Introduction to Property Law: Understanding the Basics

Every time you buy a cup of coffee or invite friends over to your place for dinner, you are exercising your legal property rights. These rights allow you to exchange your property—in this case, money—for the property of someone else (the aforementioned cup of coffee). The freedom to invite friends over is based on your ownership or leased right to enjoy your own property.

Understanding property law can help you protect, enjoy, and benefit from everything you own. This post will explore the basic concepts of property law so you can see how property rights impact you.

What is Property Law?

Property law governs ownership of both tangible and intangible objects. Tangible objects include property such as personal belongings, vehicles, buildings, and land. Intangible objects include investments, bank accounts, copyrights, and trademarks. Ownership of property also gives you the ability to use it as you like, and to sell or give it to someone else. The right to transfer property is a key right of property ownership.¹

Property ownership is a foundational right, one that defines a person’s independence and wealth. Ownership of property is such an important concept that it is protected by the 5^th and 14^th Amendments to the U.S. Constitution.

The 5^th Amendment Takings Clause—“Nor shall private property be taken for public use, without just compensation”—protects individuals when the government takes their private property in order to benefit the public good. This process, called “eminent domain,” is legal in some circumstances, but the government must pay the property “just compensation” for the property loss. An example of this “eminent domain” is the government providing compensation to a landowner whose property is needed to expand a public roadway..²

While this protection of property rights has been established since the very inception of the U.S., the Takings Clause is open to interpretation. Consider the case Kelo vs. New London, where the Supreme Court ruled in 2005 that private property could be seized for redevelopment by a private company because the public would benefit from increased tax revenue and jobs.³

Types of Property

All property belongs to one of three categories: real property, personal property, or intellectual property.

Real Property

Real property is land or things attached to land, such as buildings, trees, and plants. Mineral rights below the land’s surface and air-space rights above the land are also part of the property.

The owners of real property have the following rights, as long as they do not violate the law:

• Right of enjoyment to use the property
• Right of exclusion to control who can access the property
• Right of possession to live on the property
• Right of disposition to transfer ownership
• Right of control to modify, destroy, or rent the property, and the right to make legal decisions over the property

Laws governing where the real property exists may override the owner’s rights. For example, the law may recognize private rights of a third party to access the land, called “easements,” and easements might override, or qualify, the right of exclusion, and zoning laws might override the owner’s right to use the property as they wish. ⁴

Personal Property

This refers to tangible and intangible things owned by an individual that are movable (unlike real property, which is fixed in place). Common examples include:

• Personal belongings such as clothing and jewelry
• Household items such as furniture, some appliances, and artwork
• Vehicles such as cars, trucks, and boats
• Bank accounts and investments such as stocks, bonds, and insurance policies

Personal property, like real property, can be sold, given as a gift, passed to at death, or used as collateral for a loan.⁵

Intellectual Property

Often referred to as IP, intellectual property consists of rights in inventions or creations such as artworks, writings and designs that are used in business. Legal ways of protecting IP include:

• Patents on inventions
• Copyrights for creations including books, music art, computer programs, and films
• Trademarks and servicemarks, such as logos and brand names that differentiate goods or services
• Trade secrets, such as the recipe for a certain famous soft drink

By protecting IP, creators are rewarded for putting new inventions and artworks into the public realm for a limited number of years.⁶

Property Ownership

All types of property can be owned by individuals or groups. The most common types of ownership are:

• Sole ownership by a single individual
• Joint tenancy: Ownership by two or more people in equal shares
• Tenancy in common: A type of joint ownership by two or more people with equal or unequal shares
• Community property which has been acquired during the marriage and is equally owned by the spouses

Joint tenancy and tenancy in common might seem similar, but there are important differences.

With joint tenancy:

• Tenants (owners) hold equal shares and have equal rights and equal responsibilities
• If one tenant dies, that share is distributed equally to the remaining tenants
• Shares cannot always be sold or used as loan collateral without the agreement of all tenants

With tenancy in common:

• Tenants can have equal or unequal shares, but all have equal rights to enjoy the property
• Tenants hold title individually to their portion of the property, and can sell it or use their portion as collateral
• Upon the tenant’s death, ownership can be transferred to persons named in the tenant’s will or, if the tenant has no will, to their heirs⁷

Property Transactions

One type of real property transaction occurs when someone buys or sells rights to a property. This may be land, buildings, and/or a long-term lease of land.⁸ While a realtor may facilitate the terms of the sale, an attorney is often needed to correct any legal issues, draft the legal documents, and file the paperwork with the correct agencies.⁹

As a right of real property ownership, the owner may rent or lease the property to someone else. In general, renting refers to a short-term agreement such as 30 days, while a lease is one year or longer. The rental or lease agreement spells out the details such as payment amounts and due dates, responsibilities of the lessor (owner/landlord) and lessee (tenant), and terms of renewal.¹⁰

Property Disputes

Whether two neighbors disagree on their property line or a landlord and tenant feel the other is responsible for a repair, property disputes are common. Disputes over property titles or use happen frequently as well. These may stem from sellers who don’t have clear title to the property or disputes over land use, zoning, HOA covenants, or access, to name just a few.

Resolving real property disputes can be an upsetting, time-intensive, and expensive proposition. It's best to get good legal advice, a title search, and an accurate survey before acquiring property in order to avoid these kinds of conflicts. Once a conflict occurs, sometimes neighbors can resolve their differences amicably, by negotiating between themselves, or even involving an outside mediator. The mediator’s decision would not necessarily be binding on the two parties, but an outside party can sometimes find a solution that the parties can agree to in the end.

If informal attempts to resolve a property dispute are not effective, litigation is an available remedy. When large sums of money or valuable property is involved, litigation may be the best way to protect your rights.

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