REAL ESTATE

PROPERTY RIGHTS BY MICHAEL WOLFF

In the past, rights to property have often been represented

as a bundle of sticks, with each stick representing a right.
Although certainly useful in a symbolic way, this
visualization does not adequately portray what really goes
on in today’s complex three-dimensional real estate world
of condominiums, time-shares, air rights, zoning,
conservation easements, life estates, overlapping uses, etc.
Rights to property can better be portrayed as layers, as in
layers of a cake, with each layer representing a right. Each
of these layers can not only have separate value as part of
the whole, but also separate ownership. Thus, property
may be considered as a volume.

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O Over the years, both as a real estate appraiser and
as a real estate investor, I have had numerous
opportunities to listen to and discuss with
buyers, sellers, owners, lenders, real estate sales
agents, developers, other appraisers, investors,
speculators, landlords, and tenants the idea of real
property rights. As a result of these discussions, I
have found that most people look at the issue
only from a personal wants standpoint or with
political preconceptions and do not grasp the
In the United States, ownership of real property
entails with it both rights and obligations. These
rights are protected by western cultural traditions,
by federal and state laws, and by numerous court
decisions. Although strong, these protections are
not boundless, but subject to various limitations
imposed by government and the rights of other
property owners. These rights may be grouped into
three categories:
ownership unencumbered by any other interest
or estate, subject only to the limitations imposed
by governmental powers of taxation, eminent
domain, police power, and escheat.”2 Thus, it
may be considered to be the blend or the total of
all the constituent rights, those that add to the
estate less those that reduce it.

Do rights to property exist beyond fee simple?

Certainly. However, such a discussion is beyond
bigger picture or see the situation realistically. 1. Ownership: The right to sell, buy, bequeath, the scope of this analysis, as such rights approach
Even real estate professionals often fall into to this give, exchange, or lease in whole or part real equality with national sovereignty.
situation. Clearly more and better elucidation is property. The right to split property or transfer
needed. This treatise is an attempt to create a whole or fractional interests. When assembled together real property rights
better understanding of the concept of real estate are often thought of as a “bundle” of sticks –
property rights, by portraying how ownership, 2. Quiet Possession: The right of an owner to with each stick representing a right. Although
land, improvements, property, and rights relate to possess property free of interference or traditional, this bundle concept is very vague
each other. and does not adequately portray what really
encroachment from others, without due process
of law and just compensation. goes on, especially in the modern world, since
REAL PROPERTY some rights are more important or more
3.Use: The right of an owner to use his property valuable than other rights and may vary in
Real property has been defined as: “All interests, importance depending upon location within a
as he sees fit, for example: extraction of minerals,
benefits, and rights inherent in the ownership of property. More descriptively, property rights
development of agricultural products,
physical real estate; the bundle of rights with which may be thought of as a series of layers, stacked
the ownership or the real estate is endowed.”1 construction of structures and roads, fencing,
one upon the other, like layers of a cake – over,
Although some may argue nuances of meaning dwellings, residential, commercial, hold for in, and even beyond the surface area of a
(which is not the intent here) real property is investment, etc., within the constraints of law, property. In other words, property can be
generally considered to be synonymous with custom, and contracts. thought of as a volume, with length and width,
real estate. Land and all things affixed to it, as measured by its dimensions on the ground,
unless specifically exempt or separated out, are Complete ownership of property, i.e. ownership, and rights measured vertically. What follows
real property. quiet possession, and use, is typically referred to is a series of examples to help illustrate
as “fee simple,” defined as the “absolute this concept.

