The privileges you get as a homeowner are, in a famous legal metaphor, your bundle of rights. Why the metaphor makers didn’t choose an enchilada is anyone’s guess. It certainly would have spiced up law school courses.
In any case, what’s in a real estate deed matters. If your bundle is missing a few sticks, so to speak, you might not get to use your property as planned. You could need to negotiate or compromise with another party. You might learn that someone else has a conflicting interest and possibly always will.
Ideally, the buyer of a home with a clear title receives complete ownership and the prerogative to use it as desired. In reality, things get complicated. Here are six of the most significant rights you can have:
1. Your Right of Possession
Possession has nothing to do with a haunted house — usually. When you receive the title to the real estate, you possess a piece of property. By law, then, you own the place and may live there. You may have others removed in necessary and appropriate circumstances.
If you buy with cash, and own your home free and clear, then your right of possession is not subject to a mortgage lien. But if you secure a loan on the property, you’ve traded a part of your ownership rights for a loan. We’ll talk a little more about this below, when we discuss the homeowner’s right of disposition.
☛ What kinds of liens can impact a title? Read about how various types of liens affect a homeowner’s rights.
In some states, a home is conveyed to a mortgage borrower through a deed of trust. Home loans in these states differ from standard mortgage states. In deed of trust states, a third party holds the legal title until you, the borrower, pay off the loan. This way the lender can easily repossess the home — not by turning to the court’s foreclosure process, but by simply using the power of sale clause in the deed of trust.
2. Your Right to Quiet Enjoyment
The covenant of quiet enjoyment gives the owner or renter freedom from disruptions to their right to possess or use their real estate. If you own your home, you can use and enjoy it free from anyone else’s meddling — within legal limits, of course. Zoning and local ordinances may prohibit you from carrying out certain activities or placing certain structures on the real estate you own, or oblige you to apply for a permit.
If you’re a homeowner on a multi-unit property, everyone in the community has the same right to quiet enjoyment. So, the individual homeowners need to compromise on their own rights to respect the rights of the collective whole. If you buy a condo, others will hear or be impacted by your activities. You might be sharing walls and plumbing. Therefore, the title to your property will have conditions, covenants and restrictions (CC&Rs) limiting the activities you can take in and around your unit.
☛ Home prices have soared. But many condo properties still offer affordable homeownership. Read more about what you get with a condo deed.
3. Your Right of Control
As an owner, you have the right of control. This is the right to make improvements and do other things you want with your real estate. Related rights include the right to use the air, water, or underground resources on the property.
Here again, your right to control your property as you see fit is typically offset by certain rules and limits set by your township or subdivision, and by your neighborhood association or homeowners’ association if you have one.
☛ Can a homeowner get around a deed restriction? Read more here.
You can have an ownership interest and yet not have possession or control. Some co-ownerships are vested as tenancies in common with one co-owning as an investor. That person, although an owner, might live elsewhere and not have the right of possession.
If you rent out your property, the lease will pass the rights of quiet enjoyment and possession to your renter. The renter will also get the right to exclude. As the owner, though, you keep the right of control over your property, and may come in — after giving the requisite advance notice.
4. Your Right to Exclude Others
As an owner of private property, you have the right to keep trespassers out. Note certain exceptions for:
- Utility workers and others with easements on your property.
- Police officers with warrants.
- Governments that change homeowners’ rights through rezoning, or taking property outright through eminent domain.
- Deed restricted properties and condo units subject to inspections for compliance with rules and safety provisions.
If you decide to rent your space out, or allow someone else to have an easement to use or travel across your land, you’re voluntarily giving up your right to exclude to that extent. But in the case of renting, you’re furthering your right to derive income from your real estate. To restore these sticks to your bundle (or these ingredients to your enchilada) and offer more value to the next owner, you can wait until the renter’s (or easement’s) term is up to sell. If an easement is created without a time limit declared at the start, and the party with right of way over the easement won’t give it up, you may need to seek legal representation and pursue a quiet title action in court.
5. Your Right to Encumber the Property
This allows you, as the homeowner, to place burdens on the property. You could encumber a house with debt by taking a home equity loan out against its value, for example.
Your right to encumber your real estate can also be intertwined with letting go of certain exclusion rights. You might agree to an easement so the person next door could, say, walk across a bridge on your acreage or to get access to a trail.
☛ Curious about how easements work? Take a look at The Real Estate Easement: A Guide and Glossary from Deeds.com.
6. Your Right to Transfer the Property (Right of Disposition)
The right to transfer is the legal prerogative to market and sell, to rent out, to give away, or to bequeath real estate to another party. But not all homeowners’ enchiladas have this ingredient! For just one example, some deeds have affordable housing restrictions. Deed restrictions can prevent you from disposing of your real estate without following a set of rules or obtaining advance approval from a corporate or government authority.
If you rent out your property, you may also decide whether to grant your renter an element of your right of disposition — that’s the ability to sublet the property.
As long as there is any loan debt on the home, you as a homeowner don’t have a full right of disposition.
In most cases, you have to make a final payoff prior to selling, or pay the remaining debt from a portion of the real estate sale proceeds when you sell.
The Effects of Digital Disruptions
The idea of rights as a “bundle” is part of the way real estate works under our legal system. As newer conceptions of property emerge, investment properties are poised to become more liquid and easier to invest in. The bundle concept could go through some changes in the future. It’s complicated to assign various ingredients in an enchilada to anyone with a share in the whole!
☛ The rise of decentralized finance is making blockchain part of the evolving conversation around property rights. Keep up with blockchain and real estate, as we see it at Deeds.com.
No Rights in a Vacuum
Homeowners can be liable for damage to other parties’ property or for injuries that occur on their premises. They pay property taxes and taxes on title transfers. Mortgage lenders have a right to possess homes through foreclosure upon a borrower’s default. Condo buyers must meet regular financial responsibilities to the homeowners’ association (HOA) — or it could place liens on the units.
Thus, the collection of rights that make up homeownership never exists in a vacuum. Real estate rights arose within relationships among people. And sometimes they’re contested, divided, or shared — kind of like enchiladas.
Supporting References
Century 21 Glossary: Bundle of Rights.
Legal Information Institute (Cornell Law School): Definition – Covenant of Quiet Enjoyment.
Jasmine Eddy for CA Realty Training: What Is Equity in Real Estate? (Jul. 27, 2020).
James Kimmons for The Balance – Small Business: What Is the Bundle of Legal Rights of a Property Owner? (updated Sep. 10, 2020; internal citations omitted).
Lena Katz for MillionAcres: What is the Bundle of Rights and Why Should Real Estate Investors Care? (published by The Motley Fool; updated: Jun. 10, 2021).
Photo credits: Adoproducciones, via Pixabay, and Sam Jean, via Pexels.