What is a ‘bundle of rights’ in real estate?

“Bundle of rights” is a term used to describe the various interests and rights that a real estate title holder has in regard to their ownership of a property. The bundle typically includes the right of possession and several other associated rights. When real estate is sold, the bundle of rights to the property is usually transferred to the new owner at closing.

What is a bundle of rights?

When you own property, you get a bundle of rights that spell out what you may (or may not) do with it. Besides the right of ownership itself, the bundle typically includes the right to sell, lease, use, exclude, enjoy, dispose of or develop the property. Owners’ rights can vary depending on local laws.

In most cases, a property title holder has the right to use, manage and enjoy the property in any way that is legal, though restrictions can apply. A property owner’s rights can be limited in certain situations, such as if property taxes are not paid. In another example, playing music beyond a certain decibel range may not be allowed due to subdivision regulations or the covenants of a homeowners association.

Example

The 1992 U.S. Supreme Court case Lucas vs. South Carolina Coastal Commission is an example of a bundle of rights in action. In the case, it was established that because of the bundle of rights, taking away a property owner’s right to develop the property is no different from taking away the property altogether. David Lucas, the owner of a beachfront property in South Carolina, was denied developmental rights because of the state’s mission to preserve the land and provide beach access for the public. The state did not provide compensation for Lucas’ loss until after the case went to the Supreme Court. This court case strengthened the bundle of rights laws that property ownership extends beyond just the physical possession of real estate.

Property titles and deeds

You prove ownership, and therefore rights, to a property by having your name on the title. Ownership is transferred to you through the property’s deed during the purchasing process. It’s generally the title company’s responsibility to make sure that the title is changed to reflect the deed. How you title your property depends on your personal situation, and whether you own it alone or with another party, such as a spouse.

Some properties include an easement granting certain people or organizations rights to use portions of your property for a specific purpose. For example, a utility company may have an easement that allows them to access power or water lines. Easements may convey certain restrictions on your property separate from your bundle of rights — if you have an easement granting public access to a hiking trail behind your home, for instance, you don’t have full “right of exclusion.”

Bottom line

In real estate, bundle of rights is a legal term that grants you the rights you’d expect to come with owning a property. You get to decide what to do with it, who you don’t want on it and how you want to use it. But there are some situations, like easements, that may supersede your bundle of rights.