{"id":240,"date":"2014-09-17T00:42:03","date_gmt":"2014-09-17T00:42:03","guid":{"rendered":"https:\/\/courses.candelalearning.com\/buslegalenv\/?post_type=chapter&#038;p=240"},"modified":"2015-04-15T20:33:51","modified_gmt":"2015-04-15T20:33:51","slug":"29-1-the-general-nature-of-property-rights","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/chapter\/29-1-the-general-nature-of-property-rights\/","title":{"raw":"The General Nature of Property Rights","rendered":"The General Nature of Property Rights"},"content":{"raw":"<div class=\"bcc-box bcc-highlight\">\r\n<h3>Learning Objectives<\/h3>\r\nBy the end of this section, you will be able to:\r\n<ul id=\"mayer_1.0-ch52_s02_l01\" class=\"im_orderedlist\">\r\n\t<li>Understand the elastic and evolving boundaries of what the law recognizes as property that can be bought or sold on the market.<\/li>\r\n\t<li>Distinguish real property from personal property.<\/li>\r\n<\/ul>\r\n<\/div>\r\n<div class=\"im_section\">\r\n<div id=\"mayer_1.0-ch31_s01_s01\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">Definition of Property<\/h2>\r\nProperty, which seems like a commonsense concept, is difficult to define in an intelligible way; philosophers have been striving to define it for the past 2,500 years. To say that \u201cproperty is what we own\u201d is to beg the question\u2014that is, to substitute a synonym for the word we are trying to define. Blackstone\u2019s famous definition is somewhat wordy: \u201cThe right of property is that sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual in the universe. It consists in the free use, enjoyment, and disposal of all a person\u2019s acquisitions, without any control or diminution save only by the laws of the land.\u201d A more concise definition, but perhaps too broad, comes from the Restatement of the Law of Property, which defines property as the \u201clegal relationship between persons with respect to a thing.\u201d\r\n\r\nThe Restatement\u2019s definition makes an important point: property is a <em class=\"im_emphasis\">legal relationship<\/em>, the power of one person to use objects in ways that affect others, to exclude others from the property, and to acquire and transfer property. Still, this definition does not contain a specific list of those nonhuman \u201cobjects\u201d that could be in such a relationship. We all know that we can own personal objects like iPods and DVDs, and even more complex objects like homes and minerals under the ground. Property also embraces objects whose worth is representative or symbolic: ownership of stock in a corporation is valued not for the piece of paper called a stock certificate but for dividends, the power to vote for directors, and the right to sell the stock on the open market. Wholly intangible things or objects like copyrights and patents and bank accounts are capable of being owned as property. But the list of things that can be property is not fixed, for our concept of property continues to evolve. Collateralized debt obligations (CDOs) and structured investment vehicles (SIVs), prime players in the subprime mortgage crisis, were not on anyone\u2019s list of possible property even fifteen years ago.\r\n\r\n<\/div>\r\n<\/div>\r\n<div id=\"mayer_1.0-ch31_s01_s02\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">The Economist\u2019s View<\/h2>\r\nProperty is not just a legal concept, of course, and different disciplines express different philosophies about the purpose of property and the nature of property rights. To the jurist, property rights should be protected because it is just to do so. To an economist, the legal protection of property rights functions to create incentives to use resources efficiently. For a truly efficient system of property rights, some economists would require universality (everything is owned), exclusivity (the owners of each thing may exclude all others from using it), and transferability (owners may exchange their property). Together, these aspects of property would lead, under an appropriate economic model, to efficient production and distribution of goods. But the law of property does not entirely conform to the economic conception of the ownership of productive property by private parties; there remain many kinds of property that are not privately owned and some parts of the earth that are considered part of \u201cthe commons.\u201d For example, large areas of the earth\u2019s oceans are not \u201cowned\u201d by any one person or nation-state, and certain land areas (e.g., Yellowstone National Park) are not in private hands.\r\n\r\n<\/div>\r\n<div id=\"mayer_1.0-ch31_s01_s03\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">Classification of Property<\/h2>\r\nProperty can be classified in various ways, including tangible versus intangible, private versus public, and personal versus real. <span class=\"im_margin_term\"><span class=\"im_glossterm\">Tangible property<\/span><\/span> is that which physically exists, like a building, a popsicle stand, a hair dryer, or a steamroller. <span class=\"im_margin_term\"><span class=\"im_glossterm\">Intangible property<\/span><\/span> is something without physical reality that entitles the owner to certain benefits; stocks, bonds, and intellectual property would be common examples. <span class=\"im_margin_term\"><span class=\"im_glossterm\">Public property<\/span><\/span> is that which is owned by any branch of government; <span class=\"im_margin_term\"><span class=\"im_glossterm\">private property<\/span><\/span> is that which is owned by anyone else, including a corporation.