ABSTRACT
This chapter discusses the rules for protecting the ownership of land. The goal of an optimal system of property rights is to minimize the risk of the nonconsensual transfers. The first point to make about such a system is that it is generally not optimal to completely eliminate the risk of error. Regarding land ownership, a claimant may emerge seeking restoration of his or her legitimate title. The two types of title systems have historically been used for land transfer: the recording system; and land registration. The economic criterion for assessing the relative efficiency of the two systems is to ask which maximizes the value of land. This amounts to asking who values the land more, the current possessor or the claimant. From the possessor's perspective, the value of the land is the minimum amount of wealth he or she would be willing to accept in return for it in a consensual transaction, called the possessor's reservation price.
