What Is The Bundle of Legal Rights of a Real Estate Owner?
Rights of Ownership When You Hold Title
Real estate owners have a traditional "bundle of legal rights" that transfers to them along with the property when they purchase it. These rights of ownership are bestowed upon the holder of the title to the real estate, and they include possession, control, exclusion, enjoyment, and disposition.
Ownership of land is referred to as holding title to it. The evidence of that title is the deed.
The Right of Possession
A property is owned by whoever holds the title. It's yours if you close a real estate deal for cash and have the title in your hands because there's no mortgage note or lien against it.
This isn't the case if you take out a mortgage to purchase the home, however. The mortgage forms a lien against the property, effectively allowing the mortgage lender hold title. Depending on the state in which you're located and the laws there, the mortgage lienholder can take the house relatively quickly if you default on the loan, or they might have to go through the court system to do so.
Not paying property taxes and association dues can result in losing possession as well because these obligations can also form liens.
The Right of Control
Owners control the use of their properties, but they must adhere to any subdivision or homeowner association covenants and restrictions that apply.
For example, you can't control your property by storing car bodies there if your covenants preclude this. Likewise, you won't be able to throw loud parties or let two dozen people squat on your land if there are covenants and restrictions that forbid it.
The Right of Exclusion
Others can be excluded from using or entering your home, and this right is generally very well protected.
You don't have to allow anyone to enter your property with the exception of law enforcement carrying a warrant. There will likely be easements for things like utilities, however, so utility companies will have the right to enter to maintain their rights of way and utility lines as a part of the easement.
Easements are generally located on your property, not in it.
The Right of Enjoyment
Owners can enjoy the use of their properties in any legal manner, "legal" being the operative word. You're not free to commit a crime simply because it's your property. You're just as bound by state, local, and federal laws in your home or in your yard as you would be if you were walking down a public street.
The Right of Disposition
"Disposition" means you can transfer ownership to someone else. The titleholder can sell, rent, or transfer ownership or the use of the property at will. Of course, you'll have to pay off any mortgage against the property if you're going to dispose of it, but you generally can sell it and do that at will.
If the IRS has a tax lien against your real estate, you'll have to pay that off from the proceeds of sale or through some other means or you can't transfer title. The same applies to mechanics' liens for work done on the home or improvements.
Title insurance protects these rights. It's intended to protect against frivolous or erroneous claims on ownership rights when a property changes hands and a policy is purchased by or for the new owner.
A boundary line dispute is a good example. A new neighbor's survey might suddenly show that 10 feet along one side of your land is supposedly theirs. Your title insurance company would investigate and either refute the claim or compensate you for the loss of that 10 feet if it turns out that your own survey was wrong.
Not all title policies cover surveys, however. This coverage must often be purchased separately.
Other issues can also threaten ownership rights, such as claims by previous spouses to ownership of a property. Quitclaim deeds are generally required by title insurance companies to transfer rights between spouses in divorce situations.