This article develops and tests a theory of the institutions that make property rights viable, ensuring their enforcement, mobilizing the collateral value of assets and promoting growth. In contrast to contractual rights, property rights are enforced in rem, being affected only with the consent of the right holder. This ensures enforcement but is costly when multiple, potentially colliding rights are held in the same asset. Different institutions reduce the cost of gathering consents to overcome this trade-off of enforcement benefits for consent costs: recording of deeds with title insurance, registration of rights and even a regimen of purely private transactions. All three provide functionally similar services, but their relative performance varies with the number of transactions, the risk of political opportunism and regulatory consistency. The analysis also shows the rationality of allowing competition in the preparation and support of private contracts while requiring territorial monopoly in recording and registration activities, this to ensure independence and protect third parties.
Transaction costs, property rights, real estate, land titles, recording, registration
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