PROPERTY RIGHTS

AND TYPES OF
PROPERTY
LEARNING OBJECTIVES

At the end of this slide you should be able to:

 Explain property rights and it’s nature
 Categories of property and property right
laws
 Importance of property right
 Types of property right
 INTRODUCTION
PROPERTY RIGHTS. WHAT ARE THEY?
Control over and access to property may be understood as an individual’s or group’s claim to a
bundle of rights. These rights typically include authority to use, manage, and transfer Property.
People’s rights, including property rights, weigh heavily in matters of fairness, equity, and
justice, and can be understood and analyzed through a simple and long-standing model that
portrays property rights as bundles of rights.
This concept of property rights serves to keep the multi-dimensionality, social embeddedness
and the institutional breadth and depth at the forefront of development and environmental
planning.
Property rights refers to control over and access to property, that is, the way in which people
(individually or collectively) hold rights and responsibilities to natural resources and properties.
 INTRODUCTION
Thus, the issue of property rights raises fundamental questions of
who claims rights to what property, who has access to the
associated property, and who has the responsibility for managing
these property.
These fundamental property rights questions become even more
critical where natural resource markets are concerned, such as
markets for timber or non-timber forest products, wildlife,
ecotourism, agricultural products, payment for environmental
services and other revenue-generating activities .
 THE NATURE OF PROPERTY RIGHT

Property rights are the legal rights that entities

have on a thing or creature they own. The
owners (entities) may be people, companies,
charities, governments, trusts, etc. Property
rights are among the most basic rights in a free
society. In today’s Western democracies,
property rights are taken for granted.
However, if there were no property rights,
there would be chaos.
 THE NATURE OF PROPERTY RIGHT

