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Bundle of Rights (Real Estate) - Explained

What is a Bundle of Rights?

Written by Jason Gordon

Updated at September 24th, 2021

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Table of Contents

What is a Bundle Of Rights?How Does a Bundle Of Rights Work?Academic Research
Back To: Real Estate, Personal, & Intellectual Property

What is a Bundle Of Rights?

A bundle of rights is defined as a set of legal rights that are accorded to a real estate buyer after purchase has been made. A bundle of rights are legal because the buyer of a real estate holds a legal title to the property after it has been purchased. Set of privileges that a real estate title holder enjoys under the bundle of rights include the rights of control, right of possession, right of exclusion, right of enjoyment and right of disposition (whether to sell or lease) on the property owned. These are the legitimate rights that are attributed to the ownership of a property in the real estate industry.

How Does a Bundle Of Rights Work?

Bundle of rights are also referred to the rights of possession that a real estate title holder enjoys. Purchase of a real estate property does not automatically mean that the buyer would enjoy all the rights in the bundle of rights. There are certain instances that can limit the rights that the property owner can enjoy. A good scenario to picture this is a situation whereby the owner of a property leases the property to another party, the rights in the bundle of rights will be broken between these parties. When this situation occurs, the bundle of rights enjoyed by each of the parties will be limited. Right of possession is a legal right enjoyed by the real estate buyer. Failure of the title holder to pay required property taxes can also limit the rights of possession that the holder can enjoy. Each of the rights in a bundle of rights have distinct functions. The right of control allows the real estate title holder, to use and manage the property under legal purviews. Going beyond the territory in which the property exists attract additional restrictions. The right of exclusion enables the title holder determine who enters the property or who is not allowed to enter the property. This can however not be used when there is a legal warrant authorizing the search of the property. The right of a property holder to do any activity he finds enjoyable on the property is right to enjoyment. Right of disposition means the holder can sell or lease out the property at any time he wishes to do so without being questioned. Properties subject to liens can however not be sold or leased out using this right.

Related Topics

  • Absorption Rate
  • Fair Housing Act
  • Federal Housing Administration (FHA)
  • Housing and Urban Development (HUD)
  • Design Build Contract
  • Building Permits
  • Construction Surety Bond
  • Acquisition, Development, and Construction Loan (ADC)
  • Flipping (Real Property)
  • Homeowner Affordability and Stability Plan
  • Building Residual Method
  • Accessory Dwelling Unit
  • Property Management
  • Cost-Plus Contract
  • Real Estate Investment Fund

Academic Research

  • Toward a theory of property rights, Demsetz, H. (1974). In Classic papers in natural resource economics (pp. 163-177). Palgrave Macmillan, London. 
  • A theory of access, Ribot, J. C., & Peluso, N. L. (2003). Rural sociology, 68(2), 153-181. Bundle-of-Rights Theory as a Bulwark Against Statist Conceptions of Private Property., Epstein, R. A. (2011). Econ Journal Watch, 8(3).
  • Reflections on the Bundle of Rights, Johnson, D. R. (2007). Vt. L. Rev., 32, 247.
  • Rescuing the bundle-of-rights metaphor in property law, Baron, J. B. (2013). U. Cin. L. Rev., 82, 57.
  • Theorising power relationships in multi-owned residential developments: unpacking the bundle of rights, Blandy, S., Dixon, J., & Dupuis, A. (2006). Urban Studies, 43(13), 2365-2383. 
  • The property right paradigm, Alchian, A. A., & Demsetz, H. (1973). The journal of economic history, 33(1), 16-27. 
  • Toward a theory of psychological ownership in organizations, Pierce, J. L., Kostova, T., & Dirks, K. T. (2001). Academy of management review, 26(2), 298-310. 
  • Economist's Perspective on the Theory of the Firm, An, Hart, O. (1989). Colum. L. Rev., 89, 1757. Property: A bundle of rights? Prologue to the property symposium, Klein, D. B., & Robinson, J. (2011). Econ Journal Watch, 8(3), 193.
  • The role of rights in a theory of social action, Coleman, J. S. (1993). Journal of Institutional and Theoretical Economics (JITE)/Zeitschrift fr die gesamte Staatswissenschaft, 213-232.
  • Farmland preservation, development rights and the theory of the growth machine: the views of planners, Pfeffer, M. J., & Lapping, M. B. (1994). Journal of Rural Studies, 10(3), 233-248.
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