The property-information interface is perhaps the most crucial and undertheorized dimension of property law. Information about property can make or break property rights. Information about assets and property rights can dramatically enhance the value of ownership. Conversely, a dearth of information can significantly reduce the benefits associated with ownership. It is surprising, therefore, that contemporary property theorists do not engage in sustained analysis of the property-information interface and, in particular, of registries - the repositories of information about property.
Once, things were different. In the past, discussions of registries used to be a core topic in property classes and a focal point for property scholarship. In recent decades, registries have lost their luster for scholars, and their discussion has been relegated to the innermost pages of property textbooks. The reason for this is that registries are widely considered the domain of legal practitioners, not of theorists.
This Essay argues that nothing could be further from the truth. Registries and the information they contain are, in fact, the formative forces that shape the world of property and no theoretical account of the institution of property can be complete without them. In this Essay, we offer the first in-depth legal-theoretical analysis of the intricate relationship among title information, rights, and assets in the domain of property, as mediated by registries.
Our analysis gives rise to several new insights. First, we highlight the triple role that registries perform for property owners. They simultaneously perform a facilitative role by strea,mlining transactions between willing sellers and buyers, an obstructive role by hindering nonconsensual encroachments and takings of assets, and an enabling role by allowing owners to locate and use their own lost assets. Second, going against the accepted lore, we posit that perfect registries, even if they were possible, are socially undesirable on account of what we call "the information-asset paradox." Perfect information about assets and legal rights may result in the destruction, dismembering, and mutilation of the asset by nonconsensual takers in an attempt to make the asset unrecognizable, as exemplified by millions of stolen cars and jewelry, or, conversely, in attempts of "identity theft" that confer thieves with the benefit of the registered rights. Third, we argue that the registries are socially desirable when it is impossible or difficult to alter the defining characteristic of the underlying asset. This insight explains why there are registries for nontransformable assets, such as land and unique artworks, but not for transformable assets that include mass production goods and many natural resources. Finally, we address the question of which rights should be covered by registries and how much legal deference should be given to them.
The framework we provide is significant not only for theoretical reasons but also for practical ones. For example, it can inform policymakers in deciding whether to establish new registries for smartphones and personal computers in order to combat theft of such devices. Similarly, our analysis sounds a cautionary note about the ability of registries of copyrighted works to curb unlawful appropriation and distribution. Per our analysis, such assets are infinitely malleable and, worse yet, information concerning ownership in such works can be easily effaced or altered in the digital age. We also discuss how considerations of costs and privacy affect the comprehensiveness and integrity of registries. At the end of the day, our analysis exposes the promise and the limitations of registries, as well as the ways in which they can be improved by the state.
The authors argue
Very few concepts affect our property system as profoundly as information about property rights.1 In this Essay, we argue that extant theorizing on the property-information interface, while illuminating and important, misses essential aspects of the intricate and dynamic relationship between property and information. The Essay seeks to address this omission and offer a deeper understanding of how information shapes rights and assets in the property domain.
To date, legal scholarship on the property-information interface has primarily focused on three questions. First, most theorists who have investigated the interface between information and property rights have focused their attention on property rights in information itself. This is best evidenced by the vast and ever-growing literature on intellectual property (IP) law. Secondarily, in the context of standard property law, scholars-most notably Thomas Merrill and Henry Smith, as well as Clarisa Long - have examined how the internal design of property doctrines and principles convey information to the public at large. Finally, and relatedly, some scholars have concentrated on the way various doctrines, such as those related to adverse possession, encourage or demand that claimants reveal information.
None of these bodies of literature address the special role of information about title in property. In this Essay, we analyze the value of this information and the means of efficiently producing and disseminating it. Our analysis is based on the simple idea that the value of title to property rights vitally depends on the degree to which it is known by people in the world, including the property owner.
Knowledge about title to property rights is crucial to enjoying their value. If one "owned" an asset, but nobody knew about the ownership, its value would be deeply compromised. Buyers would not readily appear, as they would not have any information to confirm the title of the seller. Third parties might use the asset and even destroy it, believing in good faith that it belonged to no one. Owners would sharply constrain uses of their asset in order to avoid actions that might be interpreted as compromising their title, and they would expend greater resources on protecting their ownership. An owner without knowledge of title would fail to exploit the value of the asset. In short, the value of property rights is directly affected by the quality of information about title to those rights.
The world of property provides many examples of the value of information about property title. Consider, for instance, the sad case of insurance monies and bank assets belonging to victims of the Holocaust. While the Nazis looted much of the property of their victims, many assets, such as bank accounts in Switzerland, remained out of Nazi Germany's reach. By murdering the owners of the accounts together with most of their families, the Nazis left the assets - worth hundreds of billions of dollars - in the hands of Swiss banks, while the true owners of the assets (the heirs of those murdered by the Nazis) had no knowledge of their property rights. Knowledge of title to the assets in this case was worth hundreds of billions of dollars. A more prosaic set of examples can be found in the television program "Heir Hunters," broadcast by the British network BBC, focusing on probate detectives and their attempts to locate owners who are unaware that they have inherited assets and money.
