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Limitations on a Property Owner’s Rights

The rights to possess, use, exclude, and transfer property sometimes conflict with other people’s rights or the public interest. Therefore, these rights aren’t absolute. Property law attempts to reconcile competing rights and interests by means of default rules, contractual rules, and public regulations.

Declaring default common law rules

One large part of property law consists of the common law rules that generally describe the extent of property rights.

Suppose one person wants to use her land to raise pigs, but that use may seriously interfere with the adjoining landowner’s desire to use his land for his house. Instead of simply declaring that everyone can do whatever they want on their own land, property law sets default rules that limit owners’ respective rights.

In this example, the law of nuisance declares a default rule that a property owner is entitled to be free from unreasonable interference with the use and enjoyment of her land. Likewise, she may not unreasonably interfere with others’ use and enjoyment of their land.

Modifying property rights by contract

Even though the law declares default rules that reconcile competing interests, people can agree to change those rules. Just as a property owner may transfer her entire property to someone else, she may transfer just some of her rights to someone else.

For example, if the law of nuisance gave a residential property owner the right to prevent a pig farm next door, that owner could enter into a contract with the neighboring property owner to allow a pig farm on that land despite the default nuisance rule.

Covenants and easements are two types of contractual agreements that adjust parties’ respective property rights. Here’s a quick breakdown of these contractual agreements:

  • A covenant is a contractual agreement that limits a property owner’s freedom to use her land in some way or that requires her to do something on her land. For example, one common type of neighborhood covenant is a promise not to use land for nonresidential purposes.

  • An easement is typically a contractual agreement allowing someone else to use the owner’s land somehow, such as an agreement allowing a neighbor to drive across the owner’s land to get to the neighbor’s land. A negative easement, on the other hand, is a contractual agreement that restricts the property owner’s freedom to use her property.

Publicly regulating property

Federal, state, and local governments all have some power to regulate how land is used, and these regulations can further reshape property rights.

For example, even though a property owner may have a common law right to use her property as she wishes (as long as she doesn’t unreasonably interfere with others’ use and enjoyment of their land), local zoning laws may further restrict that freedom by specifying that property in certain areas may be used only for residential purposes.

Similarly, a property owner may have a common law right to transfer her property as she wishes, but federal laws restrict her freedom to transfer it in ways that are racially discriminatory.

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