Common law and civil law property appear to be quite different, with the former emphasizing pieces of ownership called estates and the latter focusing on holistic ownership. And yet the two systems are remarkably similar in their broad outlines for functional reasons. This Article offers a transaction cost explanation for the practical similarity and the differing styles of delineating property and ownership in the two systems. As opposed to the "complete" property system that could obtain in the world of zero transaction costs, actual property systems employ structures characterized by shortcuts in order to achieve property's substantive goals of protecting interests in use. Overlooking this structure leads to the bundle of rights picture of property, even though property is a structured bundle of relationships. The architecture of property consists in part of four basic relationships, and a number of characteristic features of property automatically arise out of this architecture, including exclusion rights, in rem status, and running to successors. Where civil law and common law differ is in their style of delineation, which reflects the path dependence and network effects from a common mode of legal communication and initial investment in feudal fragmentation in the common law and Roman-inspired holistic dominion in civil law. This transaction cost explanation for the functional similarities but different delineation process in the two systems promises to put the comparative law of property on a sounder descriptive footing.
Fragmentation is a theme in property theory, but the theory of property itself is deeply fragmented. At first blush, a major fault line in property lies between common and civil law. As is well known, civil law systems tracing back to Roman law place heavy emphasis on ownership (dominion) and are highly grudging in giving in rem effect to lesser interests like leaseholds. By contrast, the common law emphasizes the estate system and its many methods of carving up property, from life estates to defeasible fees and various future interests. And in the common law tradition in a broader sense, the equity courts developed the trust, which is largely unknown in traditional civil law. Sometimes this conventional wisdom about the gulf between common and civil law of property goes so far as to claim that there is no such thing as ownership in the common law. (1) Feudalism lives!
This stark cleavage between common and civil law has taken on a new life with the so-called "legal origins" literature, (2) which has influenced the World Bank's pronouncements on development. (3) Supposedly, having a common law rather than a civil law system correlates with economic growth. Different versions of the literature posit different causal mechanisms as lying behind the correlations (to the extent that they have persisted in the face of continued testing and methodological questioning). (4) Despite the favorable attention for their tradition, common law legal theorists have been quite unreceptive to this branch of economic literature, partly because they doubt that the kinds of doctrines that distinguish civil from common law could possibly have real world effects, much less effects on the scale that the legal origins literature purports to find. (5)
How, if at all, is the distinction between civil and common law property important? Life goes on in the two systems in strikingly similar fashion. Putting aside for the moment special features like the trust, ownership under the civil law and fee simple ownership of land in the common law system (and for the most part the respective notions of full ownership of personal property) coincide to a remarkable extent in their basic features: a possessory right to prevent invasions subject to qualifications such as for necessity, and supplemented by duties (for example, for lateral support or to shovel sidewalks). Lesser interests, …