I examine third-world states' extension of rational-legal domination into urban squatter settlements by granting individuals the legal ownership of residential property that they acquired extralegally. Known as "regularization," this is a mode of state-building that recognizes the residential rights of former-squatters, making them "urban citizens." Comparing the cases of Lima, Peru in the 1990s and Caracas, Venezuela in the 2000s, I focus on three features of regularization. First, if squatting is a de facto rejection of the rule of law vis-à-vis property, then legalization of a squatter's land ratifies her offense against the institution of property. So regularization is paradoxical: a state's "success" at recognizing a property freeholder is simultaneously its "failure" to uphold the rule of law. I examine how the neoliberal Peruvian and the neosocialist Venezuelan governments each rationalized their regularization initiatives discursively. Second, given the large size of squatter populations, states must prioritize certain areas and certain people. I identify which parts of their capital cities these two states targeted, and their residents' salient characteristics. Third, when a state regularizes squatters, it champions its own definition of legal rights over others. This may impact political and/or legal practices among slum dwellers. I examine whether it leads them to adopt or resist rational-legal behaviors, and/or to adopt or resist the government's reasons for granting them urban citizenship. My focus on state-building in the urban third world allows me to contribute to the incipient retheorization of the spatial and property dimensions of political authority, while my focus on two ideologically divergent governments' extension of rational-legal domination allows me to contribute to the bourgeoning literature on the symbolic side of state-building.