Define: Ownership

Quick Summary of Ownership

Ownership is the state or fact of exclusive rights and control over property, which may be an object, land/real estate, intellectual property (arguably) or some other kind of property. It is embodied in an ownership right also referred to as title.

Ownership is the key building block in the development of the capitalist socio-economic system. The concept of ownership has existed for thousands of years and in all cultures. Over the millennia, however, and across cultures what is considered eligible to be property and how that property is regarded culturally is very different. Ownership is the basis for many other concepts that form the foundations of ancient and modern societies such as money, trade, debt, bankruptcy, the criminality of theft and private vs. public property.

The process and mechanics of ownership are fairly complex since one can gain, transfer and lose ownership of property in a number of ways. To acquire property one can purchase it with money, trade it for other property, receive it as a gift, steal it, find it, make it or homestead it. One can transfer or lose ownership of property by selling it for money, exchanging it for other property, giving it as a gift, being robbed of it, misplacing it, or having it stripped from one’s ownership through legal means such as eviction, foreclosure and seizure. Ownership is self-propagating in that if an object is owned by someone, any additional goods produced by using that object will also be owned by the same person.

Ownership is the relationship between a person and a right that is vested in him. That which a man owns is, in all cases, a right. When one speaks of the ownership of a material object, this is merely a convenient and conventional figure of speech. To own a piece of land means, in law, to own a particular kind of right in that land.

According to Salmond, ownership denotes the relationship between a person and an object, forming the subject matter of his ownership. It consists of a complex of rights, all of which are rights in rem. being good against the entire world and not merely against some persons.

Ownership is the relationship between a person and a right that is vested in him. That which a man owns is, in all cases, a right. When one speaks of the ownership of a material object, this is merely a convenient and conventional figure of speech. To own a piece of land means, in law, to own a particular kind of right in that land.

According to Salmond Ownership denotes the relationship between a person and an object, forming the subject matter of his ownership. It consists of a complex of rights, all of which are rights in rem. being good against the entire world and not merely against some persons.

According to Austin, ownership is a right over a determinate thing, indefinite in point of use, unrestricted in point of disposition and unlimited in point of duration.

Ownership is thus a sum-total of the rights of possession, disposition and destruction. According to Holland, it is plenary control over an object.

Under the French Code, ownership means and involves the right of the owner to enjoy and do away with his things in the most absolute manner, that is, just as he pleases, subject to all laws and regulations.

Types of owners

In person

Individuals may own property directly. In some societies, only adult men may own property; in other societies (such as the Haudenosaunee), property is matrilinear and passed on from mother to son. In most societies, both men and women can own property with no restrictions or limitations at all.

Structured Ownership Entities

Throughout history, nations (or governments) and religions have owned property. These entities exist primarily for other purposes than to own or operate property; hence, they may have no clear rules regarding the disposition of their property.

To own and operate property, structures (often known today as legal entities) have been created in many societies throughout history. The differences in how they deal with members’ rights is a key factor in determining their type. Each type has advantages and disadvantages derived from their means of recognising or disregarding (rewarding or not) the contributions of financial capital or personal effort.

Cooperatives, corporations, trusts, partnerships, and condominium associations are only some of the many varied types of structured ownership; each type has many subtypes. Legal advantages or restrictions on various types of structured ownership have existed in many societies, past and present. To govern how assets are to be used, shared, or treated, rules and regulations may be legally imposed, internally adopted, or decreed.

Liability for the Group or for Others in the Group

Ownership implies responsibility for actions regarding the property. A “legal shield” is said to exist if the entity’s legal liabilities do not get redistributed among the entity’s owners or members. An application of this, to limit ownership risks, is to form a new entity to purchase, own and operate each property. Since the entity is separate and distinct from others, if a problem occurs that leads to massive liability, the individual is protected from losing more than the value of that property. Many other properties are protected when they are owned by other distinct entities.

In the loosest sense of group ownership, a lack of legal framework, rules, and regulations may mean that group ownership of property places every member in a position of responsibility (liability) for the actions of each other. A structured group duly constituted as an entity under law may still not protect members from being personally liable for each other’s actions. Court decisions against the entity itself may give rise to unlimited personal liability for each and every member. An example of this situation is a professional partnership (e.g. law practice) in some jurisdictions. Thus, being a partner or owner in a group may give little advantage in terms of share ownership while producing a lot of risk to the partner, owner or participant.

Sharing Gains

At the end of each financial year, accounting rules determine a surplus or profit, which may be retained inside the entity or distributed among owners according to the initial setup intent when the entity was created.

Entities with a member focus will give financial surplus back to members according to the volume of financial activity that the participating member generated for the entity. Examples of this are producer cooperatives, buyer cooperatives, and participating whole-life policyholders in both mutual and share-capital insurance companies.

Entities with share voting rights that depend on financial capital distribute surplus among shareholders without regard to any other contribution to the entity. Depending on internal rules and regulations, certain classes of shares have the right to receive increases in financial “dividends,” while other classes do not. After many years, the increase over time is substantial if the business is profitable. Examples of this are common shares and preferred shares in private or publicly listed share capital corporations.