Just as the lack of good title information about property can hinder owners' use and enjoyment, the opposite is also true: Full information about ownership in assets can help increase value for owners by discouraging nonconsensual takings of the assets. Indeed, this is the reason for the rise of registries for rights in movable goods, such as cars and boats. To give a recent example, many universities have established title registries in bicycles to battle the epidemic of bicycle theft on campuses. This policy is predicated on the belief that information about assets creates as important a deterrent against theft as locks, chains, and security cameras.
This Essay constitutes the first attempt to illuminate the symbiotic relationships between information and property. It seeks to make three contributions to our understanding of how information and property interact, each of which targets a separate dimension of the interplay between the two. First, we analyze the "obstructive" and "enabling" functions of information about title to property. Extant theorizing has focused primarily on what we call the "facilitating function" of information about property. The facilitating function refers to the role of information in streamlining consensual transactions between rights holders and legitimate purchasers by lowering transaction costs. Following observations first made by Steven Shavell, we demonstrate that information about property rights performs several key functions (and not one as was previously emphasized) in our property system: a facilitating function, an obstructive function, and an enabling function. The obstructive function refers to the ability of information to block, or at least hinder, nonconsensual appropriations of property by illicit parties, such as thieves and defrauders. The enabling function, by contrast, refers to the way title information in the hands of the owners is necessary for them to enjoy the benefits of property ownership. Interestingly, we show that the three functions can be contradictory or complementary, depending on the informational environment.
Second and equally importantly, we unveil the potential tension between title information and the safety of an asset, which we dub "the information-asset paradox." At first blush, it seems clear that society would be best off with an informational regime that offers perfect information about title to property rights in assets. Upon closer examination it becomes clear that is not the case. As we show, in a world with perfect information about rights to assets, nonconsensual takers would resort to altering physically or even destroying others' assets. Such activities may include disassembling automobiles, machinery, and electronic goods, and transforming jewelry into scrap metals. Alternatively, where property information is collected in a particular location as part of a centralized registry, but the information is vulnerable, nonconsensual takers may attempt to take control of the information and thereby make it easier for the property to fall into unsavory hands. The crime of "identity theft" is based on just such a practice. By appropriating the owner's "identity," the thief is able to take possession of all the assets registered in the owner's name.
All such activities are value reducing not only for the owner but also for society as a whole. Counterintuitively, society is often better off when the encroacher misappropriates the owner's asset instead of destroying it. Perfect information about assets will, therefore, not always be in society's best interest.
Third, we highlight the dynamic nature of property and information about property. Assets, property rights, and title information can be changed, and there are three different categories of actors who can bring about these changes. Property owners (and their potential consensual transferees), nonconsensual takers, and the government all constantly struggle over the information-asset interplay. Each group's actions can dramatically affect the informational environment that surrounds property rights. Adopting a dynamic perspective, we identify the previously hidden strategies that animate actions in the world of property in response to the informational background. Specifically, we show that when information about ownership may be easily manipulated, registries produce little value for owners. This can best be seen in the copyright realm. In the digital world, information about rights may be easily effaced, altered, and manipulated. As a result, copyright owners face a near impossible task controlling their intellectual assets online.
Just as importantly, we show that the incentives of the actors are not uniform; they may change over time. To point to just one outstanding example, consider the incentives of an owner who finds herself in debt and possibly subject to enforcement actions by creditors.13 Whereas the owner might earlier have sought good title information in order to protect her ownership interests in assets, the owner might now seek to hide assets from creditors and might therefore seek to obscure or destroy title information. As owners move closer to insolvency, or as they are more likely to lose their assets to creditors, their incentives move closer to those of nonconsensual takers, while creditors' incentives move closer to those of solvent owners. An important policy implication of our analysis that departs from prior theorizing is that, despite the high value of registries, for many categories of assets, it does not make sense to establish registries. We demonstrate that the key to the successful operation of registries lies not in the information per se, but rather in the fit between the information and the asset as it exists in the real world. In general, registries are most valuable when there is confidence that the asset as it exists in the real world will continue to match the description in the registry. This is because assets may be physically vulnerable even when ownership information is protected in registries. The easier it is to undermine the fit between asset and information by changing the information or the asset, the less valuable the registry will be. For example, when it is possible to reconfigure the asset without significant loss in value, as in the case with mass-produced jewelry, a title registry will be of only limited value to owners.
Additionally, it will rarely be socially desirable to make the information in registries comprehensive. This is because the value of accurate information in facilitating transactions and obstructing involuntary takings must be balanced against the costs of obtaining and maintaining accurate information. The state must also act cautiously before investing registries with the final say in establishing title. Where the information in registries establishes ownership despite any potential flaws in the title, the registries potentially make it easier for involuntary takers to "launder" their takings.
Structurally, the Essay proceeds in three parts. In Part I, we explore extant theorizing of the property-information interface. In Part II, we offer our account of the relationship between property and information by engaging in a dynamic analysis of the two institutions that pays heed to the intricate subtleties generated by the interplay between them. In Part III, we discuss the informational policies lawmakers should adopt in order to improve the workings of our property system. A short conclusion ensues.