In the majority of the advanced economies,

the rights of property ownership may be
extended using laws, deeds, copyrights and
patents to protect scarce tangible resources
such as land, buildings, cars, etc., non-human
creatures including cats, dogs, horses and
other pets, and even inventions and other
types of intellectual property.
THE NATURE OF PROPERTY RIGHTS
The term refers to the ownership of a resource or economic
good – either tangible or intangible (physical or abstract) and
how it can be used by the owner. Often referred to as a Bundle
of Rights, property rights have four broad components:
1. Property Rights are Transferable:
Its owner by way of sale, exchange or gift can transfer property.
It can be transmitted from one generation to the next. “In any
event the conception of property always implies that except on
some taboo on sale or transmission it could be transferred”, say
Davis. In this sense, a person’s right in his wife or his skill are
not property rights, for they are not transferable.
THE NATURE OF PROPERTY RIGHTS
2. Property Rights involves a Distinction between Ownership and Possession
of a Thing
There is distinction between ownership and possession of thing. A person a may
own a thing but he may not actually use and enjoy it. Another person may steal it
to use and enjoy, borrow with the owner’s consent. A person may own a building,
but it may be in the possession of another person (tenant) at a cost.
3. Power Aspect:
The third characteristic of property is its power aspect. As a social institution,
property gives power, not only over things, but through things also over persons.
The possession of property implies the possession of power over others. It is an
instrument people who own use to control the life and labour of those who do not
own it. In a capitalist society, for example, the owners of capital have control over
the life arid labour of those who do not own it.
THE NATURE OF PROPERTY RIGHTS
4. Property is usually Non-human:
This means that the object of property has no rights of its own but is simply the
passive object of such rights. The land has no right of its own; it only serves the
landowner. It is the owner’s will, his discretion and advantage that are served by the
object. Human beings cannot be the object of property. For example, a woman
cannot be the object of property of her husband. Property rights apply only to those
things, which have no rights of their own.
According to an article in the website of the University of Illinois, property rights:
“Establish relationships among participants in any social and economic system.
Holding the rights to property is an expression of the relative power of the bearer.
Holding such power or rights commands certain responses by others that are
enforced by the community or our culture. “For example, a producer owning 100
acres of cropland is entitled to the returns from his property, management ability,
and good sense. He is protected from trespass by his neighbors’ cultural customs
and the laws of the community. The production, or stream of benefits from the land,
is his to sell, give away, or otherwise dispose of as he sees fit.
CATEGORIES OF PROPERTY
Property is a system of rights that gives people legal control of
valuable things, and also refers to the valuable things themselves.
Depending on the nature of the property, an owner of property may
have the right to consume, alter, share, redefine, rent, mortgage,
pawn, sell, exchange, transfer, give away or destroy it, or to
exclude others from doing these things, as well as to perhaps
abandon it; whereas regardless of the nature of the property, the
owner thereof has the right to properly use it under the granted
property rights.
CATEGORIES OF PROPERTY
 TANGIBLE/MOVABLE PROPERTY
 INTANGIBLE/ IMMOVABLE PROPERTY
CATEGORIES OF PROPERTY
TANGIBLE/ MOVABLE PROPERTY
tangible property is literally anything that can be touched, and includes both real
property and personal property (or moveable property), and stands in distinction
to intangible property. Examples of tangible physical property include
automobiles, furniture, jewelry, computers, machinery, art objects, rugs, dishes,
curtains, household appliances and tools.
INTANGIBLE/ INTANGIBLE PROPERTY
Intangible property, also known as incorporeal property, is something that a
person or corporation can have ownership of and can transfer ownership to
another person or corporation, but has no physical substance, for example brand
identity or knowledge/intellectual property. It generally refers to statutory
creations, such as copyright, trademarks, or patents.
CATEGORIES OF PROPERTY
CATEGORIES OF PROPERTY
Property can further be divided into the following;
– PRIVATE PROPERTY: is excludable; the owner can prevent others from
using or entering it. The private owner controls its use, exclusion, and
management. Private property may belong to a group of legal owners, in which
case the group controls what happens to it. Private property includes all things
tangible and intangible that a private individual or entity owns, and over which
the owners have absolute property rights. Examples include buildings, land,
copyrights, patents, money, etc.
Private property is not the same as Personal Property, which is property for
personal use and consumption. Private property is a legal concept that a country’s
political system defines and enforces.
The home you live in is your personal property. However, if you own a second
home but do not live in it – you do not use the property personally – it is your
private property but not personal property. Followers of communism say they
believe in personal but not private property.
CATEGORIES OF PROPERTIES
PUBLIC PROPERTY: also called state property, is property that we all own – it belongs to
all of us. However, the community (government, local authority, etc.) controls access to it
and its use.. State-owned enterprises and national parks are examples of public property.
OPEN-ACCESS PROPERTY: nobody ‘owns’ the property. Nobody can exclude anybody
else from using it – it is non-excludable. This type of property is not managed by anybody,
and nobody controls access to it. Examples of open-access property are navigable
waterways (ocean fisheries) or the upper atmosphere.
COMMON PROPERTY: also known as collective property, is property that a group of
people owns. The joint-owners control access to it, as well as its use and exclusion.
REAL PROPERTY: refers not only to the ownership and use of any tract of land, but any
structure affixed to the land as well. Examples of real property are buildings, land (that is
every thing relating to it), machinery, minerals.
PERSONAL PROPERTY: All other assets are classified as personal property, which is
comprised of movable assets.
INTELLECTUAL PROPERTY: is a category of property that includes intangible creations
of the human intellect. There are many types of intellectual property, and some countries
recognize more than others. The best-known types are copyrights, patents, trademarks, and
trade secrets.
PROPERTY RIGHT LAWS
There are several types of property rights law. Property right laws are used to
govern the three main types of property are real property, personal property, and
intellectual property. The different rights pertaining to each of these kinds of
property are divided between rights of ownership and rights of use, though the
specifics as to what these rights entail vary by jurisdiction.
Real property rights law refers not only to the ownership and use of any tract of
land, but any structure affixed to the land as well. The right of ownership of real
property is not absolute, as governments may regulate the use of the land through
zoning laws. For instance, certain land may not be used for anything other than
residential purposes, and the type of residential housing may even be regulated.
Real property rights law also applies to anyone entering a lease or other
agreement to rent real property for any purpose. Property usage rights are limited
not only by law, but also by the owner of the real property through their lease
