Research Handbooks in Law and Economics series
Edited by Kenneth Ayotte and Henry E. Smith
Chapter 12: Property Titling and Conveyancing
Benito Arruñada* I. ENFORCEMENT BENEFITS VS. ‘CONSENT’ COSTS Rights to land and many other assets can be enforced as property rights, iura in rem, claimable against the asset itself and therefore valid against all persons, erga omnes.1 These property rights are said to ‘run with the land,’ meaning that they survive unaltered through all kinds of transactions and transformations dealing with other rights on the same parcel of land or on a neighboring parcel. For example, the mortgagee keeps the same claim on the land even after the mortgagor sells it. Property rights oblige all people: the new owner who has purchased the land is obliged to respect both the mortgage and, in particular, the right to foreclose in case the guaranteed debt is not paid. Enforcement of a property right is independent of who holds other rights on the same asset. Alternatively, rights on assets can be contract rights, enforceable against a specific person, inter partes. To clarify the difference between property and contract rights, consider what happens in the case of a lease of land, this being a right that in many jurisdictions may be structured as either a contractual or a property right. Assume that the land is sold during the life of the lease. If the lease is a contract right, the lessee loses the right of occupation, and gains instead a contract right against the lessor. However, if the lease is a property right, the lessee keeps the right of occupation. It is...
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