Is There Such A Thing As Conditional Property?

 Posted by on 9 August 2008 at 11:15 am  Law
Aug 092008

The topic of “conditional property” came up briefly in the comments section for the “Stealing Jesus” post, and I think it’s an interesting one. Although I’m not a lawyer, I’d like to offer a few thoughts and I gladly welcome further input from those with more legal knowledge.

Leaving aside the specifics in the original post on the Communion Wafer, here is the interesting broader question:

Can one sell or give property to another person, yet have the new owner bound by some sorts of conditions that restrict his or her use of that property?

Under ordinary circumstances, I’d say the answer is “no”. If I sell my old laptop computer to someone, then he becomes the new owner and he can do with it what he wants (provided he doesn’t violate anyone else’s rights). So he can use it as a computer, he can sell it to his cousin, he can use it as a doorstop, can use it for target practice, etc.

Of course he couldn’t use it as a club to smack his neighbor over the head, because that would be violating someone else’s rights. But apart from that, the laptop is his to do with as he pleases. And note that this restriction applies to any of his rightfully-owned property. He couldn’t use his legitimately-owned baseball bat or crowbar to beat his neighbor over the head any more than he could use the laptop.

This common sense understanding that property ownership is not conditional is mentioned briefly in a passage in Atlas Shrugged, in the scene where Ragnar Danneskjold hands to Rearden a bar of gold (emphasis mine):

It is not a gift, Mr. Rearden. It is your own money. But I have one favor to ask of you. It is a request, not a condition, because there can be no such thing as conditional property. The gold is yours, so you are free to use it as you please. But I risked my life to bring it to you tonight, so I am asking, as a favor, that you save it for the future or spend it on yourself. On nothing but your own comfort and pleasure.

(From Part Two, Chapter VII, “The Moratorium On Brains”)

In this context, where Rearden is taking possession of gold that is rightfully his, then I completely agree — Ragnar does not have the right to impose any sorts of conditions on Rearden’s use of his own property.

However, there are other contexts where I think there can be restrictions on one’s use of property that one owns. In particular, I can think of two ways in which this can happen.

The first is when the original owner sells you the property minus certain specific rights. For instance, a property developer might sell me a plot of land on which I can live and build my house, but he might retain to himself (perhaps to sell to someone else) the mineral rights for that plot. In that case, I can’t go digging for gold on the property, since I never acquired those rights in the original purchase, even though I can still plant apple trees in my backyard and otherwise exercise all the other rights associated with that land.

I still own the land and the rights to build a house or plant apple trees. But I don’t own the mineral rights. I don’t consider this unusual or problematic. It’s no different than if I purchased the land outright (including the mineral rights), but then subsequently sold those mineral rights to someone else and kept the rest for myself.

If there are certain rights associated with a piece of property that can be separable in this fashion, this situation will arise. This occurs commonly with intellectual property. For instance, an author might retain the rights to the book form of his or her novel, but sell the movie rights to someone else.

A second form of something that seems a lot like “conditional property” is when money or property is donated to another organization with specific provisions and requirements on how the property must be used.

For instance, suppose I own a valuable painting by Rembrandt, and I would like to see it go to a new owner that shares my values and shows proper respect for the work. In that case, I might wish to donate it to my local art museum on the condition that they agree to keep it on public display 6 months out of the year for other art lovers to enjoy, and they also agree to keep it in the usual secure climate-controlled conditions to preserve its value. In particular, I don’t want to see it in the hands of some wealthy slob who will abuse this masterpiece by using it as giant beer coaster in his living room table.

Assuming that I and the art museum draw up an appropriate contract with clear unambiguous terms specifying their rights and obligations (including clauses to ensure proper monitoring and enforcement), then the museum would own the painting, but they should be bound by these conditions. So in this sense, it acts very much like what some people might call “conditional property”, but as a matter of explicit contract.

I’m not a lawyer, so I don’t know how best to structure a contract that would take care of cases where the museum fails to live up to its promise. In that case, should the painting revert back to the me, the original owner? Or to a second-choice owner or some sort of legal trust? I’m not sure. But although I don’t know how best to implement this principle, I believe the underlying principle is valid.

Note that these sorts of situations are also relatively common. A wealthy industrialist might wish to donate $1 million dollars to his alma mater in order to fund a full-tuition scholarship for the top undergraduate chemistry majors in each year. If the university took that money, they should be bound by that agreement and not spend that money on, say, a new gymnasium for the basketball team. So even though the university owns the money, they again have restrictions on what they can rightfully do with that money.

Summary: In its simple form, barring any explicit agreement otherwise, I believe there is no such thing as “conditional property”.

But I also believe that it is possible to acquire property as part of a voluntary contractual agreement where the terms include legally binding restrictions on what one can or cannot do with one’s newly-acquired property. (Whether the proper term for this is “conditional property” or whether there is a more appropriate term for this concept is a separate question.)

Postscript: There are all sorts of interesting secondary issues that one could explore — for instance, what sorts of contracts should be enforced, what about mind-number 100-page end user agreements where there may not have been a true “meeting of the minds”, etc. I’ll leave those subtleties to those with a better understanding of the philosophy of law than myself.

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