There’s a standing joke among libertarians that the first question out of people’s mouths when they hear one is libertarian is, “Who will build the roads?” People are even more dumbfounded when they encounter anarcho-capitalists. They immediately imagine a lawless realm descending into a Mad Max-type violent future. That people lived for centuries and managed their affairs with minimal or no state-provided law seems to never occur to them.
Yet we have a marvelous example of a highly complex, sophisticated system of natural law in widespread use today in America, and most people don’t even know it exists. I am referring to the laws governing real property ownership. With minor variations between the states, the law governing the use and ownership of real property emerged as part of English common law. What is common law? It is law emerging from local custom and judicial precedent as opposed to law that is created legislatively. When the English people settled in America, they brought their system of common law land titles to this country.
Unlocking the Value of Real Property
Why do I say that the system is highly complex and sophisticated? Think about this for a moment. What was the most valuable thing that a person could own 1000 or 600 years ago? Land. Land provided everything that was essential for human life. The ability to create shelter, to grow food, to feed livestock, to hunt, and to access water, all required land.
If value is wholly located in one thing that cannot be moved, the question becomes, How does one unlock the value of the land? Suppose there were more deer to be hunted than the local farmer wanted to consume. Suppose the local landed gentry wanted to ride their hunters across the fields, but they also wanted their tenants to grow crops on the land so they would prosper. Suppose there was coal beneath the land. One couldn’t separate the land into its component parts and sell off those parts individually; or could one?
What if ownership was conceived of not to be an all-or-nothing affair, but as a bundle of rights, any one of which could be conveyed away? Think of all the things one could do with real property, and then imagine that each thing could be split into a separate right that could be sold or leased to others for whatever period of time the parties agreed to:
- The right to reside on the land forever (in fee) or for a term (for the life of widow)
- The right to hunt or fish on the land (a hereditament)
- The right to harvest crops or timber on the land
- The right to use water while it passed over the land
- The right to sublease one’s rights on the land
- The right to extract minerals
- The right to dam the flow of water (which would by necessity involve the downstream owner too)
- The right to subdivide the land into smaller parcels
- The right to use the airspace above the land
- The right to use the subsurface area (e.g. for the placement of drain pipes)
- The right of passage by foot, horse or car (an easement)
- The right to leave the property to one’s heirs.
Each of these rights could be held by separate parties. Each party could fully utilize the right he purchased only so long as he did not interfere with the rights held by others. No landowner could convey a right to a second party if he had conveyed it exclusively to the first. By envisioning and creating a system of non-absolute ownership, landowners were able to maximize the use and value of the only asset they were likely to own. This was an extraordinary development in common law.
Dealing with Liars and Cheats
But what made the whole system workable, and why it is still in widespread use today, is that common law solved the problem of cheaters – those who wouldn’t keep their promises to others about their rights to use real property. How did common law do this? The law recognized covenants that “run with the land.” These were not mere personal promises of rights to hunt or fish or extract minerals giving the beneficiary the right to an action for damages in the event of a breach. These were covenants that bound the real property itself.
In a time when record-keeping was primitive, not all covenants were recorded in the land title records, and land title records had errors, the legal system developed sufficiently to address common errors. A purchaser could not claim that a covenant granting the adjoining owner the right to use water was invalid because there was nothing written down in the land title records. The purchaser could go on the property and see the weirs and dams diverting the water to the neighboring owner. Having done so, the purchaser was duty-bound to inquire as to the rights of the neighbor when their use could be seen. He could not negate their rights by failing to inform himself of that which was visible on the property. This rule of law is still the majority view of the states in America today.
In America, where land was often homesteaded and not derived from a grant from the king, rights that were conceived of as a bundle of rights were typically inherent in all land titles; i.e. purchasers expected to own the property in fee with the entire bundle of rights noted above.
In mixed use, we can observe projects that are wholly privately owned how the complexity of the common law of real property ownership allows a wide variety of overlapping/non-conflicting uses of the same piece of real estate. All of the private covenants and easements that form the ownership basis were created through common law. When one grasps the rules of real property law, one sees that they are intuitive, clear, simple to understand, and workable in highly complex environments. Libertarians everywhere should acknowledge and celebrate the superb system of natural law that led to our system of real property ownership.
Important Policy Implications
Today, we can see that the rights that comprise ownership of real property are increasingly under attack by both federal and local governments. Property can be taken outright through a process of eminent domain, in which event one is at least “fairly compensated” for the loss of one’s property. More often, though, one or more of the bundle of rights of ownership is taken by regulation without compensation to the owner. When a locality prohibits an owner from leasing his property, from growing vegetables in his front yard, from saving the rainwater that falls on his property, or from allowing non-related others to reside on his property, the locality is taking one of the sticks from the bundle of rights that comprise the ownership interest of the property owner.
If Americans understood our excellent common law tradition of real property ownership, they might not be so sanguine about losing their ownership rights one right at a time.
This piece was originally published at the Foundation for Economic Education.