What Is a Proprietary Interest? An Explainer

Have you ever wondered about the nature of property? In reality, there are many things that form the basis for the embodiment of property. As time goes by and our world changes, conceptualisations of what constitutes a proprietary interest have developed alongside innovation, growth and societal change. Property manifests, changes, transfers, and sometimes ceases to exist all together. All the while you form ties and relationships to it.

These interactions with property are known as interests. Put simply, a proprietary interest can be profits, rights, ownership shares or advantages held by the full or partial owner of a tangible or intangible asset or property. In law, ‘property’ describes types of rights, commonly known as a ‘bundle of rights’. The Australian Law Reform Commission website lists information on these rights.

A proprietary interest might not just be the relationship you have to the house you reside in, the clothes on your back, or the worldly possessions you have amassed, but also the ideas emanating from your mind. Therefore, it is understandable that what may constitute a property right is of ongoing philosophical discussion. The concept of property can be an elusive one. Property was once a tangible item existing separate to, but protected by the law. Conversely, it may now exist because of the law itself. One clear historical example is the recognition of copyright from the 18th century. This became a new form of intangible personal property created by statute. Likewise, trademarks and registered designs have a similar recognition, as statutory creations.

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Types of proprietary interest

You can think of proprietary interests in the following way:

1. Real Property

This involves interests in land, other than through a lease:
(a) Corporeal hereditaments – land that may be inherited
(b) Incorporeal hereditaments – other property interests that may be inherited

2. Personal Property

This involves all interests in property other than land:
(a) Chattel real: lease of land
(b) Pure personalty: interests other than land

  • Chose in possession: Things like your car or clothes.
  • Chose in action: The right to enforce possession of something through legal action, like  for example intellectual property and copyright protection or to sue over debt.

A proprietary interest refers to the legally enforceable right to possess or use property in accordance with an official recognition of that right. An example might be the registered title deed to your land. Sometimes, these rights might not be recognised by law, yet you may feel as though they ought to be. These are known as equitable interests. In equity, a judge may make a decision based on what is fair and just, not so much what is strictly legal. Perhaps the most common example of an equitable interest is the interest of a beneficiary under a trust. Under a trust, the trustee has a legal interest in the trust property and all of the rights and powers that follow from that legal interest. Furthermore, the beneficiaries under the trust have an equitable interest in the trust property.

There are a vast number of ways in which proprietary interests may arise. It is very important that you know your rights in respect of property or what proprietary interests you may have. If you are unsure of your rights in respect of property or if you have questions, a property lawyer can advise you.

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