agreement. The owner does not, however, have absolute power to limit their
tenant’s use of the property. Generally, the applicable governing body regulates
lease agreements to protect the privacy of tenants from nosy or bullying landlords.
PROPERTY RIGHT LAWS
Personal property is any tangible property other than real property. While
ownership and use of some personal property is regulated for public policy
reasons, personal property rights law is generally much less rigid. Depending on
the item, owners of personal property are free to lease, sell, and lend any item
they own at will. The use and ownership of such items are typically regulated
only if they pose some sort of public health or safety issue that must be addressed.
Intellectual property is an abstract concept that requires rights for intangible
property, and as such, the property rights law regarding intellectual property is
very complex. “Intellectual property” generally refers to copyrighted, patented,
trademarked, and trade secret property. Each of these terms has their own
complex body of law involving both the use and ownership of the ideas or
creations to which they apply.
Ownership in intellectual property stems from the concept that people should be
given ownership rights for the products of their mind — in both an academic and
creative sense. Intellectual property rights law does not grant absolute power in
the ownership of such property. Exceptions for the fair use of such intellectual
property are carved out in the body of intellectual property law.
 IMPORTANCE OF PROPERTY RIGHT
KEY POINTS
 Property rights refer to the legal ownership of a resource which is protected through the legal system and the law
and order of the government.
 Property rights allow disputes over resources be resolved in an amicable way through the courts.
 As there are property rights, businesses and consumers are more willing to invest and spend time developing
economic resources as the gains will be granted to them individually.
PROPERTY RIGHTS GUARANTEE FREEDOM
Property rights guarantee freedom because control of production is spread among many acting bodies; nobody has
complete power of resources. Whether ‘society’ or central government controls the means of production; both have
complete control.
When governments own resources, a few people decide what to produce, how much to produce and for how much.
Instead, millions of individuals own their own resources which they can use for whatever they see fit. This allows for
the right and freedom for individuals to pursue their own interests. At the same time, it provides an incentive for
people to live, work, and save.
 IMPORTANCE OF PROPERTY RIGHT
ABSENCE OF PROPERTY RIGHTS CAN LEAD TO VIOLENCE
In some countries such as India, residents are easily evicted without warning or compensation. Thousands are
displaced due to infrastructural projects which force residents to resettle elsewhere. This can lead to resentment,
anger, and violence. When individuals believe that the home they built is theirs, but others come and destroy it,
violence can result. It might be a government or privately led project that claims the land for re-development – at the
price of peoples livelihoods. Without private property rights, those residents have no recourse to fight other than
through physical means. They cannot go to court, and they have no legal right to that land due to the absence of
property rights.
PROTECTION FROM CONFISCATION AND GOVERNMENT CONTROL
The ease at which the government can take back property is a serious concern; so many systems try to prevent this
through the allocation of property rights. Some countries employ restrictions on government’s power, but they do not
prevent government over-reach. For example, the US government has a power called ’eminent domain’. This allows
the confiscation of private property for public use – as long as a fair price is paid. The courts then judge what a fair
price is. However, this price is frequently below the owner’s value. When we look at countries with strong property
rights, we see a direct correlation with prosperity.
 IMPORTANCE OF PROPERTY RIGHT
PROTECTION OF INTELLECTUAL PROPERTY RIGHTS
There are also intellectual property rights to consider such as patents, copyrights, trademarks, and
trade secrets. These protect ideas and business secrets, but how do these help the economy and
society? Well, they provide the foundations for ideas to grow and develop. Are businesses going
to spend years and millions on developing a new product or idea, only for it to be copied at a
fraction of the cost? It allows businesses to protect their trade secrets like Coca-Cola does with its
recipe. Without protections like patents, investors are unwilling and unlikely to invest. For
example, within the pharmaceutical sector, millions of dollars are spent on research &
development, which requires patent approval. IP rights incentivizes entrepreneurs to keep
innovating and pushing for new developments and technology in the knowledge that they will be
protected in the end.
 IMPORTANCE OF PROPERTY RIGHT
PROTECTION OF ECOSYSTEM
The importance of property rights can be extended to the ecosystem. What such rights do, is
assign the right to a specific piece of land. Without such, it is a common resource that can be used
and exploited by everyone. For example, fishing is a known area that can potentially lead to
overuse without property rights. What these property rights do is allow for the long-term
allocation of resources to be considered.
ECONOMIC PROGRESS AND INCENTIVE TO WORK
Without private property, what incentive is there to work? If the house you live in is not yours,
then why make improvements? You may not own the house, but who does… the government?
What would be the incentive to build the house in the first place?. Private property gives
individuals an incentive to earn, invest, and accumulate wealth. It incentivizes people to earn as
wealth can accumulate. That accumulation can be used for future consumption.
 TYPES OF PROPERTY RIGHTS
1.Use rights. The most observable types of property rights are use rights
which can be in the form of right to grazing livestock in a pasture,
producing crops on agricultural lands, fishing in a pond, drilling an oil
field.
2. Management rights. Management rights are an order higher than use
rights. Management rights consist of the right to organize and assign use
rights. The manager of a unit of land or a stock of natural resources
typically has authority to make land use and production decisions that
have implications for the various use rights holders.
 TYPES OF PROPERTY RIGHT
3. Transfer right. Transfer rights exist at a still higher order than use and
management rights. Transfer rights refer to the authority to assign or reassign
both management and use rights. A transfer of rights may be definitive and
absolute, that is, the transfer may include all rights included in the property
rights bundle.
A transfer right may be absolute or not. For example, it is common for a
family or a community to transfer management and use rights attached to a
specific resource to a new arrival.
In another case, the new arrival may just be given the resource to manage for
a certain period or under certain conditions in which case it is not absolute.
 TYPES OF PROPERTY RIGHT
4. Ownership. In contrast to the rights categories presented above is used here
simply to indicate priority claims to the property rights bundle made on the part of
an individual, a private entity or a state. Priority rights can be thought of as a claim
of authority to manage and administer the property rights bundle.
Ownership rights are viewed from the contextual lens of the socio-political and
inheritance regimes of a group of people. An African thinks of ownership in terms
of historically established priority rights to a particular area or set of natural
resources on the part of a community or clan. In such a system, assignment of use
and management rights is based on the family, clan, religious or ethnic identity of
the holder rather than on formal legal precepts.