Owning real property comes with a bundle of rights. Know your rights!
The right to own property in the United States is protected under the U.S. Constitution. Anything that may be owned and gained lawfully is known as property. Property law governs the ownership of both real and personal property. For the purposes of this article, we will focus on the rights associated with real property (land) as opposed to personal property (personal possessions).
Bundle of Rights
In common law, the word “property” refers more to the rights an owner has in property than the fact that the property is owned. Property rights are known as the bundle of rights which consists of all the legal rights that are attached to the ownership of real property.
The bundle of rights includes the right to use, possess, transfer, encumber, and enjoy real property. An owner may choose to sell or give away one or more of the rights while keeping the rest. For example, under a lease agreement, an owner may give away the right of use for a certain amount of time to a tenant. However, if one of these rights is affected, control of the property is diminished.
The right to use gives the owner of a property the right to use the property within the boundaries of the law. You are free to use your property for any legal purpose and make alterations and additions however you like.
The right of possession gives the owner of a property the ability to live on the property and exclude others from access. Trespassing on private property violates a property owner’s right of possession and is a civil violation of law that has the potential to end up in court.
The right of possession can be sold, usually for a certain period of time, when entering into a lease agreement with a tenant. When the right of possession is sold for consideration, the consideration is called rent, and a leasehold interest is created. Once this right is sold, the owner no longer has the right of possession; this right now belongs to the tenant. The owner will retain all of the other rights.
The right of transfer gives the owner of a property the right to dispose of the property in any way permitted by law, including transferring ownership of the property by gift, sale or trade.
The right to encumber gives the owner the right to borrow money in order to purchase or finance the property and allows the lender to use the property as security for the loan.
The right of enjoyment gives the owner of a property the right to quiet and peaceful enjoyment of the property that s/he owns or occupies. The right of quiet enjoyment does not allow a person occupying the property to become a nuisance to surrounding neighbors or use the property for illegal purposes. Deed restrictions may also effect certain rights such as restrictions made by a homeowner’s association (HOA).
These five rights together are known as the bundle of rights for real property. Real property includes land, anything permanently attached to the land, or anything immovable by law.