Last edited 06 Nov 2020

Property ownership


[edit] Introduction

Property ownership is one of the key tenets of the capitalist socio-economic system. Adam Smith, one of the foremost capitalist thinkers, wrote that one of the ‘sacred laws of justice is to guard a person’s property and possessions’.

Property ownership may be private, collective or common; with the legal determination relating to who has the ‘bundle of rights’ and duties over the property. Ownership is referred to as being self-propagating, which means that the property owner is legally entitled to own the economic benefits of that property.

One can acquire and become the owner of property in various ways, including:

  • Making a money purchase.
  • As trade with other property.
  • As the prize of winning a bet.
  • Receiving it as a gift.
  • Inheritance.
  • Receiving it in the form of damages.
  • Building from scratch.

It is possible to lose or transfer property ownership in various ways, including:

  • Selling it for money.
  • Exchanging it for other property.
  • Losing it in a bet.
  • Giving it as a gift.
  • Losing it through legal means, i.e. eviction, seizure, foreclosure.

[edit] Types of ownership

The different types of ownership are individual, joint and by contract rights.

[edit] Individual ownership

This form of ownership involves a sole name being entitled to the property, without any additional owners. Typically, on the death of the individual owner, property goes through probate to be passed on to those assigned as inheritors of the title.

[edit] Joint ownership

[edit] Joint tenancy with right of survivorship

All owners hold an equal right to the property, and it cannot be sold or mortgaged without the approval of all owners. There is no need for probate procedures when one of the joint owners dies; instead the ownership simply passes to the surviving owners.

[edit] Tenancy by the entirety

A type of joint ownership that exists between two people, usually husband and wife. Ownership automatically passes to the other upon the death of one without probate.

[edit] Tenancy in common

A specific percentage of the property is owned by each individual ‘tenant in common’. Each ‘tenant in common’ is able to withdraw, mortgage or sell their share in the property. The difference between this and a joint tenancy with right of survivorship is that if one tenant in common dies, their share of the property is passed to their own beneficiaries rather than to the surviving tenants in common.

[edit] Contract rights

This is where an individual has ownership of the property through title by contract. This can include being payable on death (i.e. of the current owner), transfer on death, held in trust for, life estates, and so on.

[edit] Types of property owners

There are several different types of property owners

[edit] Insurance companies and pension funds

These are the traditional long-term owners of commercial property investments, and big firms may have large property departments. Many firms participate in developments in addition to buying and managing investment properties that have already been completed. Unauthorised property unit trusts are often an indirect way for smaller pension funds to invest in property.

[edit] Property companies/developers

Although there is often blurring of the boundaries, the commercial property company market is broadly divided into investment companies, traders and dealers. Investment companies and traders usually undertake developments, and whilst investment companies will tend to retain their ownership, traders will usually aim to sell for a trading profit. Dealers simply buy properties or land with the intention of selling at a profit.

[edit] Overseas buyers

Overseas buyers became a more important factor in the British property market during the late-1980s. In times of relatively low or stagnant economic growth, purchasing property overseas in a buoyant property market – often lucrative real estate – can be a shrewd investment for those with large amounts of capital.

[edit] Private individuals

Private individuals may purchase a property outright or take out a mortgage on a property if they can acquire credit from a lending institution.

Individual entrepreneurs and investors tend to operate through a company vehicle, whether listed or not.

[edit] Construction companies

As well as undertaking the construction of properties, some construction companies also undertake their own developments, either retaining the ownership of completed properties or selling them for a trading profit.

Occasionally they will also act as a source of construction finance for a developer.

[edit] Industrial and commercial companies

Many companies own the premises they operate from, retailers in particular. Often, the properties will be financed off the balance sheet, meaning that funds can be released for core business while retaining an interest in future growth in the value of the property.

[edit] Related articles on Designing Buildings Wiki

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