III. COMMON LAW PROPERTY
Although the common law shares with the civil law the basic exclusion-governance architecture, the common law employs a style that results in less of a focus on the "things" of property. The common law of property is not usually thought of as a law of things, and the bundle of rights picture has only brought things further out of the focus for property theorists. Much of the de-emphasis on things can be laid at the door of the estate system. One can say that whereas the land law in civil law systems is one of ownership, it is one of estate in the common law countries. (106)
A. Focus on the Estate System to the Exclusion of Other Lesser Property Interests
What is an estate? It is a piece of ownership. Originally, in the feudal system that William the Conqueror introduced into England after 1066 and Henry II reformed greatly, the King himself was the only full owner. (107) Out of full ownership were carved lesser legal interests: in return for rights to land, the tenant ("holder" of the interest) would be obligated to provide service to the lord. These services started out as military but were gradually supplanted by monetary obligations. (108) A tenant could turn around and subinfeudate all the way down to land holding peasants. The feudal obligations were abolished in 1660 with the Statute of Tenures, (109) bur the system of dividing property rights in the United States tracks the feudal system, with modifications. (The 1925 land reform legislation in England largely did away with the system of legal estates. (110)) Now the system of estates basically measures property interests by time (which includes conditions and limitations that can cause an interest to end).
These days, interests are rarely carved up using the estate system directly. Instead, other than leases, interests less than fee simple absolute or full ownership are created in trust, a device tracing back to the activities of the courts of equity and the desire of feudal tenants to avoid certain monetary obligations. The conventional view of the trust is that it splits ownership into legal and equitable sides. (111) The trustee holds the legal title and therefore can deal with the property and, if there are no instructions to the contrary, can alienate the trust corpus, managing the corpus and its substitutes over time in a fashion consistent with fiduciary duties. The beneficiary holds equitable title, meaning that the fiduciary duties are owed to the beneficiary and that the beneficiary has the right to the proceeds of the corpus according to the terms of the trust when it was set up by the settlor. Also, if the trustee wrongfully alienates trust assets, the beneficiary can follow them into the hands of purchasers who had notice or did not give value.
The flip side of the great attention to divisions by time and the extensive use of the trust is that the common law system does not regard as central to property a variety of other types of division. Security interests are a type of conditional property right that tends to be covered more in commercial law than in property courses. Even the status of leases as both contract and property has been cloaked in some confusion: leases give possessory rights and are somewhat standardized as to subtypes, but they are otherwise customizable. (112) And crucially while they "run" to successor landlords, they are avoidable in bankruptcy like contract rights. Likewise, bailments have not received much attention, despite being widespread, as in coat checks, parking, and the like. But again, bailments sit uncomfortably at the intersection of the in rem and the in personam. (113)
B. Transaction Cost Explanations
Our transaction cost theory of the common law has a practical and theoretical aspect. The common law of property is not as different from civil law as conventional wisdom would have it. In both systems the broad contours of the system and their basic architectural features are dictated by the overwhelming transaction cost savings of a property system featuring the structured relations and essential features discussed in Part II. …