Entities with a focus on providing service in perpetuam do not distribute financial surplus; they must retain it. It will then serve as a cushion against losses or as a means to finance growth activities. Examples of this are not-for-profit entities: they are allowed to make profits but are not permitted to give any of it back to members except by way of discounts in the future on new transactions.

Depending on the charter at the foundation of the entity and depending on the legal framework under which the entity was created, the form of ownership is determined once and for all time. To change it requires significant work in terms of communicating with stakeholders (members, governments, etc.) and acquiring their approval. Whatever structural constraints or disadvantages exist at the creation thus remain an integral part of the entity. Common in, for instance, New York City, Hamburg, and Berlin in Germany is a form of real estate ownership known as a cooperative (also co-operative or co-op, in German Wohnungsgenossenschaft, apartment co-operative), which relies heavily on internal rules of operation instead of the legal framework governing condominium associations. These “co-ops”, owning the building for the mutual benefit of its members, can ultimately perform most of the functions of a legally constituted condominium, i.e. restricting use appropriately and containing financial liabilities to within tolerable levels. To change their structure now that they are up and operating would require significant effort to achieve acceptance among members and various levels of government.

Sharing Use

The owning entity makes rules governing use of property; each property may comprise areas that are made available to any and every member of the group to use. When the group is the entire nation, the same principle is in effect whether the property is small (e.g., picnic rest stops along highways) or large, such as national parks, highways, ports, and publicly owned buildings. Smaller examples of shared use include common areas such as lobbies, entrance hallways and passages to adjacent buildings.

One disadvantage of communal ownership, known as the Tragedy of the Commons, occurs when unlimited, unrestricted, and unregulated access to a resource (e.g., pasture land) destroys the resource because of overexploitation. The benefits of exploitation accrue to individuals immediately, while the costs of policing or enforcing appropriate use and the losses due to overexploitation are distributed among many and are only visible to them gradually.

In an ideal communist nation, the means of production of goods would be owned communally by all people of that nation; the original thinkers did not specify rules and regulations.

Types Of Property

Personal Property

Personal property is a type of property. In common law systems, personal property may also be called chattels. It is distinguished from real property or real estate. In the civil law system, personal property is often called movable property or movables—any property that can be moved from one location to another. This term is in distinction with immovable property or immovables, such as land and buildings.

Personal property may be classified in a variety of ways, such as goods, money, negotiable instruments, securities, and intangible assets, including things in action.

Land Ownership

Real estate or immovable property, is a legal term (in some jurisdictions) that encompasses land along with anything permanently affixed to the land, such as buildings. Real estate (immovable property) is often considered synonymous with real property (also sometimes called realty), in contrast with personal property (also sometimes called chattel or personalty). However, for technical purposes, some people prefer to distinguish real estate, referring to the land and fixtures themselves, from real property, referring to ownership rights over real estate. The terms real estate and real property are used primarily in common law, while civil law jurisdictions refer instead to immovable property.

In law, the word real means relating to a thing (from Latin res, matter or thing), as distinguished from a person. Thus, the law broadly distinguishes between [real property] (land and anything affixed to it) and [personal property] (everything else, e.g., clothing, furniture, money). The conceptual difference was between immovable property, which would transfer title along with the land, and movable property, which a person would retain title to. The word is not derived from the notion of land having historically been “royal” property. The word royal—and its Spanish cognate, real—come from the unrelated Latin word rex, meaning king.

With the development of private property ownership, real estate has become a major area of business.

Ownership is passed when one party asks for another party’s property under all circumstances.

Corporations And Legal Entities

An individual or group of individuals can own corporations and other legal entities. A legal entity is a legal construct through which the law allows a group of natural persons to act as if they were individuals for certain purposes. Some companies and entities are owned privately by the individuals who registered them with the government, while others are owned publicly.

Some duly incorporated entities may not be owned by individuals nor by other entities; they exist without being owned once they are created. Not being owned, they cannot be bought and sold. Mutual life insurance companies, credit unions, and cooperatives are examples of this. No person can purchase the company, as their ownership is not legally available for sale, neither as shares nor as a whole.

A publicly listed company, known as a public company, is owned by any member of the public who wishes to purchase stock in that company rather than by a relatively few individuals. A company is owned by stockholders who are members of the general public and trade shares publicly, often through a listing on a stock exchange. Ownership is open to anyone who has the money and inclination to buy shares in the company. Owners, however, are generally classified into three groups. Those with 5% ownership of the stock usually hold significant sway over the company. Mutual funds and regular institutions can also own the stock; if they own enough, they are considered part of the 5% ownership category. They are usually differentiated from privately held companies, where the shares are held by a small group of individuals, often members of one or a small group of families or otherwise related individuals (or other companies). For a discussion of the British and Irish variants of this type of company, see public limited company.

