Stewart Sterk, ‘Strict liability and negligence in property theory’

Introduction:
… The prevailing conception of property is one of clear boundaries, easily and inexpensively ascertainable by owners and potential users. Within that conception, a strict liability regime makes considerable sense: it delegates control over resource use to owners, reducing the need for courts and potential resource users to educate themselves about the value of competing resources. At the same time, strict liability imposes no hardship on encroachers or infringers. An encroacher or infringer only uses a neighbor’s rights because he (unlike the paradigmatic tortfeasor) derives economic benefit from those rights. The gains from use of the owner’s rights provide a fund from which the encroacher can compensate the owner for his losses. If property boundaries were always clear, however, both strict liability and negligence regimes would generate identical outcomes. If a potential resource user could costlessly determine which rights he needed and who owned those rights, the user would act negligently – if not intentionally – whenever he encroached on an owner’s rights.

But in fact, it is often costly to determine the title to – and the scope of – property rights. When a potential user makes reasonable, but ultimately unsuccessful, efforts to ascertain property boundaries, a strict liability regime requires the user to compensate the owner for any losses. This compensation must occur even when the user does not derive benefits that correspond to the owner’s loss. For instance, if I pay market value for a property interest with the mistaken belief that the seller had good title, requiring me to return the property (or its value) to the true owner leaves me with a substantial out-of-pocket loss. In addition, in the all-too-frequent case in which the seller has died or become insolvent, I must bear the entirety of that loss.

This Article argues that, in cases where ascertaining the scope of boundaries is costly, property law should, and sometimes does, make use of negligence principles. Current doctrine does not directly incorporate the law of negligence into property law. Instead, property law has developed surrogates for negligence-based liability rules. These surrogate rules protect the interests of a usurper who took reasonable care before investing in a property interest he did not own – the same interests a negligence rule would protect. Thus, although explicit discussions of negligence rarely find their way into property law opinions, issues of fault do play a significant role in property cases and perhaps should play a bigger, more explicit role in the future.

(Lexis)

Stewart E Sterk, Symposium: New Dimensions in Property Theory: STRICT LIABILITY AND NEGLIGENCE IN PROPERTY THEORY. 160 University of Pennsylvania Law Review 2129. June, 2012.

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