Bundle of rights
From Wikinvestor
Property law is the area of law that governs the various forms of ownership in real property (land as distinct from personal or movable possessions) and in personal property, within the common law legal system. In the civil law system, there is a division between movable and immovable property. Movable property roughly corresponds to personal property, while immovable property corresponds to real estate or real property, and the associated rights and obligations thereon.
The concept, idea or philosophy of property underlies all property law. In some jurisdictions, historically all property was owned by the monarch and it devolved through feudal land tenure or other feudal systems of loyalty and fealty.
Though the Napoleonic code was among the first government acts of modern times to introduce the notion of absolute ownership into statute, protection of personal property rights was present in medieval Islamic law and jurisprudence, and in more feudalist forms in the common law courts of medieval and early modern England.
The bundle of rights is a common way to explain the complexities of property ownership. Teachers often use this concept as a way to organize confusing and sometimes contradictory data about real estate.
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.
Ownership of land is a much more complex proposition than simply acquiring all the rights 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 mechanics lien takes some, but not all, rights out of the bundle held by the owner. Extinguishing that lien 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.
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Applications
Community land trusts 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 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 removal".
"Squatting" can result in "adverse possession", that in common law, is the process by which title to another's real property is acquired without compensation, by holding the property in a manner that conflicts with the true owner's rights 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
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.
| Title Owner | Public Use | Government | Third Party |
|---|---|---|---|
|
|
|
For example, a husband and wife can be owners (technically, title owners) of real property that is also encumbered by a mortgage and a mechanics lien. Their neighbor may have an easement 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, and the government at multiple levels retains various regulatory rights such as environmental regulation, zoning, and building code enforcement.
See also
The right of quiet enjoyment
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