Understanding the Bundle of Rights

When your purchase real estate you are purchasing more than just land or just a house, you are actually purchasing the land including the subsurface, surface and air rights, all the structures on the land and you also get a bundle of rights that come with the purchase of any real property. The term “bundle of rights” describes the set of legal rights associated with ownership of real property. The “bundle” is made up of five different rights: the right of possession, the right of control, the right of exclusion, the right of enjoyment and the right of disposition.

Subsurface rights include the rights to everything under the earth all the way down to the center, but "within reason" which is pretty vague, but it's done like that for a reason. When we think of subsurface many of us maybe are only thinking the first 6-10 feet for family burial plots or tree  or bush planting, but these rights include the minerals and natural resources like oil found underground so when you sell off sub surface rights (or buying subsurface rights) the buyer is purchasing everything below the ground for as far down as they able or willing to get to.

Air rights are similar to subsurface rights but also not. It depends where you are. So in a residential sense the air rights to a single family detached home would be all the air space above your home all the way up to infinity but again "within reason" again they do this with the purpose of leaving room for interpretation when it comes to air travel. However if you are talking about a building on top of a building like adding stories, you may have to buy air rights in order to build up. This is often seen in cities where air rights are sold by floor, because they are often bought by investors hoping you'll buy it back from them when you expand.

How The Bundle Of Rights Works

Another name for the bundle of rights is a bundle of sticks, and I think for teaching purposes I will stick to that term, so think of your bundle of rights as a bundle of sticks.

Each stick represents one of your five rights.

When you own your home outright without any liens, encumbrances or shared ownership, you have a full bundle. However, if you used a mortgage to purchase the property, you may have to share one of your sticks with your lender. Once you pay off your loan, the lender will give you your stick back. Or, if the home is an investment property that you rent out, your renter might hold some of your sticks while they live there.

Essentially, when you own a home, the rights you have as a property owner can be separated and held by someone other than you. So you might not always have your full bundle of rights – or a full bundle of sticks – even if you’re the owner of the home. Additionally, even if you retain all the rights to your home, those rights will still be limited by the law and things like homeowners association (HOA) rules.  This can also helpful if you co-own a home with somebody, such as a spouse. When you share homeownership, you can’t always make unilateral decisions about what happens with the property. For example, you’ll generally need your co-owner’s permission before you can put the house up for sale.

The Bundle of Rights

Possession: This is probably the easiest most out right of the rights. it gives you the right to posses your land, to live on it, and to use it how you please within the limits dictated by your township and zone.

Disposition: the right to "dispose" of your property how you see fit. You can sell, give, rent, or gift part of or all of your property to whomever you wish. Keep in mind that liens and encumbrances may impede your right to disposition.

Quiet Enjoyment: (here's why you want title insurance) You have the right to own your property without anyone harassing you or claiming that it is theirs. One way to make sure of this is by purchasing title insurance which insurers that the property you are purchasing is free and clear for you to purchase and that you won't run into anyone claiming it as their down the line.

Exclusion: you can decide who is aloud on your property and who is not. This is your home, your safe space, and in PA your castle and you have every right to dictate who you want to share this with and how. This right also gives you the ability to dictate how your property is used by individuals.

Control: This is the right to physically alter or change the property. Want to add a pond? Go for it. Want to cut down a tree and put in a garage? Add a pool? Change where your driveway is? Build a second story? Go for it. As long as it's legal you can do it. Keep in mind though that some HOA or zoning or deed restrictions as well as local laws may impede your right to control.