Rights associated with the ownership of
real property. The theory underlying the
bundle of rights holds that the ownership of
real property can be compared to a bundle of
sticks, with each stick representing a
distinct and separate right or privilege of
ownership. These rights are inherent in
ownership of real property and are
guaranteed by law including: the right to
use real property, to sell it, to lease it,
to enter it, to give it away, and finally
the right to refuse to exercise any of these
rights. The highest level of ownership
rights is fee simple.
Example of Bundle of Rights
An owner can sell or lease mineral
rights while retaining the rights to use the
surface area of his/her property. An
absentee owner can rent the surface rights
to one party and lease the subsurface rights
to another. the remaining rights in the
bundle can be sold, leased, transferred, or
otherwise disposed of. In establishing a
property’s value, the rights remaining with
the property and the effect of the loss of
any of these private rights on its value
must be taken into consideration.
Government
Limitations
The legal definition of land implies
complete ownership of the land and
everything attached to it, under it, or over
it. However, legal title to land does not
imply unrestricted exercise of the bundle of
rights. Such rights and privileges are
limited by the following four government
powers.
Police Power:
The right of government to regulate property
for promotion of public safety, health,
morals, and general welfare. Zoning by-laws,
building codes, traffic regulations, and
sanitary regulations are also based on
police power.
Power of
Expropriation:
A right reserved by the government to take
private property for public benefit provided
that just compensation is paid. This right
has been extended to quasi-public bodies
such as housing authorities and public
utilities.
Power of
Taxation:
Right of all levels of government to
generate revenue through the taxation of
land. The most common and direct form being
property taxation at the municipal level.
Escheat:
Right to have ownership of the property
return to the state if the owner dies having
no will and no known or ascertainable heirs.
Government limitations on the bundle of
rights can be far-reaching. For example, the
Criminal Code permits law enforcement
officers to enter one’s lands if a crime is
committed. An owner cannot create a nuisance
in law, e.g., bring dangerous chattels such
as dynamite onto the land. Although owners
may excavate, lateral support to the
neighbour’s land must be retained. Riparian
rights affect an owner’s ability to
interfere with the quality or quantity of
water and taking action that might have a
detrimental effect on other property owners
sharing the waterway.
Private restrictions can limit the use,
manner of development, or even the ownership
that may be conveyed concerning real
property. Encumbrances may require that the
buyer be obligated to use the property
subject to restrictions, e.g., deed
restrictions, easements, rights of way,
party wall agreements, and mortgages.
Various bundling of rights can produce a
wide range of ownership options, as well as
offering flexibility of use. While most
immediately think of leasehold interests,
real property has many ownership dimensions,
e.g., life estates, sub-leasehold estates,
and partial and fractional interests. In
fact, fractional interests can be a
significant value in an increasingly complex
society, e.g., real property can be divided
into different planes: subsurface rights,
surface rights, and air rights.
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