- •Contents
- •Exclusion and the Bundle of Rights
- •The Thing’s the Thing
- •General Justifications, General Concerns
- •Further Reading
- •First Possession
- •Discovery and Creation
- •Accession
- •Adverse Possession
- •Sequential Possession, Finders, and the Relativity of Title
- •The Mosaic of Acquisition Principles
- •Further Reading
- •The Demsetz Theory
- •Personhood
- •Inherently Public Property
- •Hybrid Resources
- •Further Reading
- •Laws for Owner Protection
- •Self-Help
- •Exceptions to the Right to Exclude
- •Necessity
- •Custom
- •Public Accommodation Laws
- •Antidiscrimination Laws
- •Owner Powers
- •Licenses
- •Bailments
- •Abandonment and Destruction
- •Transfer by Sale, Gift, and Inheritance
- •Further Reading
- •Estates and Future Interests
- •How the System Works
- •Co-Ownership
- •Marital Interests
- •Further Reading
- •Why Separate Management Authority from Other Incidents of Ownership?
- •Leasing
- •Property and Contract
- •Models of the Lease Contract
- •Implied Warranty of Habitability
- •Transferring Leasehold Interests
- •Common Interest Communities
- •Trusts
- •Further Reading
- •Land Sale Contracts
- •Title Records
- •Mortgages
- •Further Reading
- •The Coase Theorem
- •Tort Liability: Nuisance
- •Modification of Property Rights: Easements
- •Contract: Covenants Running with the Land
- •Public Regulation: Zoning
- •Further Reading
- •The General Form of the Problem
- •Sources of Forbearance
- •The Rule of Law
- •Procedural Due Process
- •Vested Rights
- •Stare Decisis
- •Waivers of Sovereign Immunity
- •Explicit Takings
- •Public Use
- •Just Compensation
- •Regulatory Takings
- •Further Reading
- •Index
The Oxford Introductions to U.S. Law
Property
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The Oxford Introductions to U.S. Law
Property
thomas w. merrill and
henry e. smith
Dennis Patterson, Series Editor The Oxford Introductions to U.S. Law
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Library of Congress Cataloging-in-Publication Data Merrill, Thomas W.
TehOxford introductions to U.S. law. Property / Thomas W. Merrill, Henry E. Smith. p. cm.—(The Oxford introductions to U.S. law)
Includes bibliographical references and index.
ISBN 978-0-19-531476-2 ((pbk.) : alk. paper)
1.Property—United States. I. Smith, Henry E. II. Title. III. Title: Property. KF561.M47 2010
346.7304—dc22 2010002669
____________________________________________
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Printed in the United States of America on acid-free paper
Note to Readers
Th is publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is based upon sources believed to be accurate and reliable and is intended to be current as of the time it was written. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Also, to confirm that the information has not been affected or changed by recent developments, traditional legal research techniques should be used, including checking primary sources where appropriate.
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To our students
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Acknowledgments
in completing this book, we have happily incurred many debts of gratitude. The substance of the book greatly benefited, as always, from comments by Bob Ellickson and Carol Rose. We also thank the anonymous reviewers at Oxford University Press for their valuable suggestions. Our students at Yale and Harvard also deserve thanks for their insights and encouragement in test runs of the book in our classes, and we especially thank our research assistants, Claire McCusker and Sarah Beth Berry.
There are many others who deserve our thanks for their contributions to this project. We would like to thank the staff of Oxford University Press, especially Lori Wood and Chris Collins. Professor Smith is also grateful to the Hoover Institution at Stanford University for its generous financial support as a member of its Task Force on Property Rights, Freedom, and Prosperity.
Finally, our deepest appreciation extends to our families whose support made this book possible.
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Contents
chapter 1 The Institution of Property 1
Exclusion and the Bundle of Rights 4 Th e Thing’s the Thing 8
General Justifi cations, General Concerns 11 Further Reading 16
chapter 2 Original Acquisition and the Scope of Property Claims 17
First Possession 18
Discovery and Creation 23
Accession 30
Adverse Possession 34
Sequential Possession, Finders, and the
Relativity of Title 38
Th e Mosaic of Acquisition Principles 40
Further Reading 40
chapter 3 The Domain of Property 43
Th e Demsetz Theory 43
Personhood 51
Inherently Public Property 55
Hybrid Resources 59
Further Reading 63
ix
xcontents
chapter 4 Owners as Gatekeepers 65
Laws for Owner Protection 66
Self-Help 71
Exceptions to the Right to Exclude 74
Necessity 75
Custom 76
Public Accommodation Laws 79
Antidiscrimination Laws 81
Owner Powers 84
Licenses 85
Bailments 87
Abandonment and Destruction 89
Transfer by Sale, Gift, and Inheritance 91
Further Reading 94
chapter 5 Dividing Property Rights 95
Estates and Future Interests 95
How the System Works 104
Co-Ownership 113
Marital Interests 118
Further Reading 122
chapter 6 Managing Property 123
Why Separate Management Authority from Other
Incidents of Ownership? 125
Leasing 129
Property and Contract 131
Models of the Lease Contract 135
Implied Warranty of Habitability 138
Transferring Leasehold Interests 143
Common Interest Communities 146
Trusts 153
Further Reading 157
contents xi
chapter 7 Land Transactions and Title Records 159
Land Sale Contracts 159
Title Records 166
Mortgages 176
Further Reading 181
chapter 8 Neighbors and Neighborhood Effects 183
Th e Coase Theorem 185
Tort Liability: Nuisance 192
Modifi cation of Property Rights: Easements 200
Contract: Covenants Running with the Land 207
Public Regulation: Zoning 215
Further Reading 221
chapter 9 Government Forbearance 223
Th e General Form of the Problem 224
Sources of Forbearance 229
Th e Rule of Law 233
Procedural Due Process 233
Vested Rights 236
Stare Decisis 238
Waivers of Sovereign Immunity 239
Explicit Takings 241
Public Use 242
Just Compensation 248
Regulatory Takings 251
Further Reading 258
Index 259
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• one
Th e Institution of Property
the common law is typically divided into contracts, torts, and property. A contract, roughly speaking, is a legally enforceable promise. A tort is a civil wrong based on the violation of a duty not arising from contract. Where does property fit into the picture?
