Title in the Shadow of Possession
Law and Economics of Possession (edited by Yun-chien Chang), Cambridge University Press, 2014, Forthcoming
18 Pages Posted: 9 Aug 2014 Last revised: 10 Oct 2014
Date Written: August 6, 2014
This essay reexamines the normative impulse for property law’s use of possession as a key to acquiring greater property rights. In his classic article on the question of why property doctrines are so deferential to first possessors (Possession as the Root of Title), Richard Epstein posited that first possession is an essential rule in property law primarily because it has long been used, and it provides for rapid dissemination of private property rights. This Essay argues that in some cases property law recognizes first possession as a source of title for an entirely different reason: It is essential to recognize rights de jure that already exist de facto, lest the legal system of property lose its salience. Simply put, if the law did not recognize legal rights as a result of possession, many first possessors would find it advantageous to eschew legal rights and protect their possessory rights extra-legally. Indeed, in cases where the law denies property rights notwithstanding possession, robust extra-legal asset markets have developed, undermining the goals that led lawmakers to split property rights from possession. Examples of this phenomenon can be found, for instance, in the markets for illegal antiquities and natural resources. However, first possession is often a problematic way to allocate title; salvage rules can often provide an alternative that both rewards de facto possession and reduces wasteful overexploitation.
Keywords: possession, property, black markets, first possession, title, legal systems, salvage
JEL Classification: K11, K42, P48
Suggested Citation: Suggested Citation