\r\n\r\nPerhaps the most important distinction is between real and personal property. Essentially, <span class=\"im_margin_term\"><span class=\"im_glossterm\">real property<\/span><\/span> is immovable; <span class=\"im_margin_term\"><span class=\"im_glossterm\">personal property<\/span><\/span> is movable. At common law, personal property has been referred to as \u201cchattels.\u201d When chattels become affixed to real property in a certain manner, they are called fixtures and are treated as real property. (For example, a bathroom cabinet purchased at Home Depot and screwed into the bathroom wall may be converted to part of the real property when it is affixed.) Fixtures are discussed in Section 29.3 \"Fixtures\" of this chapter.\r\n\r\n<\/div>\r\n<div id=\"mayer_1.0-ch31_s01_s04\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">Importance of the Distinction between Real and Personal Property<\/h2>\r\nIn our legal system, the distinction between real and personal property is significant in several ways. For example, the sale of personal property, but not real property, is governed by Article 2 of the Uniform Commercial Code (UCC). Real estate transactions, by contrast, are governed by the general law of contracts. Suppose goods are exchanged for realty. Section 2-304 of the UCC says that the transfer of the goods and the seller\u2019s obligations with reference to them are subject to Article 2, but not the transfer of the interests in realty nor the transferor\u2019s obligations in connection with them.\r\n\r\nThe form of transfer depends on whether the property is real or personal. Real property is normally transferred by a deed, which must meet formal requirements dictated by state law. By contrast, transfer of personal property often can take place without any documents at all.\r\n\r\nAnother difference can be found in the law that governs the transfer of property on death. A person\u2019s heirs depend on the law of the state for distribution of his property if he dies intestate\u2014that is, without a will. Who the heirs are and what their share of the property will be may depend on whether the property is real or personal. For example, widows may be entitled to a different percentage of real property than personal property when their husbands die intestate.\r\n\r\nTax laws also differ in their approach to real and personal property. In particular, the rules of valuation, depreciation, and enforcement depend on the character of the property. Thus real property depreciates more slowly than personal property, and real property owners generally have a longer time than personal property owners to make good unpaid taxes before the state seizes the property.\r\n<div id=\"mayer_1.0-ch31_s01_s04_n01\" class=\"im_key_takeaways im_editable im_block textbox\">\r\n<h3 class=\"im_title\">Key Takeaway<\/h3>\r\nProperty is difficult to define conclusively, and there are many different classifications of property. There can be public property as well as private property, tangible property as well as intangible property, and, most importantly, real property as well as personal property. These are important distinctions, with many legal consequences.\r\n\r\n<\/div>\r\n<div class=\"bcc-box bcc-info\">\r\n<h3>Exercises<\/h3>\r\n<section id=\"self-check-questions\">\r\n<ol>\r\n\t<li>Kristen buys a parcel of land on Marion Street, a new and publicly maintained roadway. Her town\u2019s ordinances say that each property owner on a public street must also provide a sidewalk within ten feet of the curb. A year after buying the parcel, Kristen commissions a house to be built on the land, and the contractor begins by building a sidewalk in accordance with the town\u2019s ordinance. Is the sidewalk public property or private property? If it snows, and if Kristen fails to remove the snow and it melts and ices over and a pedestrian slips and falls, who is responsible for the pedestrian\u2019s injuries?<\/li>\r\n\t<li>When can private property become public property? Does public property ever become private property?<\/li>\r\n<\/ol>\r\n<\/section><\/div>\r\n<div id=\"mayer_1.0-ch52_s02_s06_n02\" class=\"im_exercises im_editable im_block\"><\/div>\r\n<\/div>","rendered":"<div class=\"bcc-box bcc-highlight\">\n<h3>Learning Objectives<\/h3>\n<p>By the end of this section, you will be able to:<\/p>\n<ul id=\"mayer_1.0-ch52_s02_l01\" class=\"im_orderedlist\">\n<li>Understand the elastic and evolving boundaries of what the law recognizes as property that can be bought or sold on the market.<\/li>\n<li>Distinguish real property from personal property.