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Library of Congress Cataloging-in-Publication Data Merrill, Thomas W.

TehOxford introductions to U.S. law. Property / Thomas W. Merrill, Henry E. Smith. p. cm.—(The Oxford introductions to U.S. law)

Includes bibliographical references and index.

ISBN 978-0-19-531476-2 ((pbk.) : alk. paper)

1.Property—United States. I. Smith, Henry E. II. Title. III. Title: Property. KF561.M47 2010

346.7304—dc22 2010002669

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Printed in the United States of America on acid-free paper

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To our students

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xcontents

chapter 4 Owners as Gatekeepers 65

Laws for Owner Protection 66

Self-Help 71

Exceptions to the Right to Exclude 74

Necessity 75

Custom 76

Public Accommodation Laws 79

Antidiscrimination Laws 81

Owner Powers 84

Licenses 85

Bailments 87

Abandonment and Destruction 89

Transfer by Sale, Gift, and Inheritance 91

Further Reading 94

chapter 5 Dividing Property Rights 95

Estates and Future Interests 95

How the System Works 104

Co-Ownership 113

Marital Interests 118

Further Reading 122

chapter 6 Managing Property 123

Why Separate Management Authority from Other

Incidents of Ownership? 125

Leasing 129

Property and Contract 131

Models of the Lease Contract 135

Implied Warranty of Habitability 138

Transferring Leasehold Interests 143

Common Interest Communities 146

Trusts 153

Further Reading 157

contents xi

chapter 7 Land Transactions and Title Records 159

Land Sale Contracts 159

Title Records 166

Mortgages 176

Further Reading 181

chapter 8 Neighbors and Neighborhood Effects 183

Th e Coase Theorem 185

Tort Liability: Nuisance 192

Modifi cation of Property Rights: Easements 200

Contract: Covenants Running with the Land 207

Public Regulation: Zoning 215

Further Reading 221

chapter 9 Government Forbearance 223

Th e General Form of the Problem 224

Sources of Forbearance 229

Th e Rule of Law 233

Procedural Due Process 233

Vested Rights 236

Stare Decisis 238

Waivers of Sovereign Immunity 239

Explicit Takings 241

Public Use 242

Just Compensation 248

Regulatory Takings 251

Further Reading 258

Index 259

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2the oxford introductions to u.s. law: property

control and derive value from resources in the world. Property tells us what is mine and what is not mine. Without rules about this, the world would be a chaotic and probably quite violent place.

What exactly then is property? Some people, especially economists, tend to regard any expectation about being able to derive value from some resource as “property.” In this broad sense, one’s expectation of being able to stay in a friend’s apartment overnight, or being able to collect mushrooms on public land, would be regarded as property. Notice that “expectation” here need not have any normative force or legal enforcement. Indeed, on this understanding one could say that someone has property rights in coconuts if he or she is the only one who knows how to climb a tree.1

This conception of property as pure expectation is too broad to capture the meaning of property in law. Rather, legal scholars (and more legally attuned social scientists) would require at a minimum some kind of social guarantee for an expectation to count as property. For A to have property in some thing, A’s expectation of a special claim to the thing—whatever that claim is—must have some social recognition. Some scholars argue that this recognition need not consist of legal enforcement. On this view, fishers with informal “rights” to fishing spots may have their expectations recognized by other fishers, which may be all that is needed to call the right property. Practically speaking, this may mean that other fishers will tolerate self-help on the part of fishers defending their spots, or it may mean that other fishers will come to the aid of a fisher whose spot is threatened by someone else.

For still others, the concept of property is reserved for a legally protected entitlement. On this view, the informal right to a fishing spot resembles property: there is an expectation of a benefit from it and that expectation is recognized and supported in a relevant

1.John Umbeck, Might Makes Rights: A Theory of the Formation and Initial Distribution of Property Rights, 19 Econ. Inquiry, 38, 38–39 (1981).

the institution of property 3

social group. But it would not be property in the legal sense unless its holder could vindicate his or her rights in a court of law.

In this book, we will use the term “property” to refer to entitlements to resources protected by formal legal institutions. If the fisher cannot go to a court of law to vindicate a claim to a spot, that claim may be a social norm or a custom, but it would not be regarded as property. As we will note from time to time, customs are sometimes, but far from always, incorporated into law. So the boundary between custom and law is fluid, rather than fixed.

Property in the sense of legally protected entitlements comes in a variety of forms. The paradigmatic legal property right would be full title to a parcel of land or an object like a car—real property and personal property (or “chattels”), respectively. But the law also affords legally enforceable claims to nontangible resources. Intellectual property—chiefly, patents, copyrights, and trademarks— is regarded as property despite not being a right to any physical thing. Intellectual property rights are rights in intangibles. Likewise one can own a debt or an account at a bank or other financial institution. These too are property rights in intangibles.

Who is eligible to serve as an owner of property? There are many possibilities. Individual persons, small groups of persons who have some close relationship (co-owners), private entities that have a legally established governance structure (partnerships, corporations, nonprofit organizations), and governments (cities, counties, states, the federal government) all can and do own property. Some commentators argue that certain close-knit communities can be said to have property rights in resources like fisheries and common pastures, in the sense that persons who are not members of the community are excluded from participating in the resource. And some property, for example some beaches, might be said to belong to the general public—they are “inherently public” in the sense that even the government cannot bar members of the pubic from access to it. Seeking to bring some order to these possibilities, one popular classification scheme distinguishes between private property (property owned by individual persons, co-owners, or