What Is a Bundle of Rights?
A bundle of rights is a term for the set of legal privileges that is generally afforded to a real estate buyer with the transfer of the title. The bundle includes the following:
- The right of possession
- The right of control
- The right of exclusion
- The right of enjoyment
- The right of disposition
The average homebuyer can expect the whole traditional bundle of rights once the deal is done.
Real estate ownership carries with it a complex set of rights, and the bundle of rights concept traditionally has been how those rights are described and summarized. It is a feature of many real estate license tests and first-year law classes.
- A buyer of property gets a bundle of rights along with the title.
- These rights generally give the buyer the freedom to use the property within the limits of the law.
- Commercial property investors may share some of these rights with other parties.
Understanding a Bundle of Rights
The average homebuyer can expect the whole traditional bundle of rights once the deal is done. That is, homebuyers expect to have the right of possession, of control, of exclusion, of enjoyment, and of disposition.
However, these rights can be broken up and assigned to different parties. This usually applies to commercial and investment property purchases. For example, the buyer of a rental property may have rights that are limited by local landlord-tenant laws and regulations, or the owner of a storefront property may share certain rights with the tenant who runs a business there.
In any case, a real estate owner’s bundle of rights can be exercised only with the boundaries of many other laws. For example, a homeowner’s right of enjoyment may not be exercised beyond the limits of local noise control laws.
Right of Possession
The right of possession simply states that the titleholder is the legal owner of the property.
Right of Control
The titleholder can use the property in any way that is not illegal. In practice, a homeowner association (HOA) can place additional restrictions on anything from garden ornaments to pet ownership, though these rules are not laws.
Right of Exclusion
The right of exclusion allows the titleholder to limit who may enter the property. This one has few real limits. Easements may be in place permitting access to utility lines that override this right. A warrant authorizing a search of the property trumps the right of exclusion. Additionally, an owner of a rental property may not have right of exclusion for who their tenant lets on the property depending on the terms of the lease and local laws.
Right of Enjoyment
The right to enjoyment asserts the titleholder’s right to participate in any activities that they find pleasurable while on the property. This assumes, once again, that those activities are lawful.
Right of Disposition
The right of disposition protects the titleholder’s right to transfer ownership, permanently or temporarily, to another party. This right is fully realized only when the property is owned outright and not mortgaged. An exclusion also applies if the property is subject to a lien.
Does Homeowner Association (HOA) Authority Supersede My Rights as Property Owner?
This depends on the state where you live and the covenants, convictions, and restrictions (CC&Rs) that you signed and agreed to when you purchased the property. The homeowner association (HOA) may have the right to impose certain penalties on you if you do not follow their rules, which can effectively restrict your rights as a property owner.
Who Has More Rights, Landlord or Tenant?
That depends on your local laws and how tenant-friendly or landlord-friendly they are. In some states, landlords have very few restrictions on entering property, selling property, evicting tenants, and so on. In other states, tenants have more rights and, for example, must grant permission before a landlord can enter a property and must be given certain periods of notice before a landlord can sell the property. In addition to local statutes, each judiciary has purview to decide which cases to hear and when, which puts some statutes in effect regardless of laws on the books.
How Does the Bundle of Rights Work with Multiple Owners?
If there are multiple owners on a property, then the bundle of rights belongs to both equally—which is both a protection and a hindrance, depending on circumstances. For example, if a home is owned by a married couple and that couple gets divorced, then one spouse would need permission from the other to sell the house.
The Bottom Line
As a property owner, you get the rights of possession, control, exclusion, enjoyment, and disposition once you close on the property. This bundle of rights gives you all of the rights that you would expect once you own a property. However, there are exclusions, depending on the type of property you own and if you are renting it out to tenants.