Chapter 5 Quiz

Non-Judicial Foreclosure

"power of sale" granted to lender; no suit; no deficiency judgment; no redemption period after sale

Types of Encumbrances

-Easements -Encroachments -Licenses -Deed Restrictions -Liens

Easement termination

-release -merger -abandonment -condemnation -change of purpose -destruction -non-use

Easement creation

-voluntary action -court decree by necessity (landlocked) -court order by prescription -eminent domain and condemnation (eminent domain is the law that gives government the right to take away your property and condemnation is the process they use to do so)

Easement by Prescription

An easement acquired by continuous, open, and hostile use of the property for the period of time prescribed by state law. Property used without permission over a statutory period qualifies for easement creation regardless of owners wishes Prescription period varies from state to state bu tin MA its 20 years.

Easement appurtenant

An easement created to benefit adjacent land; attaches to the real estate Easement by necessity Party Wall

A homeowner has hired a contractor to build a room addition. The work has been completed and the contractor has been naid for all work and materials but fails to pay the lumber vard for a load of lumber. What potential problem may the home owner experience? a. The contractor may place a mechanic's lien for the amount of the lumber against the homeowner's real property. b. The lumber yard may place a vendor's lien against the contractor and the homeowner for the amount of the lumber. c. The lumber yard may place a mechanic's lien for the amount of the lumber against the homeowner's real property. d. The homeowner has no liability because the contractor was paid for the lumber.

C. The lumber yard may place a mechanic's lien for the amount of the lumber against the homeowner's real property.

Deed Restrictions

Clauses in a deed limiting the future uses of the property. Deed restrictions may impose a vast variety of limitations and conditions—for example, they may limit the density of buildings, dictate the types of structures that can be erected, or prevent buildings from being used for specific purposes or even from being used at all. conditions and covenants imposed on a property by deed or subdivision plat (things that you can and cannot do) goes with property upon transfer established to control quality and standards of property Apply to land use, type of structure, setbacks, minimum house size, etc.

Convenants

Created by mutual agreement Enforced by injunction

What are the two types of easements?

Easement appurtenant Easement in gross

Superior/senior vs Inferior/Junior Liens

Establishes seniority ranking for order of payment in foreclosure Superior liens- rank over junior liens; not ranked by recording date; real estate tax and assessment liens and inheritance taxes Junior liens- rank by recording date: judgment; mortgage, vendor's, utility, mechanic's, other tax liens; mechanic's lien priority "dates back" to when work or sale transpired

General vs. Specific Lien

General= lien placed against all property Specific= lien placed on a specific property

Servient Tenement

Land on which an easement exists in favor of an adjacent property (called dominant estate); also called a servient estate. of appurtenant easement

Judicial Foreclosure

Occurs when "power of sale" clause (gives permission of lender to sell property if payment isn't made) is in mortgage docs lawsuit and court-ordered public sale; deficiency judgments, redemption rights

Easement by necessity

Part of easement appurtenant granted by necessity, e.g. to landlocked owners

Dominant Tenement

Property that receives the benefit of an appurtenant easement.

Burdened party

The giver of the easement right

Benefited party

The receiver of the easement right.

Foreclosures

The seizure of property from borrowers who are unable to repay their loans. enforcement of liens through liquidation or transfer of encumbered property

Voluntary vs. Involuntary Liens

Voluntary- owner borrows money Involuntary- statutory lien (tax lien) court imposed equitable lien (judgement lien)

Power of Sale Clause

a clause authorizing a private foreclosure sale that does not require court action gives permission of lender to sell property if payment isn't made

Easements

a right to use portions of another's property

Easement in gross

a right to use property that does not attach to the real estate personal: not revocable or transferrable; ends upon death of easement holder ex: use of pathway to the beach that is across the street commercial: granted to businesses; transferrable ex: utility lines across frontage of property

How is a lien terminated? a. Payment of the debt that is the subject of the lien and recording of the satisfaction. b. Transfer of the property that has the lien. c. Recording of another lien that is superior. d. Death of the lienor or lienee.

a. Payment of the debt that is the subject of the lien and recording of the satisfaction.

A real estate tax lien, a federal income tax lien, a judgment lien, and a mortgage lien are recorded against a property. Which lien will be paid first when the property is sold? a. Real estate tax lien. b. Federal income tax lien. c. Judgment lien. d. Mortgage lien.

a. Real estate tax lien.

Which of the following is true of easements in general? a. They involve the property that contains the easement and a non-owning party. b. They apply to a whole property, not to any specific portion of the property. c. They cannot be assigned or transferred. d. They may require a specific use, but cannot prohibit one.

a. They involve the property that contains the easement and a non-owning party.

In a strict foreclosure, a. a lender takes title to the liened property directly. b. a lender receives the proceeds from the forced sale of the liened property. c. the defaulting owner does not have the opportunity to prevent the foreclosure by paying the amounts owed. d. a foreclosure suit is optional.

a. a lender takes title to the liened property directly.

