Bundle of Rights

In the past we have written articles on the importance of becoming “business fit”. The more you understand about the terms and conditions associated with real estate, the more likely it is that you will be successful in real estate investing.

Often real estate instructors teach the concept of the “bundle of rights” to help explain the complexities of property ownership. Understanding the “bundle of rights” can help you grasp and visualize how real estate ownership is defined and understood. Property rights originated, and have their roots, in English common law.

Property rights have been compared to a bundle of sticks where each stick represents a specific right, privilege, or benefit. Real estate ownership carries with it a complex set of rights. The bundle of rights expands as sticks, or rights, are added or gets smaller as sticks are taken away.

The owner of real estate has rights which can include the right of possession, the right of control, the right of exclusion, the right of enjoyment, and the right of disposition. A right is something due a person by claim, or legal share, or privilege. Understanding the concept of the “bundle of rights” is fundamental to a good comprehension of real estate. The bundle of rights normally varies from property to property. A particular property will often have restrictions on use, easements granted to others, mineral or water rights granted to others, etc.

Concessions like these reduce the rights, or bundle of rights associated with the property. The community where the property is located also has a “bundle of rights”. The public view of rights would include the right to tax, take for public use, control of the property with zoning restrictions, etc. Routinely the private and public rights will be in conflict. 

Property owners take their private property rights very seriously. The individual’s concept of their rights may not be in agreement with the public or governmental perspective.Remember that property rights are not absolute; they are a function of what society is willing to acknowledge, defend and enforce.