property entailed more the owner's dominion over a thing, placing restrictions ''on others'' from interfering with the owner's property. "Bundle of rights," however, implies rules specifying, proscribing, or authorizing actions on the part of the owner. Ownership of land is a much more complex proposition than simply acquiring all the
rights Rights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people according to some legal system, social convention, or ethical theory ...
to it. It is useful to imagine a bundle of rights that can be separated and reassembled. A " bundle of sticks" – in which each stick represents an individual right – is a common analogy made for the bundle of rights. Any property owner possesses a set of "sticks" related directly to the land. For example, perfection of a
mechanic's lien A mechanic's lien is a security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property. The lien exists for both real property and personal property. In the realm of real property, ...
takes some, but not all, rights out of the bundle held by the owner. Extinguishing that
lien A lien ( or ) is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the ''lienee'' and the per ...
returns those rights or "sticks" to the bundle held by the owner. In the United States (and under common law) the fullest possible title to real estate is called " fee simple absolute." Even the US federal government's ownership of land is restricted in some ways by state property law.


Basic property rights

Traditionally, the bundle of rights concept encompassed five basic rights that may be held with respect to a parcel of real property * Right of possession: an entity is the legal owner of the property. * Right of control: the owner of this right can prescribe what activity takes place on the property, such as the building of structures or operating a business. This right is often shared between the title owner and governments or organizations that have some form of administrative jurisdiction over the property, such as a city with
Zoning Zoning is a method of urban planning in which a municipality or other tier of government divides land into areas called zones, each of which has a set of regulations for new development that differs from other zones. Zones may be defined for a si ...
regulations, or a homeowner association. * Right of exclusion: the owner of this right is able to prohibit others from entering the property (that is, trespassing). * Right of enjoyment (Jus in re propria): the owner of this right is able to use the property as they see fit, including activities such as inhabitation and resource extraction. These activities are generally constrained by laws by jurisdictional agencies. In many legal regimes, portions of this right may be held or owned separately; For example, while the title owner may have the general right, a lease holder has been granted a temporary subsidiary right to inhabit the property, while someone else may own the rights to any subsurface minerals or water. * Right of disposition: the owner of the property is able to transfer any of the rights they hold to another party, whether temporarily (as in a lease) or permanently (as through
inheritance Inheritance is the practice of receiving private property, titles, debts, entitlements, privileges, rights, and obligations upon the death of an individual. The rules of inheritance differ among societies and have changed over time. Officia ...
or sale).


Variations on the concept

Variations on the division between public and private property use can be found throughout the world. While the bundle of rights concept is strongly rooted in
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipres ...
, there are comparable ideas in civil law systems and religious law systems. National, sub-national, and municipal laws strongly influence what title owners can do with their property in terms of physical development. Quasi-governmental bodies (such as
utility As a topic of economics, utility is used to model worth or value. Its usage has evolved significantly over time. The term was introduced initially as a measure of pleasure or happiness as part of the theory of utilitarianism by moral philosoph ...
companies) are also permitted to create
easement An easement is a nonpossessory right to use and/or enter onto the real property of another without possessing it. It is "best typified in the right of way which one landowner, A, may enjoy over the land of another, B". An easement is a propert ...
s across private property. Historically the degrees of individual and community control over real property have varied greatly. The differences between capitalism, despotism, socialism, feudalism, and traditional societies often define different standards for land ownership. The bundle of rights concept looks much different when examined by different types of societies. For instance, a
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups ...
government would allow a much different bundle of rights than a communist government.