FIGURE 1
ABOVE SURFACE RIGHTS
RIGHTS

STREET LINE SURFACE RIGHTS AND USES

SUB-SURFACE RIGHTS,
OWNERSHIP POSSESSIONS

LENGTH
WIDTH

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 FIGURE 2

Basic Rights Idea

Complex Rights
Using this idea of volume to represent a
property’s size, shape and rights, a graphic Although the property rights represented in
portrayal of property rights and ownership can Figure 1 can be useful to conceptually visualize a
be constructed. simple situation, in reality most properties are • Part C could represent an underlying fee
subject to many factors that change the shape and ownership in an adjoining lot which in turn
Figure 1 portrays this volume and layers idea arrangement of these layers. For example, access has an easement or other rights over it.
for a simple rectangular lot; that is, a lot which and/or utility easements through the property
has no rights, such as easements, beyond its Typically, legal descriptions define these
can modify the size, shape, and position of the components. However, rights or uses beyond or
physical borders and no incursion of rights layers; a property can have rights through other
from other properties into it. into the basic property can result from
properties; etc. restrictions, limitations, or rights imposed by
government or other parcels.
The lower layers might represent basic Figure 2 demonstrates a more complex example
underlying rights, such as ownership and quiet of a property rights situation, with easement Property rights have been portrayed as a circular
possession. Above this could be represented rights extending beyond the boundaries of the pie shaped diagram. This is useful only where
mineral and water rights, excavation rights, etc. basic property, with easements owned by rights are evenly distributed throughout the
Still higher may be farming, construction of someone else extending into the basic property, property, which is not usually the case. Setbacks,
structures, roadways, etc. The highest layers and with underlying rights in an adjoining utilities, and other intangibles cannot be
would likely represent rights associated with property. For example: adequately portrayed in this fashion.
height, such as: air rights, views, smoke,
intangibles, etc. A right’s thickness represents its
importance relative to the other rights. All
• Part A of the subject property might be an Partial Easement
easement of some kind through the adjoining
the rights taken together, less the rights
property (a scenic view or access easement When a portion of a property’s rights is removed,
retained/owned by other properties, represent a
perhaps); such as through the creation of an easement, the
complete estate.
remainder property takes on a different shape. An
• Part B could be a utility easement for a sewer easement is “an interest in real property that
The rights layers shown in Figure 1 are shown line, electric power, etc. owned by someone conveys use, but not ownership, of a portion of
for illustrative purpose. Individual layers can else that enters into the basic property; and an owner’s property.”3
vary, depending upon the specific situation.

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Figure 3 shows what can happen by the creation
of an easement.

• Part A is the portion left over after the

removal of the rights associated with Part B.
In condemnation, it is often called the
remainder.
FIGURE 3
• Part B represents the rights removed. In
condemnation, this is often called the “part
taken” or simply the “taking.” The removed
rights could represent a slope and/or
drainage easement associated with roadway
improvements resulting from FEE SIMPLE
condemnation, an area for utility lines,
access way to an adjoining parcel, etc. NOT FEE SIMPLE

When an easement is created through a property

(such as for access to another parcel or for
drainage, or an embankment, signing, utilities,
etc.), only a portion of the total rights is taken.
The remainder parcel retains the underlying
rights, whatever they may be.
Fee simple ownership is retained in the portion
of Part A not impacted by the imposition of
Separation of Rights Over an Entire Property
Part B and ownership under Part B is not fee
simple. Thus, the remainder estate has both fee
simple and less than fee simple components. Sometimes other interests may be imposed upon
or cover an entire parcel, such as deed restric-
tions, homeowners’ association requirements,
FIGURE 4 conservation easements, leaseholds, building
height restrictions, etc. As a consequence, basic
fee simple rights may be reduced over the entire
property. Figure 4 depicts a situation like this:
Part A possibly represents an overlying easement,
such as a conservation easement; and Part B the
underlying rights.
The owner of the underlying estate, Part B, can
utilize his property any way he sees fit, except as
constrained by the overlying easement, Part A.
Ownership of neither Part A nor Part B is fee
simple; i.e. both estates are less than fee simple.
Time
Property rights can also vary with time. Most
property rights exist in perpetuity, but some
rights, such as leases, rentals, life estates, and
timeshares exist only through time, i.e. for a
limited duration within the underlying fee
simple rights.

