Browse Proptionary encyclopedia

Build your real estate vocabulary to be able to communicate and invest more effectively and professionally.

Bundle of Rights

DEFINITION

Legal rights of real property ownership including the right to use, enjoy, and exclude others from using the property.

EXPLANATION

Real property, also referred to as bundle of rights, includes all rights of the land, such as:

Right of possession

Right of enjoyment of property

Right to control property use

Right to exclude others from property

Right to dispose of the property

These five basic rights open other rights associated with property ownership. For example, the right to mortgage, cultivate, explore, lease, rent, share, trade, or exchange land.

Real estate and real property is the same thing. The legal definition is known as real property, while most consumers refer to property as real estate. The definition of real property, according to the California Civil code definition, includes the following aspects of real estate:

Land

Fixtures (anything attached to house i.e. tree, plants, natural resources)

Anything immovable by land

Real property includes buildings, mines, wells, roads, canals, and dam, which make up the land.

In other words, whatever is on the land and is immovable, is owned by the landowner unless the state demands the landowner must remove the items in question from the real property.

Land

Mineral rights are the granted rights of the owner to claim possession to minerals such as coal, gold, silver and gravel found on the property. As the owner of the land, a landowner has the right to transport minerals found on their property, unless otherwise barred from the government.The word “land” in real estate terms simply means the soil in which the property is located. Land constitutes any resources, like oil, gas and water that make up the land, as being the sole possession of the owner. Airspace associated with the land is also the sole possession of the land owner. Although the airspace is the property of the land owner, the law has certain limitations on an individual property’s airspace. This is often the case in areas nearing an airport, army base, or other government building. In many instances, land may be more valuable because of the presence of oil, gas, or water, than it would be for development purposes.

Mineral rights ownership, also referred to as a mineral interest, is an estate of real property. It is called a mineral estate. The mineral estate gives the landowner the right to mine the land below the property’s surface for economic purposes. Mineral rights include the right to extract organic and inorganic material that make up the natural soil of the land.

Major elements of mineral rights include:

Right to access the surface in the capacity needed to reasonably access the minerals

Right to receive royalties

Right to bonuses

Right to further convey mineral rights to others

Owners of mineral rights can sell or lease their mineral rights. It is common for landowners with mineral rights to lease the land to companies to excavate the oil. Mineral rights owners may be entitled to royalty checks if the land is being explored by an oil and gas company.

Example

Jack Donigan believes his property may have oil under the property’s surface as his friend Bob Massey, a nearby neighbor, found oil under his property. In an attempt to find the oil, Jack hires an oil company to inspect below the property’s surface. Upon inspections, Jack discovers massive oil reserves and decides to lease the reserves to an oil company. Believing that he may have found his new business, Jack decides to drill under his neighbor’s property. Upon beginning the drilling under his neighbor’s property, Jack’s neighbor files a lawsuit against Jack to prevent Jack from drilling on his land. The lawsuit alleges that jack is entitled only to drill directly beneath his own land and not the land of others.

Water Rights

Water rights include the right of landowners to extract water from a source of water including a stream, river, or underground water source. There are two major types of water sources. They include Riparian Water Rights, which are commonly used on the east coast and appropriation water rights, which are used in California. Authorization of water use requires the landowner to get a water right permit.

In California where the prior appropriation water rights are used, water rights are based on a “first in line, first to right” of water. This means older, more senior water rights users have the right to water rights over junior water rights users. The method used to determine who has seniority water rights goes back to which party is the first party to either obtain a water permit or the first party to use the water in a beneficial capacity.

Riparian Rights

Riparian rights is a system of water disbursement that guides the division of water amongst property owners whose land borders, crosses, or enters on water. Landowners with riparian rights do not own the water but rather they possess the legal right to use the water while owning the land. This means when the landowner sells the land, any existing right to the water is terminated.

Landowners have the right to reasonable use of the water passing through their property; however, they do not have the right to use more than necessary. Landowners do not have the right to expunge water from the water source and sale or transfer it to others. The water right is the sole and exclusive use of the land owners. In the event the division of water does not satisfy the needs of all adjoining property owners, the state will allot a fixed proportion to each user.

Much like air, sunlight, or wildlife, riparian water rights give the user the right to use the water. There is no technical owner of water rights including private individuals or the government. The water is affixed to the land and therefore belongs to the land. There are instances when the government has the right to terminate the landowner’s right to use the water flowing through their property. Right of appropriation is the right of the government to confiscate or divert water for a beneficial purpose that benefits the community.

Air Rights

Air rights refer to landowner rights for the air above their land/property. Owning land typically grants the landowner the right to use the air above their property, unless otherwise prevented by the government. Prior to the creation of the airplane, air rights did not exist. When airplanes became a more common vehicle of transportation, the government was forced to address the air rights issue.

The government eventually passed legislation that limited landowners use to their air rights to only use what was necessary. The government concluded that it is unreasonable for a landowner to claim air rights to all the air above their property because doing so would hinder air travel. The government ultimately ruled that landowners had the right to 500 feet of the airspace above their property. The government further reasoned that to prevent claims of trespassing by landowners, any air surpassing 500 feet would be considered a public easement.

Air rights have been addressed in the case United States v. Causby, which yielded a conclusion that navigable airspace would be considered a public highway and would therefore be labeled as a public domain. In 1926, the government created the Federal Aviation Act (FAA), which granted the FAA the sole authority to manage public airspace. The act’s main provision stated that “The United States government has exclusive sovereignty of the airspace of the United States.”

[quiz-new]