Intellectual (IP) property refers to a legal entitlement that sometimes attaches to the expressed form of an idea or to some other intangible subject matter. This legal entitlement generally enables its holder to exercise exclusive rights of use in relation to the subject matter of the IP. The term intellectual property reflects the idea that this subject matter is the product of the mind or the intellect and that IP rights may be protected at law in the same way as any other form of property.

Intellectual property laws confer a bundle of exclusive rights in relation to the particular form or manner in which ideas or information are expressed or manifested and not in relation to the ideas or concepts themselves (see idea-expression divide). It is therefore important to note that the term “intellectual property” denotes the specific legal rights that authors, inventors, and other IP holders may hold and exercise, not the intellectual work itself.

Intellectual property laws are designed to protect different forms of intangible subject matter, although in some cases there is a degree of overlap.

• Copyright may subsist in creative and artistic works (e.g., books, movies, music, paintings, photographs, and software), giving the copyright holder the exclusive right to control reproduction or adaptation of such works for a certain period of time.
• A patent may be granted in relation to an invention that is new, useful, and not simply an obvious advancement over what existed when the application was filed. A patent gives the holder an exclusive right to commercially exploit the invention for a certain period of time (typically 20 years from the filing date of a patent application).
• A trademark is a distinctive sign that is used to distinguish the products or services of one business from those of another business.
• An industrial design right protects the form, appearance, style, or design of an industrial object (e.g., spare parts, furniture, or textiles).
• A trade secret (also known as “confidential information”) is an item of confidential information concerning the commercial practices or proprietary knowledge of a business.

Patents, trademarks, and designs fall into a particular subset of intellectual property known as industrial property.

Like other forms of property, intellectual property (or rather the exclusive rights that subsist in the IP) can be transferred (with or without consideration) or licenced to third parties. In some jurisdictions, it may also be possible to use intellectual property as security for a loan.

The basic public policy rationale for the protection of intellectual property is that IP laws facilitate and encourage disclosure of innovation into the public domain for the common good by granting authors and inventors exclusive rights to exploit their works and inventions for a limited period.

However, various schools of thought are critical of the very concept of intellectual property, and some characterise IP as intellectual protectionism. There is ongoing debate as to whether IP laws truly operate to confer the stated public benefits and whether the protection they are said to provide is appropriate in the context of innovation derived from such things as traditional knowledge and folklore and patents for software and business methods. Manifestations of this controversy can be seen in the way different jurisdictions decide whether to grant intellectual property protection in relation to subject matter of this kind and the North-South divide on issues of the role and scope of intellectual property laws.

Chattel Slavery

The living human body is, in most modern societies, considered something which cannot be the property of anyone but the person whose body it is. This is in contradistinction to chattel slavery. Chattel slavery is a type of slavery defined as the absolute legal ownership of a person or persons, including the legal right to buy and sell them. The slaves do not have the freedom to live life as they choose, but as they are instructed by their owners, and their rights may be either severely limited or non-existent. In most countries, chattel slaves were considered as movable property.

Slavery is currently illegal in every country around the world; however, up until the 19th century, slavery and ownership of people had existed in one form or another in nearly every society on earth. Notwithstanding the illegality according to codes of law, slavery still exists in various forms today.

Social Views of Ownership

In modern Western popular culture, some people (principally among the far political left) believe that exclusive ownership of property underlies much social injustice and facilitates tyranny and oppression on an individual and societal scale. Others (principally among the political right) consider the striving to achieve greater ownership of wealth as the driving factor behind human technological advancement and increasing standards of living.

Vedantic View

The Brahiminist theology called Vedanta believes that the root of ownership is the feeling that one is separate from the rest of the universe. Given this understanding, one disconnects oneself from the universe and then attempts to reconnect with objects through a relationship called ownership. Vedanta believes that the feeling of ownership is an illusion that remains with oneself as long as one considers oneself separate from the universe. When one understands the fundamental reality that there is only one entity called the Universe, there is no need for ownership and one gets rid of this illusion.

Ownership Issues In Politics

Ownership society is a political slogan used by United States President George W. Bush to promote a series of policies aimed at increasing the control of individual citizens over health care and social security payments and policies. Critics have claimed that the slogan hid an agenda that sought to implement tax cuts and curtail the government’s role in health care and retirement savings.

Controversies Over The Universality Of Ownership

Native America

A modern myth is that some societies, notably Native American ones, appeared to exist without the concept of personal ownership. Members of a society would feel free to take any objects they were in need of and expect them to be taken by others. Recently, however, researchers have started to question just how collectivist Native American societies really were. Citing earlier studies done by anthropologists and historians “who were able to interview tribal members who had lived in pre-reservation Indian society,” they argue that in fact, “most if not all North American indigenous peoples had a strong belief in individual property rights and ownership.” These researchers further assert that Native American collectivism is a myth originating from the first encounters with tribes who, because of their hunting orientation, “did not view land as an important asset” and, indeed, did not have a private property system with regards to land. The collectivist myth was initially propagated by reporters and politicians who never actually had contact with Native Americans and then made into a reality by the collectivist property rights system forced on Indians by the 1934 Indian Reorganisation Act.

Disclaimer

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 9th April, 2024.