Bundle of Rights in Real Estate: Importance of Ownership Rights

The “bundle of rights” is the common term in the United States for the collection of legal rights that are granted to a property owner upon purchase of (and receipt of a title to) a piece of real estate. These property rights include possession, control, exclusion, derivation of income, and disposition.

Each right within the bundle of rights operates individually (often yielding the nickname “bundle of sticks” in property law). Property owners may lose or choose to give up certain rights (or “sticks”) for specific reasons—for example, if they decide to rent out a room on the property, they give up the right of exclusion in favor of tenancy.

A bundle of rights is important because it provides real estate owners with a breakdown of how they can legally use their property. Whether you’re a private home buyer or a commercial real estate investor, it’s vital to familiarize yourself with the set of rights that you’ll receive with the title of a property so you can set the appropriate expectations for its utility.

In some cases, there may be unexpected encumbrances to these rights, such as land use laws, homeowners’ association (HOA) regulations, or shared rights with other tenants or storefronts.

The bundle of rights includes several specific ownership rights:

• The right of possession. When someone purchases a property, they have a legal right to own it. The right of possession can be subject to many stipulations, including that the owner must pay property taxes and HOA fees (if applicable) to continue enjoying the right of possession. In addition, if the purchaser has taken out a mortgage, that means the mortgage lender has a lien (a legal claim against a property) and technically holds the title and the right to foreclose (take ownership of the property if the mortgage owner falls behind on loan payments).
• The right of control. A homeowner has the right to control their property, meaning they get to decide what happens at their home, including the right to own a pet or derive income from the property. The right of control is subject to other regulations—for instance, the homeowner is still subject to homeowners’ association regulations, local, state, and federal laws, and zoning regulations.
• The right of enjoyment. Sometimes called the “right of quiet enjoyment,” this right protects the homeowner’s right to decide how they design, operate, and live in their home (both their real property and yard), subject to the regulations of HOAs and the law.
• The right of exclusion. A homeowner has the right to prevent others from trespassing in their home or on their private property. The right of exclusion has several exceptions, including law enforcement officers with a warrant and easements for utility companies, which gives them the right to use parts of the land for repair and maintenance.
• The right of disposition. A homeowner has the right to transfer ownership of the property to another person, including in a sale, as a gift, or in their will. If the house still has a mortgage, the right of disposition is subject to a lien, and the seller must pay off the mortgage with the money from a sale.
• Additional rights. In addition to the five major rights, there are other less common rights granted to the property owner, including surface rights (related to the surface of the land), mineral rights (pertaining to the substances found on their property), and air rights (legal ability to occupy the vertical air space above a plot of real estate).

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