BUNDLE OF RIGHTS

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.

Contents

Understanding the bundle of rights

Applications

Examples

Stack of Sticks Analogy

See also

References

Understanding the bundle of rights

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, 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 easments across private property.
Historically the degrees of individual and community control over real property have varied greatly. The differences between capatilism, despotism, socialism, feudalism, and traditional societies often define different standards for land ownership. The bundle of rights concept looks much differently 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.

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 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. 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".

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
★ Mortgage ★ Lease ★ Sell ★ Subdivide the property ★ Create a covenant running with the land	★ Railroad ★ Public works ★ Electric power transmission lines ★ Air rights ★ Riparian water rights ★ Mineral rights ★ Grazing rights	★ Collect Property tax ★ Enforce a Lien ★ Protect Endangered species ★ Protect Wetlands ★ Zoning ★ Eminent domain	★ Freedom to roam ★ Homeowners association ★ Historic preservation ★ Conservation easement

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. Planes 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.

Stack of Sticks Analogy

Ownership of land is a much more complex proposition than simply acquiring all the rights to it. In order to make sense of this jumble of competing interests, it is useful to imagine a bundle of rights that can be separated and reassembled. A "stack 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. Resolving that lien returns those rights or "sticks" to the bundle. In the United States (and under common law) the fullest possible title is called "fee simple absolute." Even the US federal government's ownership of land is restricted in some ways by state property law.

See also

★ List of real estate topics

★ Property rights (economics)

★ Real estate

References

★ Land use law, Daniel R. Mandelker, , , LexisNexis Matthew Bender, 2003,

★ Introduction to Property Rights: A Historical Perspective