Building Encroachments

41 Pages Posted: 4 Dec 2008 Last revised: 21 May 2011

Date Written: December 2, 2008


Property law usually addresses encroachments with ejectment. Building encroachments differ, however, as restoring a landowner’s property claims implies the reversal of often large costs sustained by the builder. The authority thus confronts the following dilemma: either it stands by the landowner, thereby facing the social costs of undoing significant investments and possibly supporting an opportunistic landowner that tries to hold up the builder, or it defends the investment of the builder thereby endorsing a kind of private eminent domain. In addressing building encroachments, national property laws have deployed different remedies ranging from a property rule in favor of the landowner to a property rule in favor of the builder with a variety of liability rules, often hybridized with property rules, in between. This paper models the builder-owner conflict after the theory of optional law (Ayres, 2005); it frames different national solutions into a common analytical setting; and it evaluates the different laws in their relative allocative and distributive outcomes and their capacity to constrain opportunistic behavior.

Keywords: building encroachments, adverse possession, comparative law and economics, property, land law, optional law, property rules, liability rules, opportunism

JEL Classification: K11

Suggested Citation

Rizzolli, Matteo, Building Encroachments (December 2, 2008). Available at SSRN: or

Matteo Rizzolli (Contact Author)

LUMSA University ( email )

Via Pompeo Magno
Roma, Rome 00191

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