The “Bundle” of Real Estate Ownership Rights

In real estate, the bundle of rights refers to the rights that a property owner enjoys. These rights are automatically transferred with ownership of the property. This means that when you buy real estate, a bundle of rights comes along with it. Anyone who owns real estate has certain rights that come with property ownership. We’ll take a closer look at the rights of possession, use, enjoyment, disposition, and exclusion. Many times, all of these rights are included in a contract, but some rights may be excluded.

Possession

Above all, a property owner has the right of possession. Once the title for a property is in hand and the mortgage is paid or cash is used to purchase property, the owner has the right of possession. This basically means that the buyer officially has ownership of the property. As long as the owner pays his or her taxes and abides by any homeowner association regulations, they have possession of the property.

Use

The right of use refers to the way the owner wishes to use the property. As long as the owner has possession of the property, they can use it in whatever way is desired. Of course, the owner must pay tax, abide by any government zoning laws, and follow any other laws or association rules. Otherwise, the property owner has the right to use the property for any desired purpose.

Enjoyment

The right of enjoyment gives the owner the freedom to enjoy the property in any way, within reason. This means that the owner must follow all laws and homeowner covenants that apply. So, the owner is free to enjoy the property in any legal way.

Disposition

Disposition refers to the right of the owner to sell the property. In fact, the right of disposition not only allows the owner to sell at will but also to rent, lease, or transfer ownership or use of the property. The only restriction here comes if taxes are owed to the IRS. If the owner owes tax, then the amount must be paid as part of the settlement in the disposition of the property.

Exclusion

Exclusion means that the owner can prohibit other people from using or entering the property. A property owner does not have to allow anyone access to a property without a warrant. Only law enforcement officers with a legal warrant have the right to enter private property without permission. Easements, usually for utilities, sometimes provide access for third parties to perform maintenance.

Finally, a property owner reserves the right not to exercise any of these rights. Simply because you have a right does not mean you must exercise it. However, knowing you have these rights as a property owner can provide peace of mind in case they are ever needed.