In America, we believe strongly in our individual rights. It’s in our country’s DNA. While you may think if you own property, you can do whatever you want with it, the truth is more complex. Understanding your property rights is important to maintaining them.
If you want to know your rights and keep them, read on.
Property Rights Definition
Property rights are the theoretical and legal rights the owner or right holder have allowing them to possess, use and transfer their property.
In terms of real estate, when we’re talking property rights, we’re usually referring to surface rights. These are the rights to control the land and the structures you own on it. There are also air rights and mineral rights. These control the area above and below your property. In most residential real estate purchases, you will only be dealing with surface rights.
How Are Private Property Rights Established In Real Estate?
Property rights are declared for homeowners through your house title and property deed. Your house title isn’t a physical document. It’s a concept denoting your ownership rights over the property. Your house deed is the physical document that defines the property and states you own it. Your title and your deed legally define your ownership, protecting your property rights.
In cases of rented property, while you may not have property rights, you do have tenant rights. These tend to be defined on state and local levels, but the basic ones include needing notice before eviction, your right to your security deposit and your right to a habitable home.
If you inherit a property, you inherit the rights to it, along with whomever else inherited the property. You also inherit the taxes. For an inherited property, you have three options: move in, rent it or sell it. Leaving it vacant could result in someone taking advantage of the property and establishing their own right to it.
What Rights Do Homeowners Have Over Their Property?
As a homeowner, when you hold title over your real estate, you are given what is referred to as a “bundle of rights.” This bundle of rights is a package of five different rights that apply to your property ownership. Because this is a bundle of rights, some rights can be lost or given up depending on the situation.
These rights are only held in the confines of the law. If your home is zoned as residential, you may not be allowed to certain types of business out of it. Similarly, if your city has a law against structures of a certain height, you may not be allowed to build a third floor onto your home.
Let’s go through each right and describe what they mean to you.
Right Of Possession
You possess property, meaning you own it. It’s your asset and responsibility. If you have a mortgage, your lender has a lien on your property until the mortgage is paid off. If you fail to pay your mortgage, or even your taxes or HOA fees, you may lose possession.
Right Of Control
As long it’s legal, you can do whatever you want with your property. If you want to build an ornate fountain in your front yard, you can (if there’s no ordinance against it).
Right Of Exclusion
This right means you can determine who can and can’t be on your property. If you tell your neighbor to get off your property, legally they must. Exceptions to this right of exclusion include police officers with a warrant and utility companies who have an easement to access their equipment.
Failing to exclude frequent trespassers could result in an encumbrance or adverse possession of your property.
Right Of Enjoyment
Do what you like while on your property (if it’s not against the law). You can throw parties, sunbathe, grow a spectacular garden – it’s your property to enjoy.
Right Of Disposition
The right of disposition means you have the right to sell or gift your property. Whether you sell or give your property away, if you still owe a lender, you have to pay off the balance on your loan.
Are There Exceptions To Your Real Estate Property Rights?
Yes, there are exceptions to your real estate property rights. Besides laws, ordinances and zoning, there are several ways your rights could be lost or altered.
Here are some exceptions to your real estate property rights.
Property Tax Liens
Not paying your property taxes can result in you losing your property rights. When you fail to pay your taxes, the government can place a lien a lien on your property for the amount of tax you owe.
While generally the IRS will work with you to help you pay back the money you owe, smaller governments may be more stringent. People have lost their homes over a few hundred dollars they owe to the state.
With strict budgets, any amount missing means a lot to state and local governments. If you owe back taxes to the local, state and federal governments, pay the smaller governments back first.
Technically, your mortgage is a type of lien using the property as collateral. If you don’t pay your mortgage, you risk eviction and foreclosure. This lien is paid off when you finish paying your mortgage or when you sell the property.
Another type of lien that can limit your property rights is a mechanics or construction lien. They are specific liens created when you fail to pay someone for a service involving the repair or construction of your property. You won’t be able to sell your property until the lien is paid.
A judgement lien is a lien that’s the result of a lawsuit. This can occur when a judge determines you owe the plaintiff money. If the money isn’t paid, the plaintiff can place a lien on your property.
Easements occur when people gain the right to your property and you lose the right to exclude them. There are three types of easements: easement appurtenant, easement in gross and easement by prescription.
Easements appurtenant are tied to the property and stay with it when its sold. An example of an easement appurtenant is when a property is landlocked. There may be an easement over a stretch of the neighbor’s driveway so the landlocked owner can access the road.
An easement in gross is tied to a person or entity. The classic example of this type of easement is the utility company having access to their equipment on your land. Generally easements to utility companies or the government are unavoidable and don’t detract from your property value.
Easement by prescription, or a prescriptive easement, is an easement that is granted when someone uses your property without your permission for a period of time determined by your state. An example of this is if your neighbor builds a fence 3 feet into your property. If they didn’t ask for permission and you don’t contest it, they could get a prescriptive easement if it stays up long enough.
Also known as “squatter’s rights,” adverse possession is when someone uses your property openly, continually and without permission. The requirements for adverse possession vary by locality. In some states, the possessor must provide proof of paying property taxes to qualify for adverse possession.
How To Protect Your Property Rights
Protecting your property rights can get more complex the more property you own. If you’re living on a plot in a subdivision, you won’t need to do much to protect your property rights. If you’re out in the country on multiple acres, you may need to put more effort in.
Here are four simple ways to protect your property rights.
1. Put Up A Fence
The simple act of putting up a fence along your property line denotes what property is and isn’t yours. Before you put up a fence, consult your deed and get a survey done to make sure it’s on your property. Look up local ordinances and other restrictions to assure your fence is legal.
2. Post Signs
Posting signs is a great way to keep your property rights intact and keep intruders off your property. Signs are most useful when you have a lot of property and don’t want to fence it all off. Simply putting up signs saying “Private Property” or “No Trespassing” will help protect your rights.
3. Monitor Your Property Usage
Monitoring your property and how it’s used is easier with smaller parcels but is essential if you have multiple properties or a large piece of land. Staying updated with how your land is used (or misused) is the simplest way to prevent adverse possession or a prescriptive easement.
4. Pay Your Bills
In case you haven’t noticed already, you will lose your property rights if you don’t pay your bills. If you’re expenses outweigh your income, it’s best to act as soon as possible. You don’t want foreclosure and you don’t want a lien on your property limiting what you can do with it. If you’re in this situation, contact your mortgage lender and your utility companies. They want you to pay your bills and can help you get back on track.
The Bottom Line
Part of being a responsible homeowner is understanding your property rights. You want to possess, enjoy and control the property you own. If you lose all or some of your rights, your property could be devalued or you could lose it.
Keep yourself informed on your rights and how to maintain your home. Check out more content on homeownership in the Rocket Mortgage® Learning Center.