What are property rights? Definition and meaning
Property rights are the legal rights that entities have on a thing or creature they own. The owners (entities) may be people, companies, charities, governments, trusts, etc. Property rights are among the most basic rights in a free society. In today’s Western democracies, property rights are taken for granted.
The term refers to the ownership of a resource or economic good – either tangible or intangible (physical or abstract) and how it can be used by the owner. Often referred to as a Bundle of Rights, property rights have four broad components:
- the right to use the good (thing that is owned),
- the right to earn an income from it,
- the right to transfer it to others, and
- the right to enforce property rights.
In the majority of the advanced economies, the rights of property ownership may be extended using deeds, copyrights and patents to protect scarce tangible resources such as land, buildings, cars, etc., non-human creatures including cats, dogs, horses and other pets, and even inventions and other types of intellectual property.
According to an article in the website of the University of Illinois, property rights:
“Establish relationships among participants in any social and economic system. Holding the rights to property is an expression of the relative power of the bearer. Holding such power or rights commands certain responses by others that are enforced by the community or our culture.”
“For example, a producer owning 100 acres of cropland is entitled to the returns from his property, management ability, and good sense. He is protected from trespass by his neighbors’ cultural customs and the laws of the community. The production, or stream of benefits from the land, is his to sell, give away, or otherwise dispose of as he sees fit.”
Property rights – several interpretations
We all seem to have an opinion about property rights, whether about our own rights, those of other people, or the rights of society.
Lawyers and economists rarely agree on what the term means. Discussions can reveal controversial and diverse opinions, and are frequently related to greater issues such as land use, planning, regulation, etc.
Neil Meyer, a professor at the University of Idaho’s College of Agricultural and Life Sciences, wrote the following in an article – Property Rights: A Primer:
“Property actually refers to the right to a stream of benefits from a given set of resources. In the U.S., access to those benefits is controlled in four basic ways: private ownership plus three forms of public ownership – open access, closed access, and state.”
Property rights only matter when a number of people start forming a community. An individual living in total isolation, for example, in a remote part of Northern Australia during the early 19th century, was not in the least concerned about property rights. On the other note, it did matter in Southern Australia where the population was denser. The real estate experts from Adelaide have covered in detail how the property laws have changed over the time and what all buyers and sellers should be aware of before dealing with Australian properties.
When people start gathering, and hamlets turn into villages, and those become small towns, the need for specific arrangements regarding property ownership becomes more urgent.
Property rights are then defined by the different groups or communities that are formed. That is why the term has so many definitions across the English-speaking nations, as well as the rest of the world.
Different types of property
Property rights to something must be defined, their uses need to be monitored, and ownership of those rights must be enforced.
Below is a list of some types of property:
– Private Property: is excludable; the owner can prevent others from using or entering it. The private owner controls its use, exclusion, and management. Private property may belong to a group of legal owners, in which case the group controls what happens to it.
Private property includes all things tangible and intangible that a private individual or entity owns, and over which the owners have absolute property rights. Examples include buildings, land, copyrights, patents, money, etc.
Private property is not the same as Personal Property, which is property for personal use and consumption. Private property is a legal concept that a country’s political system defines and enforces.
The home you live in is your personal property. However, if you own a second home but do not live in it – you do not use the property personally – it is your private property but not personal property. Followers of communism say they believe in personal but not private property.
– Public Property: also called state property, is property that we all own – it belongs to all of us.
However, access to it and its use are controlled by the community (government, local authority, etc.). State-owned enterprises and national parks are examples of public property.
– Open-Access Property: nobody ‘owns’ the property. Nobody can exclude anybody else from using it – it is non-excludable. This type of property is not managed by anybody, and nobody controls access to it.
Examples of open-access property are navigable waterways (ocean fisheries) or the upper atmosphere.
– Common Property: also known as collective property, is property that a group of people owns. The joint-owners control access to it, as well as its use and exclusion.