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Property Rights: Key Concepts & Terms

Instructor: Shawn Grimsley
Real property is not just about the surface of the Earth and the stuff on it; it is also about the rights that people have concerning the property. In this lesson, you will learn about different types of property rights a landowner can have.

Property Rights Defined

In real estate law, property is more than just the dirt and the stuff on and in it. Real property also involves the rights related to the physical land. You can think of property rights as the legal rights that a person has over a piece of real property. For example, as a homeowner, you have the right to possess, use, and sell your property. On the other hand, a tenant doesn't own the property she is renting, but she does have the right to possess and use the property during the period of the lease.

Property Rights as a Bundle of Sticks

As you can see in our discussion of the homeowner and the renter, not everyone has the same property rights in property. A common metaphor to explain property rights is to think of them as a bundle of sticks. Each stick in the bundle is a specific property right. Some people may have the whole bundle of rights, while other people may only have some of the sticks in the bundle.

An example may help illustrate the bundle of rights. Let's say you own a house on 10 acres of land. You have the right to posses, use and sell your property (three separate 'sticks'). On the other hand, a neighbor may have a right to travel across a specific part of your property to reach a public road, called a right of way. He has one stick. While you may have more sticks, or rights, than anyone else, the fact remains that other people have some legal right relating to your property.

You should also note that different people could hold different rights on the same property. For example, you may own the surface of the property, someone else may own the mineral and gas rights underneath the property and another person may have water rights on the property.

Types of Property Rights for Owners

Let's take a quick moment to discuss the specific sticks in our bundle of property rights an owner may have. Again, keep in mind that a person can hold all the sticks in our bundle or just one.

Possession is the right to occupy the property. You need to keep in mind that the right to possession is not a right of ownership. A person that holds legal title (owns the property) may or may not have a right of possession. A tenant has a right to possess an apartment but doesn't own it. Similarly, while a landlord owns the property, she doesn't have the right of possession during the term of the lease.

Use is the right to use the property to some degree and manner. If you hold legal title to a piece of property, then you have the right to use the property to the extent permitted by law. This is often known as the right of enjoyment. You may decide to use the property for a residence, for a business or as a rental to the extent permitted by law. Of course, if you lease the property, you are transferring the right of use to your tenant for the period of the lease.

Property owners also have the right of control, which is the ability to restrict how others may use the property. For example, a landlord may limit the use of an apartment to residential occupancy and not permit any business activities in it.

Keep in mind, however, that the owner's right of control is subject to the rights others may have in the property, such as an easement. An easement is a right to use a piece of property for a specific purpose. For example, a utility company may hold an easement to place power lines along a specified part of your property. You have no right to control how the company does it so long as the company is operating within the terms of the easement.

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