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Property Rights: What Are They In Real Estate?

April 20, 2024 4-minute read

Author: Sam Hawrylack

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Buying a property is exciting. It’s a financial investment in your future. But as a property owner, you have certain property rights that you should understand. While all property owners have rights, certain things can overtake them.

Here’s everything you should know about how property rights work.

What Are Property Rights?

Property rights refer to what you can legally do with the property you own, as noted by the Fifth Amendment. Individuals, businesses, or the government can own a piece of property and have the freedom to buy, sell and use that property as long as they follow the law.

You earn property rights when you become the legal property owner. This occurs when the property is legally transferred to you with a deed and it’s recorded with the county.

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What Does Property Ownership Mean?

Property ownership means one or more people have a recorded interest in a property. Ownership provides specific property rights, which you can use within reason. You can own a property as a sole owner, in joint ownership, in a trust or even in a partnership. The type of ownership determines how the property is handled when you sell or if one person should die while owning the property.

The local government records all real estate transactions because it’s how they determine who is responsible for paying property taxes. When you take possession of the property, you become the owner on record on the deed and house title.

House Title

A house title isn’t a document. Instead, it’s a set of rights you have as the owner of record (on the deed). It demonstrates legal ownership of the property and includes the right to possess, control and enjoy it.

House Deed

A house deed, also known as the property deed, is a legal document that effectively transfers rights from the seller to the buyer. The house deed is recorded with the county. This is how title companies conduct a title search to determine the chain of homeownership, so deed recording is vital.

Types Of Property Rights

Homeowners have property rights when the house deed transfers to them. These rights are different than a tenant’s rights. A homeowner’s rights are often called a bundle of rights and include the following:

 

  1. Possession: The right of possession means you have the right to own the property that the grantor (seller) transferred to you, the grantee. You have possession of the property as long as you meet your mortgage obligations (if you borrowed a mortgage). If you default on your mortgage, then the lender has a primary claim to the property and can take possession.
  2. Control: You have the right to control your property to a certain point. You must follow all state and local laws, including any zoning issues. This means you must use the property as it’s meant. For example, you can’t turn a residential house into a storefront because it’s zoned for residential use.
  3. Exclusion: The right of exclusion allows you to determine who can or cannot enter your property. Certain rights override this, however, including easements or judicial reasons to use the property, such as a warrant from a court.
  4. Enjoyment: The right of enjoyment means you can do what you want on your property as long as it’s legal. No one can tell you not to do the things you want to do unless those activities break the law.
  5. Disposition: As a homeowner, you have the right to sell, transfer or pass down your property. However, if you owe a mortgage on the property, your mortgage will have a due on sale clause. This means the total mortgage balance becomes due if you transfer or sell the property.

Property Rights And Legal Considerations

While a homeowner has property rights, certain legal considerations could stand in your way. For example, if someone stakes a claim against your property for an encumbrance, you could be accused of violating someone else’s property with your structure.

Another obstacle to property rights is an easement. This allows another person access to your property without your permission. It may also limit what you can and cannot do with your property, depending on the reason for the easement. An example of this is an easement for the owner of. Another property to access your own – like if you have a shared driveway.

Finally, liens could affect a property owner’s rights. When there is a lien on your property, another entity has rights to it, such as a mortgage lender. If you default on your mortgage, lenders have the right to repossess your property.

Zoning Laws

Zoning laws determine what you can and cannot do with your property. Each zone has a specific use, and only that type of property can be built there. For example, if an area is zoned for commercial use, you cannot build a residential home there, and vice versa.

State And Local Laws

State and local laws determine what you can and cannot do with your property. The state laws pertain to the entire state, and local laws pertain to a certain city or county. Property owners must abide by both state and local laws.

Property Rights FAQs

Property rights can seem confusing since there are so many entities involved. Here are some commonly asked questions about them.

What Are My Rights As A Property Owner?

Property owners have the right to own, control, enjoy, exclude and dispose of the property as they wish, as long as they follow the law. However, there are certain exclusions to these rights, such as any judicial or legal reasons that supersede your rights or any liens that take over the rights of your property.

What Are The Types Of Property?

There are many types of properties, including residential, commercial, raw land, industrial, special use, agricultural and historic. These categories are based on the area’s zoning and determine what property owners can and cannot do with their property.

What Determines Property Rights?

The title determines your property rights. All deed owners have the right to possess, control, enjoy, exclude and dispose of the property. The recorded deed lists those who have ownership of the property. But anything that supersedes it will take precedence, if necessary.

The Bottom Line

Property rights are given when you purchase a property as long as all legalities are followed. Property rights are important to understand when you take ownership of a property, so you ensure they aren’t violated.

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Sam Hawrylack

Samantha is a full-time personal finance and real estate writer with 5 years of experience. She has a Bachelor of Science in Finance and an MBA from West Chester University of Pennsylvania. She writes for publications like Rocket Mortgage, Bigger Pockets, Quicken Loans, Angi, Well Kept Wallet, Crediful, Clever Girl Finance, AllCards, InvestingAnswers, and many more.