Figure 5 illustrates an example of this:

• Part A represents a time-limited estate (such

as a residential rental unit), from its

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 B1

FIGURE 5
TIME

B2

inception at time A1 (which could be the Condos and Common Areas Rights Can Vary With Location
beginning of a lease term, for example) to its
termination at time A2 (which could be the Property can be held both individually and in Up to this point, property rights have been
ending of a lease term). common at the same time. Condominiums and evaluated as uniform layers, i.e. each individual
• Part B represents the underlying estate. B1 is townhouses typically fit this scenario. right being equally distributed throughout its
this estate immediately after the creation of portion of a property. However, the importance
Figure 6 below shows such a situation: of individual rights can vary from one specific
the time estate, and B2 immediately before
the termination of the time estate. location within a property to another, especially
• Part A represents the common elements, in,
Immediately before and after the on, and over the land, collectively owned by in larger parcels. In fact, some layers may not
time estate, the whole property would the owners of the B parts. span the entire area of a property at all; some may
look like the property represented in gradually increase or decrease in importance;
• The B parts represent individually owned some may abruptly change; and so forth.
Figure 1.
units, with no common elements.

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 FIGURE 6

The rights diagrammed in Figure 7 demonstrate may change abruptly at the line of the zoning CASE STUDY: USEFULNESS
how they can vary with location within a change.
property. For example:
• Part C: The importance of some rights may Having evaluated how the ownership of property
• Part A: The significance of the rights shown increase as they get farther away from a can be portrayed three-dimensionally, a specific
increase steadily as they get closer to the front roadway, such as with some residential example might be useful to aid understanding.
of the property; a situation like this could properties. Below is a common eminent domain situation,
reflect a commercial retail property, where that is, a partial taking of rights, appraisal
roadway frontage may be significant. •Part D: Some rights may exist only in small situation. Included also are two property rights
portions of a property, which might represent a diagrams (Figures 8 and 9), showing the before
• Part B: If a property straddles more than one well site for cattle grazing or an interest owned and the after situations.
zoning classification, a given right’s significance by someone else.

FIGURE 7

STREET LINE

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The Problem Drainage Easement Figure 9 shows how the proposed drainage
easement will impact the subject property.
A local city needs to make roadway improve- In order to rectify this drainage problem, the city
ments, together with enhanced drainage, that will will need to acquire an easement through the Conclusion
impact several lots, including the subject herein. subject lot. The engineers have determined that
No effort has been made here to estimate the value
an easement 15 feet wide (street frontage) and 30
impact caused by the easement taking, but instead
feet deep (along north side), within the subject
The Subject the purpose of this treatise is to demonstrate how
property will be sufficient to construct the
the subject property rights have changed. Clearly,
The subject is an approximately level vacant lot proposed improvements.
as shown in Figures 8 and 9, the subject property
that has a small wash cutting through its is smaller after the imposition of the drainage
City work crews will remove debris, reform the
northeast corner. Periodically, water will overflow easement than before.
channel slightly and install riprap. The workmen
onto the street from this channel. This lot has 70
will be able to perform all their work within the
feet of street frontage and is 100 feet deep. After imposition of the drainage easement, the
proposed easement and the existing right of way;
subject property owner still retains some rights
The street is paved with roll curbing and no so, no temporary construction easement will
in the drainage area. Not all rights are lost by
sidewalks. All existing roadway improvements are be needed.
the taking.
entirely within the existing right of way. Analysis
There is an existing overhead power easement The proposed drainage easement is entirely HOW MANY RIGHTS
within the subject property that overlaps the overlapped by the overhead power easement and
proposed easement. It is 15 feet wide and runs In the beginning of this analysis, three broad categories
partly by the setbacks. The proposed drainage of property rights were identified: ownership, quiet
along the entire north edge of the property. Side easement will not impact zoning, setbacks, or
setbacks are 10 feet and the front setback is 20 possession and use. But these are only categorical
development of the property.
feet. There are no vegetation or landscaping issues groupings. Within each, many individual rights are
of consequence. Figure 8 shows the approximate before situation. located , which may be represented as layers within

