Reconceptualizing Trespass

40 Pages Posted: 21 Jan 2009 Last revised: 10 Mar 2010

Gideon Parchomovsky

University of Pennsylvania Law School; Bar Ilan University - Faculty of Law

Alex Stein

Brooklyn Law School

Abstract

This Essay addresses an anomaly in trespass law. Trespass law is generally understood as the paradigmatic example of property-rule protection: an owner can obtain an injunction against the trespasser and have him removed from her land. The property-rule protection enjoyed by the owner protects her right to exclude others and to set the price for the use of her property. However, the property-rule protection only exists ex ante: it avails only against imminent or ongoing trespasses. Ex post, after a trespass ends, the owner can only recover compensation measured by the market value of the unauthorized use, i.e., the going rent. This liability-rule compensation dilutes the ex ante property-rule protection of ownership. Effectively, it grants trespassers a call option on others' property, creating a mismatch between rights and remedies.

To remedy this mismatch, we introduce the concept of propertized compensation - a damage measure that sets compensation equal to the owner's pre-trespass asking price. We contend that propertized compensation should become the primary remedial option in trespass cases. The use of this measure will reinstate the owner's position as a price maker, entitling her to recover the amount that she would have agreed to accept ex ante in a voluntary exchange. We further argue that owners who cannot produce evidence regarding their pre-trespass asking price (as well as owners who prefer not to seek propertized compensation) should be entitled to seek disgorgement of the trespasser's profits. Finally, we claim, contra the extant regime, that market-value compensation should only be used in the exceptional cases of trespass by necessity, media trespass, and good faith encroachments. In all other cases, it should only be awarded if the owners specifically ask for it.

Keywords: Property law, property-rule protection, ongoing trespasses, imminent trespassing, disgorgement of profits, market-value compensation, trespass by necessity, media trespass, good faith encroachment, rights and remedies, evidence, evidence law, cheap talk, credible signaling, propertized compensation

JEL Classification: K11, K42

Suggested Citation

Parchomovsky, Gideon and Stein, Alex, Reconceptualizing Trespass. Northwestern University Law Review, Vol. 103, Pg. 1823, 2009; U of Penn, Inst for Law & Econ Research Paper No. 09-02. Available at SSRN: https://ssrn.com/abstract=1330528

Gideon Parchomovsky (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-1603 (Phone)

Bar Ilan University - Faculty of Law ( email )

Ramat Gan 52900
Israel
972-2-5317078 (Phone)

Alex Stein

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States
718-780-0615 (Phone)

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