Bundle of Rights
Encyclopedia
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 mechanic's 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.
, 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
companies) are also permitted to create easement
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
government would allow a much different bundle of rights than a communist government.
Bundle of Rights- Simply put are rights inherent with the property. The right to use, the right to sell, right to mortgage, right to lease, right to give away, and right to enter. Or the right to refuse to exercise any of these rights. This is subject to certain limitations.
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 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 right
s 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.
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.
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
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
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 takes some, but not all, rights out of the bundle held by the owner. Extinguishing that lien
Lien
In law, a lien 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...
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
Fee simple
In English law, a fee simple is an estate in land, a form of freehold ownership. It is the most common way that real estate is owned in common law countries, and is ordinarily the most complete ownership interest that can be had in real property short of allodial title, which is often reserved...
." Even the US federal government's ownership of land is restricted in some ways by state property law.
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 lawCommon law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
, 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
Public utility
A public utility is an organization that maintains the infrastructure for a public service . Public utilities are subject to forms of public control and regulation ranging from local community-based groups to state-wide government monopolies...
companies) are also permitted to create easement
Easement
An easement is a certain right to use the real property of another without possessing it.Easements are helpful for providing pathways across two or more pieces of property or allowing an individual to fish in a privately owned pond...
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
In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....
government would allow a much different bundle of rights than a communist government.
Bundle of Rights- Simply put are rights inherent with the property. The right to use, the right to sell, right to mortgage, right to lease, right to give away, and right to enter. Or the right to refuse to exercise any of these rights. This is subject to certain limitations.
Applications
Community land trustCommunity land trust
A community land trust is a nonprofit corporation which acquires and manages land on behalf of the residents of a place-based community, while preserving affordability and preventing foreclosures for any housing located upon its land.-Key features:...
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 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
Squatting
Squatting consists of occupying an abandoned or unoccupied space or building, usually residential, that the squatter does not own, rent or otherwise have permission to use....
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
Adverse possession
Adverse possession is a process by which premises can change ownership. It is a common law concept concerning the title to real property . By adverse possession, title to another's real property can be acquired without compensation, by holding the property in a manner that conflicts with the true...
", that in common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
, is the process by which title
Title (property)
Title is a legal term for a bundle of rights in a piece of property in which a party may own either a legal interest or an equitable interest. The rights in the bundle may be separated and held by different parties. It may also refer to a formal document that serves as evidence of ownership...
to another's real property
Real property
In English Common Law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, wells, dams, ponds, mines, canals, roads, various property rights, and so forth...
is acquired without compensation
Remuneration
Remuneration is the total compensation that an employee receives in exchange for the service they perform for their employer. Typically, this consists of monetary rewards, also referred to as wage or salary...
, by holding the property in a manner that conflicts with the true owner's right
Right
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...
s 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 |
|---|---|---|---|
|
Right-of-way (railroad) A right-of-way is a strip of land that is granted, through an easement or other mechanism, for transportation purposes, such as for a trail, driveway, rail line or highway. A right-of-way is reserved for the purposes of maintenance or expansion of existing services with the right-of-way... Public works Public works are a broad category of projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community... Electric power transmission Electric-power transmission is the bulk transfer of electrical energy, from generating power plants to Electrical substations located near demand centers... lines Air rights Air rights are a type of development right in real estate, referring to the empty space above a property. Generally speaking, owning or renting land or a building gives one the right to use and develop the air rights.... Riparian water rights Riparian water rights are system for allocating water among those who possess land about its source. It has its origins in English common law... Mineral rights - Mineral estate :Ownership of mineral rights is an estate in real property. Technically it is known as a mineral estate and often referred to as mineral rights... Grazing rights Grazing rights is a legal term referring to the right of a user to allow their livestock to feed in a given area.- United States :... |
Property tax A property tax is an ad valorem levy on the value of property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state or a municipality... Lien In law, a lien 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... Zoning Zoning is a device of land use planning used by local governments in most developed countries. The word is derived from the practice of designating permitted uses of land based on mapped zones which separate one set of land uses from another... Eminent domain Eminent domain , compulsory purchase , resumption/compulsory acquisition , or expropriation is an action of the state to seize a citizen's private property, expropriate property, or seize a citizen's rights in property with due monetary compensation, but without the owner's consent... |
Homeowners association A homeowner association is a corporation formed by a real estate developer for the purpose of marketing, managing, and selling of homes and lots in a residential subdivision... Historic preservation Historic preservation is an endeavor that seeks to preserve, conserve and protect buildings, objects, landscapes or other artifacts of historical significance... Conservation easement In the United States, a conservation easement is an encumbrance — sometimes including a transfer of usage rights — which creates a legally enforceable land preservation agreement between a landowner and a government agency or a qualified land... |
For example, a husband and wife can be owners (technically, title owners) of real property
Real property
In English Common Law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, wells, dams, ponds, mines, canals, roads, various property rights, and so forth...
that is also encumbered by a mortgage and a mechanics lien
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 property, it is called by various names, including,...
. Their neighbor may have an easement
Easement
An easement is a certain right to use the real property of another without possessing it.Easements are helpful for providing pathways across two or more pieces of property or allowing an individual to fish in a privately owned pond...
for a utility line, and a license
License
The verb license or grant licence means to give permission. The noun license or licence refers to that permission as well as to the document recording that permission.A license may be granted by a party to another party as an element of an agreement...
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
Eminent domain
Eminent domain , compulsory purchase , resumption/compulsory acquisition , or expropriation is an action of the state to seize a citizen's private property, expropriate property, or seize a citizen's rights in property with due monetary compensation, but without the owner's consent...
, also called eminent domain
Eminent domain
Eminent domain , compulsory purchase , resumption/compulsory acquisition , or expropriation is an action of the state to seize a citizen's private property, expropriate property, or seize a citizen's rights in property with due monetary compensation, but without the owner's consent...
, and the government at multiple levels retains various regulatory rights such as environmental regulation, zoning
Zoning
Zoning is a device of land use planning used by local governments in most developed countries. The word is derived from the practice of designating permitted uses of land based on mapped zones which separate one set of land uses from another...
, and building code
Building code
A building code, or building control, is a set of rules that specify the minimum acceptable level of safety for constructed objects such as buildings and nonbuilding structures. The main purpose of building codes are to protect public health, safety and general welfare as they relate to the...
enforcement.