What it means
Property law splits into the physical and the conceptual. Land and equipment are tangible, and the rights over them are corporeal; incorporeal rights attach to things you cannot touch but can absolutely own and enforce.
The classic division has two branches. Jura in re aliena covers rights over someone else's property, like leases, easements, rights-of-way and mortgages.
Jura in re propria covers ownership of intangibles themselves, like copyrights, patents and trademarks. A book shows both layers at once.
The buyer owns the physical copy outright, but the author keeps the incorporeal right to control reproduction of the work inside it. Intangibles themselves come in two flavors.
Pure intangibles, such as debts and intellectual property, exist without any document; documentary intangibles, like promissory notes, are tied to paper, though electronic records have blurred the line. These rights are fully real in law.
They can be sold, licensed, inherited, given away and defended in court, and they often exceed the value of the physical things around them. Finance runs on them.
A mortgage is an incorporeal claim over a building, a bond is a documented claim to payment, and much of a modern company's value sits in incorporeal assets like brands and patents. Transfer follows the right, not the object.
Selling a copyrighted work's rights moves control of reproduction, while selling a printed copy moves only the paper. For anyone buying property or a business, the check is two-sided: what tangible assets come with the deal, and what incorporeal rights, or encumbrances like others' easements, come attached.
In practice
Real-world examples.
Example
A landowner grants a neighbour a right-of-way across her field. The neighbour holds an incorporeal right over her land while she keeps ownership of every blade of grass. The right-of-way is recorded so future buyers of either property know about it.
Example
An author sells a thousand printed novels. Each buyer owns a physical book; the author keeps the incorporeal copyright controlling any reproduction. A reader who photocopies the whole book would be infringing that right.
Example
A company buying a rival checks the trademark registrations. The brand, an incorporeal asset, may be worth more than the factories in the deal. The buyer insists that ownership of the registrations is formally assigned at closing.
Formula
Calculation
Incorporeal rights have no single formula, but their weight shows up in valuation. A simplified business value equals tangible assets plus intangible assets.
Suppose a company holds $2,000,000 of equipment and property, and its trademarks and patents are valued at $3,000,000. Intangibles then make up 60% of the $5,000,000 total ($3,000,000 / $5,000,000).
That ratio drives real decisions. A lender weighing collateral, or a buyer pricing an acquisition, who counts only the $2,000,000 of physical assets would miss most of what the business is worth, and most of what could be lost if the rights lapsed.
Rights held by others reduce value in the same way. If a plot would be worth $400,000 unencumbered, and a valuer judges that a neighbour's right-of-way reduces its value by 10%, the plot is worth $360,000 ($400,000 x 90%).Case study
Seen in the real world.
The following is an illustrative and fictional case. Solana Reyes bought a small coffee roastery, charmed by its cafe, its roaster and its loyal morning crowd. Her lawyer's review found the real assets were invisible. The brand name was trademarked, the signature blend was under contract with two cafes, and the premises operated under a ten-year lease. It also found a problem.
An old easement gave the neighbouring building access across the roastery's courtyard, right where Solana planned outdoor seating. Because easements are incorporeal rights that travel with the land, she could not simply ignore it. The purchase price was renegotiated to reflect the constrained courtyard, and the trademark and contracts were formally assigned in the sale. Two years later the brand accounts for most of the business value. Solana tells new buyers the same thing her lawyer told her: walk the property, but price the rights.
Watch out
Common mistakes.
- Valuing only what you can touch. In many modern businesses the incorporeal assets, brands, patents and contracts, carry most of the value.
- Ignoring encumbrances. Easements, leases and similar rights of others attach to property and survive a sale.
- Assuming buying the object buys the rights. Purchasing a book, painting or copy of software does not transfer the underlying copyright.
Questions
People also ask.
What are the two types of incorporeal rights?
Rights over another's property (jura in re aliena, like easements and leases) and ownership of intangible property itself (jura in re propria, like copyrights and trademarks).
Can incorporeal rights be sold or inherited?
Yes. They transfer like other property, and the rights move with the intangible asset rather than with any physical object.
What are common examples?
Copyrights, patents, trademarks, easements, rights-of-way, leases, mortgages, servitudes and ordinary debts are the everyday examples.
From the founder's library
Take it further with the book.
Build your financial confidence beyond this definition. Shihan's full-length guide, Accounting Fundamentals, takes the same plain-English approach and turns it into a complete, practical playbook for non-finance managers, business owners and students - with chapter-end quiz answers and presentation slides included.
25% off with code MMHQ25, applied at checkout. Priced in USD - checkout may show the equivalent in your local currency.
View the book and save 25%