<\/li>\n<\/ul>\n<\/div>\n<div class=\"im_section\">\n<div id=\"mayer_1.0-ch31_s01_s01\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">Definition of Property<\/h2>\n<p>Property, which seems like a commonsense concept, is difficult to define in an intelligible way; philosophers have been striving to define it for the past 2,500 years. To say that \u201cproperty is what we own\u201d is to beg the question\u2014that is, to substitute a synonym for the word we are trying to define. Blackstone\u2019s famous definition is somewhat wordy: \u201cThe right of property is that sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual in the universe. It consists in the free use, enjoyment, and disposal of all a person\u2019s acquisitions, without any control or diminution save only by the laws of the land.\u201d A more concise definition, but perhaps too broad, comes from the Restatement of the Law of Property, which defines property as the \u201clegal relationship between persons with respect to a thing.\u201d<\/p>\n<p>The Restatement\u2019s definition makes an important point: property is a <em class=\"im_emphasis\">legal relationship<\/em>, the power of one person to use objects in ways that affect others, to exclude others from the property, and to acquire and transfer property. Still, this definition does not contain a specific list of those nonhuman \u201cobjects\u201d that could be in such a relationship. We all know that we can own personal objects like iPods and DVDs, and even more complex objects like homes and minerals under the ground. Property also embraces objects whose worth is representative or symbolic: ownership of stock in a corporation is valued not for the piece of paper called a stock certificate but for dividends, the power to vote for directors, and the right to sell the stock on the open market. Wholly intangible things or objects like copyrights and patents and bank accounts are capable of being owned as property. But the list of things that can be property is not fixed, for our concept of property continues to evolve. Collateralized debt obligations (CDOs) and structured investment vehicles (SIVs), prime players in the subprime mortgage crisis, were not on anyone\u2019s list of possible property even fifteen years ago.<\/p>\n<\/div>\n<\/div>\n<div id=\"mayer_1.0-ch31_s01_s02\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">The Economist\u2019s View<\/h2>\n<p>Property is not just a legal concept, of course, and different disciplines express different philosophies about the purpose of property and the nature of property rights. To the jurist, property rights should be protected because it is just to do so. To an economist, the legal protection of property rights functions to create incentives to use resources efficiently. For a truly efficient system of property rights, some economists would require universality (everything is owned), exclusivity (the owners of each thing may exclude all others from using it), and transferability (owners may exchange their property). Together, these aspects of property would lead, under an appropriate economic model, to efficient production and distribution of goods. But the law of property does not entirely conform to the economic conception of the ownership of productive property by private parties; there remain many kinds of property that are not privately owned and some parts of the earth that are considered part of \u201cthe commons.\u201d For example, large areas of the earth\u2019s oceans are not \u201cowned\u201d by any one person or nation-state, and certain land areas (e.g., Yellowstone National Park) are not in private hands.<\/p>\n<\/div>\n<div id=\"mayer_1.0-ch31_s01_s03\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">Classification of Property<\/h2>\n<p>Property can be classified in various ways, including tangible versus intangible, private versus public, and personal versus real. <span class=\"im_margin_term\"><span class=\"im_glossterm\">Tangible property<\/span><\/span> is that which physically exists, like a building, a popsicle stand, a hair dryer, or a steamroller. <span class=\"im_margin_term\"><span class=\"im_glossterm\">Intangible property<\/span><\/span> is something without physical reality that entitles the owner to certain benefits; stocks, bonds, and intellectual property would be common examples. <span class=\"im_margin_term\"><span class=\"im_glossterm\">Public property<\/span><\/span> is that which is owned by any branch of government; <span class=\"im_margin_term\"><span class=\"im_glossterm\">private property<\/span><\/span> is that which is owned by anyone else, including a corporation.<\/p>\n<p>Perhaps the most important distinction is between real and personal property. Essentially, <span class=\"im_margin_term\"><span class=\"im_glossterm\">real property<\/span><\/span> is immovable; <span class=\"im_margin_term\"><span class=\"im_glossterm\">personal property<\/span><\/span> is movable. At common law, personal property has been referred to as \u201cchattels.\u201d When chattels become affixed to real property in a certain manner, they are called fixtures and are treated as real property. (For example, a bathroom cabinet purchased at Home Depot and screwed into the bathroom wall may be converted to part of the real property when it is affixed.) Fixtures are discussed in Section 29.3 &#8220;Fixtures&#8221; of this chapter.