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 BEFORE DRAINAGE EASEMENT
OVERHEAD EASEMENT
FIGURE 8

STREET LINE

WASH

a property; thus, creating the concept that property construction setbacks with zoning issues while a and billboards; lighting; parking; commercial,
has volume, not just surface. commercial analysis may combine setbacks with residential, industrial, and office uses; views and
development potential. obstructions; lot splitting and subdividing; and
The number of rights/layers is virtually unlimited easements. Each of these items can be considered a
and can range from minutiae to broad concepts. Property rights can be broken down into many right or group of rights and may be analyzed
Each layer can be as thin or as thick as the number components, such as building construction size, individually, as individual situations dictate.
of components one wishes to include in them, or, quality, materials, height, and design, color; Ultimately reasonableness and the issues within a
more importantly, as circumstances may dictate. landscaping design and vegetation; vehicular use, specific situation is the only guide to the number
For example, a residential analysis may combine storage and type; access to roadways; signs and size of the layers of rights.

FIGURE 9

STREET LINE

PROPOSED
DRAINAGE
EASEMENT

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DIVISION OF REAL PROPERTY through one or more of the sub-parcels to paramount. There are a number of such non-
be created. economic possibilities, but these tend to be esoteric
Property can be divided in many ways and into in character and not readily measurable.
many parts. As we have already seen, rights to
property can be divided or separated into various Thus, a property can be physically split while From the standpoint of real estate market
layers, and each layer can have not only a separate ownership and rights remain unchanged. economics, the size of the rights layers can best be
value but also separate ownerships. But there are measured as components of market value using
also other ways to divide property: a property can • Ownership: Adding one or more owners to a standard appraisal analytical and comparative
be physically divided; and/or ownership can be given property, such as through a sale, effectively techniques, such as matched pairs, point system,
divided between different people or entities, splits it. For example, if I own a parcel and extraction, statistics, surveys, etc. Thus, a layer’s
each having in turn different elements. Thus, convey to you an undivided half interest, the thickness can be reflected by its value contribution.
subdividing of real property can be grouped into remaining parcel now has two owners. Thus, a
three broad categories: the physical land, the form of property division has occurred. CONCLUSION
ownership, and the property rights.
• Rights: As has already been shown extensively Though the concept of property rights as layers
• Land: The actual physical splitting of land is in this treatise, through the concept of layers, does not necessarily solve all appraisal analysis
what people think of most often, when the rights to property can be conveyed, that is problems, it does provide an alternative view and
topic of dividing, subdividing, or splitting divided, to others. An easement is a good hopefully aids understanding, especially for partial
property is considered. A fence, for example, is takings of rights through condemnation.
example here; it creates two ownerships to the
the symbol that best represents the separation same property: the underlying owner and the
of one property from another. The physical easement holder.
splitting of property is, however, not quite as
easy as one might think. Consider the property Measurement of Rights
shown in Figure 2. This is a complex property,
which also includes various easements, into It is reasonable to assume that some rights or
groupings of rights have more importance than
and out of the subject property. Thus, splitting
others and should, therefore, form thicker layers
it would result in sub-properties with various REFERENCES
than other rights of lesser importance.
easements being created. Merely drawing a line 1
The Dictionary of Real Estate Appraisal, 4th Edition, by the
on the ground would not adequately portray Some may argue that property rights are inherently Appraisal Institute, page 234.
the resultant subdivided parcels. Such a political in nature and should be measured accord- 2
Ibid. page 113.
resultant split might also cause new easements ingly. Others may say that sociological issues are 3
Ibid. page 90.

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