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Concepts and Principles On

Property

Property

Property
• Property is a legal concept encompassing all the
interests, rights and benefits related to ownership.
• Property consists of the rights of ownership, which
entitle the owner to a specific interest or interests
in what is owned.
• To distinguish between real estate, which is a
physical entity, and its ownership, which is a legal
concept, the ownership of real estate is called real
property.

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Property
• The combination of rights associated with the
ownership of real property is referred to as the
bundle of rights.
• The bundle of rights concept likens property
ownership to a bundle of sticks with each stick
representing a distinct and separate right of the
property owner, e.g., the right to use, to sell, to
lease, to give away, or to choose to exercise all
or none of these rights.

Bundle of Rights

Bundle of Rights
• In the bundle of rights theory, ownership of
property is compared to a bundle of sticks.
• Each stick represents a distinct and separate
right, which may be the right
– to use,
– to sell it,
– to lease it,
– to give it away, or
– to choose to exercise more than one or none of these
rights.
• Although subject to certain limitations and
restrictions, private enjoyment of these rights is
guaranteed by law under the Constitution.

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Bundle of Rights

The bundle expands as


“sticks,” or rights, are added
and gets smaller as sticks
are taken away.

Ownership Rights
RIGHT EFFECT ON PROPERTY
Not necessarily prohibited by the easement but is subject to
1. To Sell:
provisions of the conservation easement.
May have adverse effect due to inability to obtain maximum
2. To Mortgage: financing on favorable terms due to restrictions imposed by
the easement.
Not prohibited by the conservation easement but is subject to
3. To Bequeath:
provisions of the conservation easement.
Often prohibited and will have adverse effect due to inability t o
4. To Lease:
lease the property.
5. To Use and Not prohibited by the easement but is subject to provisions of
Occupy: the conservation easement.
6. To Grade, Fill
Often prohibited, unless minimal effect on property.
or Excavate:

Ownership Rights
RIGHT EFFECT ON PROPERTY
7. Install New Permanent Often prohibited, with potential negative effect on
Roads or Widen Existing
property.
Ones:

8. Install New Lake(s): Often prohibited, unless minimal effect on property.

9. Occupy/Use Existing
Often no restrictions.
Improvements:
10. Construct New prohibited, with major effect if the property has
Improvements: development potential.

11. Subdivide and Develop: Sometimes prohibited, as noted above or may be


limited to large tracts, such as 500 acres.

Sometimes prohibited, with effect depending on the


12. To Farm: type and quality of the soil on the property. Not
for profit farming for wildlife is often permitted.

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Bundle of Rights
• It is possible to own all of the rights in a property or only
a portion of them.
• A person owning all of the rights in real property
ownership is said to have fee simple title.
• Fee simple title is regarded as an estate without
limitations or restrictions.
• Less-than-complete estates result from partial interests
that are created by selling, leasing or otherwise limiting
the bundle of rights in the fee estate.
• An appraisal assignment may require the appraisal of
fee simple title or any partial interest such as the
leasehold interest of an easement.

Restriction on Ownership

• Four powers of government


• Legal private agreements

Restriction on Ownership
All estates in real property are subject to
four powers of government;
1. taxation,
2. eminent domain,
3. police power and
4. escheat.

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Restriction on Ownership
• In addition to government encumbrances on
property, legal private agreements may also
impose limitations.
• One type is a restriction inserted in a deed.
– Such restrictions can limit the use or manner of
development, or even the manner in which ownership
can be conveyed.
– The purchaser of a property so encumbered is
obligated to use the property subject to such
restrictions.
• Other private restrictions include certain
easements, rights-of-way, and party-wall
agreements.

Bundle of Rights
• The rights in the bundle, subject to government
limitations and private restrictions, can be sold, leased,
transferred, or otherwise disposed of individually.
• Certain parcels of land afford owners a number of
options.
– For example, one property owner could sell or lease
minerals rights and still retain the rights to use the surface
area.
– Another could lease surface rights to one-party and lease
subsurface rights to another.
– Still another could sell or lease air rights for construction or
aviation.
– Thus, the ownership of certain rights may be severed from
the ownership of the rest of a property by their being sold,
leased, or given as a gift to other parties.

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