<\/p>\n<\/div>\n<div id=\"mayer_1.0-ch31_s01_s04\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">Importance of the Distinction between Real and Personal Property<\/h2>\n<p>In our legal system, the distinction between real and personal property is significant in several ways. For example, the sale of personal property, but not real property, is governed by Article 2 of the Uniform Commercial Code (UCC). Real estate transactions, by contrast, are governed by the general law of contracts. Suppose goods are exchanged for realty. Section 2-304 of the UCC says that the transfer of the goods and the seller\u2019s obligations with reference to them are subject to Article 2, but not the transfer of the interests in realty nor the transferor\u2019s obligations in connection with them.<\/p>\n<p>The form of transfer depends on whether the property is real or personal. Real property is normally transferred by a deed, which must meet formal requirements dictated by state law. By contrast, transfer of personal property often can take place without any documents at all.<\/p>\n<p>Another difference can be found in the law that governs the transfer of property on death. A person\u2019s heirs depend on the law of the state for distribution of his property if he dies intestate\u2014that is, without a will. Who the heirs are and what their share of the property will be may depend on whether the property is real or personal. For example, widows may be entitled to a different percentage of real property than personal property when their husbands die intestate.<\/p>\n<p>Tax laws also differ in their approach to real and personal property. In particular, the rules of valuation, depreciation, and enforcement depend on the character of the property. Thus real property depreciates more slowly than personal property, and real property owners generally have a longer time than personal property owners to make good unpaid taxes before the state seizes the property.<\/p>\n<div id=\"mayer_1.0-ch31_s01_s04_n01\" class=\"im_key_takeaways im_editable im_block textbox\">\n<h3 class=\"im_title\">Key Takeaway<\/h3>\n<p>Property is difficult to define conclusively, and there are many different classifications of property. There can be public property as well as private property, tangible property as well as intangible property, and, most importantly, real property as well as personal property. These are important distinctions, with many legal consequences.<\/p>\n<\/div>\n<div class=\"bcc-box bcc-info\">\n<h3>Exercises<\/h3>\n<section id=\"self-check-questions\">\n<ol>\n<li>Kristen buys a parcel of land on Marion Street, a new and publicly maintained roadway. Her town\u2019s ordinances say that each property owner on a public street must also provide a sidewalk within ten feet of the curb. A year after buying the parcel, Kristen commissions a house to be built on the land, and the contractor begins by building a sidewalk in accordance with the town\u2019s ordinance. Is the sidewalk public property or private property? If it snows, and if Kristen fails to remove the snow and it melts and ices over and a pedestrian slips and falls, who is responsible for the pedestrian\u2019s injuries?<\/li>\n<li>When can private property become public property? Does public property ever become private property?<\/li>\n<\/ol>\n<\/section>\n<\/div>\n<div id=\"mayer_1.0-ch52_s02_s06_n02\" class=\"im_exercises im_editable im_block\"><\/div>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-240\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Business and the Legal Environment. <strong>Authored by<\/strong>: Anonymous. <strong>Provided by<\/strong>: Anonymous. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"http:\/\/2012books.lardbucket.org\/books\/business-and-the-legal-environment\/\">http:\/\/2012books.lardbucket.org\/books\/business-and-the-legal-environment\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc-sa\/4.0\/\">CC BY-NC-SA: Attribution-NonCommercial-ShareAlike<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":5,"menu_order":2,"template":"","meta":{"_candela_citation":"[{\"type\":\"cc\",\"description\":\"Business and the Legal Environment\",\"author\":\"Anonymous\",\"organization\":\"Anonymous\",\"url\":\"http:\/\/2012books.lardbucket.org\/books\/business-and-the-legal-environment\/\",\"project\":\"\",\"license\":\"cc-by-nc-sa\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-240","chapter","type-chapter","status-publish","hentry"],"part":751,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/wp-json\/pressbooks\/v2\/chapters\/240","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/wp-json\/wp\/v2\/users\/5"}],"version-history":[{"count":4,"href":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/wp-json\/pressbooks\/v2\/chapters\/240\/revisions"}],"predecessor-version":[{"id":860,"href":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/wp-json\/pressbooks\/v2\/chapters\/240\/revisions\/860"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/wp-json\/pressbooks\/v2\/parts\/751"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/wp-json\/pressbooks\/v2\/chapters\/240\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/wp-json\/wp\/v2\/media?parent=240"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/wp-json\/pressbooks\/v2\/chapter-type?post=240"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/wp-json\/wp\/v2\/contributor?post=240"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/wp-json\/wp\/v2\/license?post=240"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}