Owning real estate carries with it a traditional “bundle of legal rights” transferred with the property from the seller to buyer. These are the recognized rights of the holder of title to the property.
Real Estate Ownership Rights
- The right of possession: The property is owned by whoever holds the title. Once you close a real estate deal for cash and have the title in your hands, it’s yours. Well, let’s start out right away with the caveat that not paying property taxes and many association dues can get your property taken away from you. That said, when you have a deed in your name and no mortgage note or lien against the property, you own it. However, depending on the state in which you live and the laws there, the lien holder of a mortgage can quickly exercise the right to take the property, or they may have to go through the courts to do so.
- The right of control: Within the laws, the owner controls the use of the property but must adhere to any subdivision or homeowner association covenants and restrictions. So, if you want to control your property by storing car bodies, but your covenants preclude that, then that control isn’t yours. Likewise, if you want to have loud parties and let two dozen people squat on your property, you won’t be able to do that if there are covenants and restrictions that forbid it.
- The right of exclusion: Others can be excluded from using or entering the property. Generally, this one is pretty protected. You don’t have to allow anyone to enter your owned property who isn’t law enforcement with a warrant. However, there will likely be easements for things like utilities. Utility companies will have the right to enter the property to maintain their rights of way and utility lines as a part of the easement.
- The right of enjoyment: The owner can enjoy the use of the property in any legal manner. If you want to enjoy your property by throwing a massive party, you can only do so if it’s not restricted through subdivision or homeowner covenants or restrictions documents.
- The right of disposition: The title holder can sell, rent, or transfer ownership or use of the property at will. Unless you have a mortgage, as that must be paid off to dispose of the property, you generally can sell it at will. Of course, if the IRS has a tax lien on your property, then you’ll have to pay that off as a part of the settlement money. This applies as well to mechanics’ liens for work done on the property or improvements.
Ownership of land is holding “title” to it. The evidence of that title is the deed. The seller executes a deed to transfer title to real property and the bundle of rights that go with it.
Title insurance is how we protect those rights against claims against them. When a property changes hands and title insurance is purchased by or for the new owner, they are supposedly protected against frivolous or erroneous claims on their ownership rights.
An example of a situation when title insurance could come to your aid might be in a boundary line dispute. Let’s say that suddenly a new buyer neighbor’s survey shows that 10 feet of one side of your property are supposedly theirs. The title insurance company, if you have survey coverage, would investigate and either refute their claim or compensate you for the loss of the ten feet if your survey was wrong. Not all title policies cover survey accuracy, or it must be purchased separately.
Other issues, such as claims by previous spouses to ownership of a property, can also threaten ownership rights. However, quitclaim deeds are generally required by title insurance companies from spouses in divorce situations.