One way to think about property is that it defines the entitlements people can enter into contracts about, or can sue in tort in order to protect. Thus, contract law and tort law presuppose the existence of property. If A sells Blackacre (the proverbial name for a generic plot of land) to B, the transfer is governed by a contract. But what A and B are contracting about is the property rights in Blackacre: Before the contract, A owns Blackacre; after the contract, it is owned by B. Likewise, if B enters Blackacre without permission or sends foul odors wafting onto Blackacre, A might bring a tort action in trespass or nuisance against these interferences. These tort actions provide protection for something; that something is A’s property rights in Blackacre.
We can describe the fundamental nature of property in relation to contract and tort another way. One can imagine a world without contract or tort. It would be a highly inconvenient place to live. Without contracts, people would have to make do with what they already have rather than trading for other things. Without tort, the only recourse for those wishing to protect their possessions would be self-help (i.e., putting up fences or using guard dogs) or, in the case of more aggravated violations, criminal law. But it would be much more difficult to imagine a world without property. In the broadest sense, property delineates the rights people have to
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2the oxford introductions to u.s. law: property
control and derive value from resources in the world. Property tells us what is mine and what is not mine. Without rules about this, the world would be a chaotic and probably quite violent place.
What exactly then is property? Some people, especially economists, tend to regard any expectation about being able to derive value from some resource as “property.” In this broad sense, one’s expectation of being able to stay in a friend’s apartment overnight, or being able to collect mushrooms on public land, would be regarded as property. Notice that “expectation” here need not have any normative force or legal enforcement. Indeed, on this understanding one could say that someone has property rights in coconuts if he or she is the only one who knows how to climb a tree.1
This conception of property as pure expectation is too broad to capture the meaning of property in law. Rather, legal scholars (and more legally attuned social scientists) would require at a minimum some kind of social guarantee for an expectation to count as property. For A to have property in some thing, A’s expectation of a special claim to the thing—whatever that claim is—must have some social recognition. Some scholars argue that this recognition need not consist of legal enforcement. On this view, fishers with informal “rights” to fishing spots may have their expectations recognized by other fishers, which may be all that is needed to call the right property. Practically speaking, this may mean that other fishers will tolerate self-help on the part of fishers defending their spots, or it may mean that other fishers will come to the aid of a fisher whose spot is threatened by someone else.
For still others, the concept of property is reserved for a legally protected entitlement. On this view, the informal right to a fishing spot resembles property: there is an expectation of a benefit from it and that expectation is recognized and supported in a relevant
1.John Umbeck, Might Makes Rights: A Theory of the Formation and Initial Distribution of Property Rights, 19 Econ. Inquiry, 38, 38–39 (1981).
the institution of property 3
social group. But it would not be property in the legal sense unless its holder could vindicate his or her rights in a court of law.
In this book, we will use the term “property” to refer to entitlements to resources protected by formal legal institutions. If the fisher cannot go to a court of law to vindicate a claim to a spot, that claim may be a social norm or a custom, but it would not be regarded as property. As we will note from time to time, customs are sometimes, but far from always, incorporated into law. So the boundary between custom and law is fluid, rather than fixed.
Property in the sense of legally protected entitlements comes in a variety of forms. The paradigmatic legal property right would be full title to a parcel of land or an object like a car—real property and personal property (or “chattels”), respectively. But the law also affords legally enforceable claims to nontangible resources. Intellectual property—chiefly, patents, copyrights, and trademarks— is regarded as property despite not being a right to any physical thing. Intellectual property rights are rights in intangibles. Likewise one can own a debt or an account at a bank or other financial institution. These too are property rights in intangibles.
Who is eligible to serve as an owner of property? There are many possibilities. Individual persons, small groups of persons who have some close relationship (co-owners), private entities that have a legally established governance structure (partnerships, corporations, nonprofit organizations), and governments (cities, counties, states, the federal government) all can and do own property. Some commentators argue that certain close-knit communities can be said to have property rights in resources like fisheries and common pastures, in the sense that persons who are not members of the community are excluded from participating in the resource. And some property, for example some beaches, might be said to belong to the general public—they are “inherently public” in the sense that even the government cannot bar members of the pubic from access to it. Seeking to bring some order to these possibilities, one popular classification scheme distinguishes between private property (property owned by individual persons, co-owners, or