What Is the "Bundle of Rights"?

Mary McMahon
Mary McMahon

The bundle of rights is a concept used to illustrate the set of linked rights property owners have over their real estate and intellectual property. Owners can lease, license, or give up some of their rights while retaining ownership. These rights can be restored through a variety of activities. In the bundle of rights metaphor, each right is like a stick in a bundle. The owner can pass out sticks without giving up the whole armful, and can take sticks back and reintegrate them into the bundle.

Businesswoman talking on a mobile phone
Businesswoman talking on a mobile phone

Application of this concept to real estate is relatively ancient, as property owners typically have rights to possess, control, and enjoy their property. They can choose to exclude people from their land, and they have the right to ultimate disposition. The property owner may choose to lease out the real estate, in which case the tenant has rights of possession and enjoyment, taking those sticks from the bundle. Likewise, tenants can decide to exclude unwanted persons from their property.

The lease does not weaken other rights; the landlord still ultimately decides how to dispose of the land, for example. Landlords can also grant other rights, like easements, which do not infringe on the bundle of rights. When a road cuts through a farm, for instance, the government in charge of the road does not get to dictate how the land around the road should be used. The bundle of rights concept allows for selective distribution of different property rights, without endangering the underlying ownership.

It is possible to place liens on property, another example of the bundle of rights at work. A home with a lien on it cannot be disposed of without the permission of the lienholder, but the owner still controls the property. When the owner resolves the lien, the right to dispose reverts, and the lienholder no longer has any ability to dictate the terms of sales.

This concept can also be applied to intellectual property. A copyright holder owns a copyright and can opt to license or lease it, or to donate licensing in the case of a charitable endeavor. Copyright holders have control over how their intellectual property can be used, and can decline some uses while accepting others. They have a bundle of rights under the law, which they can choose to exercise in ways that suit them. Giving up one right does not automatically imperil the others, which allows for tighter control of intellectual property while facilitating free exchange because copyright holders don't need to worry about diluting their rights.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a wiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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