Applications

Community land trust A community land trust (CLT) is a nonprofit corporation that holds land on behalf of a place-based community, while serving as the long-term steward for affordable housing, community gardens, civic buildings, commercial spaces and other community ...
s and land banking are examples of efforts to rearrange the bundle of rights. This is typically done by dividing the responsibilities of ownership and management from the rights to use the property. A typical community land trust strategy is to hold ownership over the land and sell the structural improvements (residential or other buildings) to low-income homebuyers. This allows people to buy a home at a price far below the market rate and to realize the benefits of their property value improving.
Real Estate Investment Trusts A real estate investment trust (REIT) is a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, including office and apartment buildings, warehouses, hospitals, shopping cente ...
divide up the bundle of rights in order to allow commercial investments in real property. These legal structures are becoming more common throughout the developed world. Squatting presents a non-economic way for people to transfer parts of the bundle of rights. Depending on the applicable laws, a squatter can acquire property rights by simply occupying vacant land for an extended period of time. Areas with high concentrations of squatters are sometimes thought of as ''informal settlements.'' Squatters face great instability due to their lack of title and governmental efforts at "
blight Blight refers to a specific symptom affecting plants in response to infection by a pathogenic organism. Description Blight is a rapid and complete chlorosis, browning, then death of plant tissues such as leaves, branches, twigs, or floral org ...
removal". "Squatting" can result in "
adverse possession Adverse possession, sometimes colloquially described as "squatter's rights", is a legal principle in the Anglo-American common law under which a person who does not have legal title to a piece of property—usually land ( real property)—ma ...
", that in
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipres ...
, is the process by which
title A title is one or more words used before or after a person's name, in certain contexts. It may signify either generation, an official position, or a professional or academic qualification. In some languages, titles may be inserted between the f ...
to another's real property is acquired without compensation, by holding the property in a manner that conflicts with the true
owner Ownership is the state or fact of legal possession and control over property, which may be any asset, tangible or intangible. Ownership can involve multiple rights, collectively referred to as title, which may be separated and held by different ...
's
rights Rights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people according to some legal system, social convention, or ethical theory ...
for a specified period of time. Circumstances of the adverse possession determine the type of title acquired by the adverse possessor, which may be fee simple title, mineral rights, or another interest in real property.


Examples of Component Rights

This table breaks down some of the various rights involved in real property ownership. Several of these rights can be transferred between different parties through sale or trade. Third parties can obtain the rights to access and profit from several of the ''public use'' rights without the consent of the title owner. This is often the case with resource extraction companies such as mines. For example, a husband and wife can be owners (technically, title owners) of real property that is also encumbered by a
mortgage A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any ...
and a
mechanics lien A mechanic's lien is a security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property. The lien exists for both real property and personal property. In the realm of real propert ...
. Their neighbor may have an
easement An easement is a nonpossessory right to use and/or enter onto the real property of another without possessing it. It is "best typified in the right of way which one landowner, A, may enjoy over the land of another, B". An easement is a propert ...
for a utility line, and a license for entry and exit to a nearby plot of land. Airplanes have the right to fly through their airspace. Constitutionally, the state and federal governments always hold the right to condemnation, also called
eminent domain Eminent domain (United States, Philippines), land acquisition (India, Malaysia, Singapore), compulsory purchase/acquisition (Australia, New Zealand, Ireland, United Kingdom), resumption (Hong Kong, Uganda), resumption/compulsory acquisition (Austr ...
, and the government at multiple levels retains various regulatory rights such as
environmental regulation Environmental law is a collective term encompassing aspects of the law that provide protection to the environment. A related but distinct set of regulatory regimes, now strongly influenced by environmental legal principles, focus on the manage ...
,
zoning Zoning is a method of urban planning in which a municipality or other tier of government divides land into areas called zones, each of which has a set of regulations for new development that differs from other zones. Zones may be defined for a si ...
, and
building code A building code (also building control or building regulations) is a set of rules that specify the standards for constructed objects such as buildings and non-building structures. Buildings must conform to the code to obtain planning permiss ...
enforcement.


See also

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List of real estate topics This aims to be a complete list of the articles on real estate. __NOTOC__ # * 72-hour clause A * Abandonment * Abstract of title * Acceleration clause * Accession * Acknowledgment * Acre – a measure of land area * Action to quiet tit ...
*
Property rights (economics) Property rights are constructs in economics for determining how a resource or economic good is used and owned, which have developed over ancient and modern history, from Abrahamic law to Article 17 of the Universal Declaration of Human Rights. Re ...
*
Real estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...


References

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Introduction to Property Rights: A Historical Perspective
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