What distinguishes a lien from other types of encumbrance? a. it involves a monetary claim against the value of a property b. it lowers the value of the property c. it is created voluntarily by the property owner d. it attaches to the property rather than to the owner of the property

a. it involves a monetary claim against the value of a property

An important difference between a judicial foreclosure and a non-judicial foreclosure is a. there is no right to redeem the property in a non-judicial foreclosure b. a judicial foreclosure forces a sale of the property c. a non-judicial foreclosure ensures that all liens are paid in order of priority d. the lienor receives the title directly in a non-judicial foreclosure

a. there is no right to redeem the property in a non judicial foreclosure

Encumbrances

another right to use or take possession of a legal owners property, or to prevent the legal owner from enjoying the full bundle of rights Non-possessory interests lifting the legal owners rights

What's meant by a "lien-theory" state? a. a state in which liens are given priority over other encumbrances b. a state in which a mortgagor retains title to the property when a mortgage lien is created c. a state in which the holder of a mortgage lien receives title to the mortgaged property until the debt is satisfied d. a state in which liens exist in theory but not in practice

b. a state in which a mortgagor retains title to the property when a mortgage lien is created

A property survey reveals that a new driveway extends one foot onto a neighbor's property. This is an example of a. an easement appurtenant b. an encroachment c. an easement by prescription d. a party wall easement

b. an encroachment

An encroachment is a. an easement that has not been recorded on the title of the burdened property. b. an unauthorized physical intrusion of one property into another. c. a right granted by a property owner to the owner of an adjoining property to build a structure that protrudes across the property boundary. d. a structure that does not comply with a zoning ordinance.

b. an unauthorized physical intrusion of one property into another.

A property is secured by a mortgage that does not contain a "power of sale" clause. To foreclose, the lien holder will have to a. file a deficiency suit. b. file a foreclosure suit. c. obtain a deed in lieu of foreclosure. d. obtain a writ to extinguish the lien.

b. file a foreclosure suit.

A court renders a judgment which authorizes a lien to be placed against the defendant's house, car, and personal belongings. This is an example of a a. specific judgment lien b. general judgment lien c. voluntary judgment lien d. superior judgment lien

b. general judgment lien

The lienee in a lien is the a. party who initiates the lien. b. owner of the property that is subject to the lien. c. party who has a claim against the owner of the property subject to the lien. d. property that is given as security for a debt.

b. owner of the property that is subject to the lien.

A property owner has an easement appurtenant on her property. When the property is sold to another party, the easement a. terminates b. transfers with the property c. transfers with the owner to a new property d. becomes a lien on the property

b. transfers with the property

Which of the following tax liens is a junior lien? a. Special assessment tax lien. b. Inheritance tax lien. c. Income tax lien. d. Ad valorem tax lien.

c. Income tax lien.

A certain property has the following liens recorded against it: a mortgage lien dating from three years ago: a mechanic's lien dating from two years ago; a real estate tax lien for the current year;, and a second mortgage lien dating from the current year. In case of a foreclosure. which of these liens will be paid first? a. First mortgage lien b. Mechanic's lien c. Real estate tax lien d. Second mortgage lien

c. Real estate tax lien

Foreclosure is a. a court-ordered acceleration of loan payments. b. the final step in a bankruptcy filing. c. a proceeding to enforce a lien by forcing sale or transfer of a secured property. d. a proceeding to take equitable title to a property that was liened as security for a mortgage loan.

c. a proceeding to enforce a lien by forcing sale or transfer of a secured property

A court might grant an easement by prescription if a. a municipality needs to dig a trench across an owner's property to install a sewer line to a neighboring property, and the owner refuses permission. b. a property owner sells the front half of a lot and wants to continue using the driveway to reach the rear of the lot. c. an intruder has been using an owner's property for a certain period with the owner's knowledge but without permission. d. a property owner wants to prevent the owner of an adjoining property from building a second-story addition that blocks the sunlight to his rose garden.

c. an intruder has been using an owner's property for a certain period with the owner's knowledge but without permission.

An encumbrance is most broadly defined as a. another's right to use a property without the permission of the property owner. b. another's right to claim the sale proceeds of a property that has been used as collateral for a loan. c. another's interest in a real property that limits the interests of the freehold property owner. d. another's right to control how the freehold owner of a real property uses the property.

c. another's interest in a real property that limits the interests of the freehold property owner.

A lien is a a. debt incurred by a property owner. b. promissory note granted by a property owner as security for a debt. c. creditor's claim against property as security for a debt of the property owner. d. document that creates an easement.

c. creditor's claim against property as security for a debt of the property owner.

If the owner of property A has a court-ordered easement to drive across property B because it is the only way for A to have access to a public road, the easement is a(n) a. easement by prescription. b. personal easement. c. easement by necessity. d. easement in gross.

c. easement by necessity.

Easements and encroachments are types of a. lien b. deed restriction c. encumbrance d. appurtenance

c. encumbrance

A homeowner has hired a contractor to build a room addition. The work has been completed and the contractor has been paid for all work and materials but fails to pay the lumber yard for a load of lumber. What potential problem may the homeowner experience? a. the contractor may place a mechanics lien for the amount of the lumber against the homeowner's real property b. the lumber yard may place a vendors lien against the contractor and the homeowner for the amount of lumber c. the lumber yard may place a mechanics lien for the amount of the lumber against the homeowner's real property d. the homeowner has no liability because the contractor was paid for the lumber

c. the lumber yard may place a mechanics lien for the amount of the lumber against the homeowner's real property

Liens

claims attaching to real and personal property as security for debt

Strict Foreclosure

court orders legal transfer of title directly to lender without public sale

Conditions

created upon property transfer and put into deed If violate, ownership may revert to previous owner

In what kind of easement is there a dominant tenement and a servient tenement? a. An easement in gross. b. A commercial easement. c. A personal easement. d. An easement appurtenant.

d. An easement appurtenant.

What kind of interest does a lienor usually have in the liened property? a. A possessory interest. b. Legal ownership of a dominant tenement. c. A legal interest in a pro rata share of the property. d. An equitable interest, except a mortgage lienor in a title-theory state.

d. An equitable interest, except a mortgage lienor in a title-theory state.

One difference between a condition and a covenant is that a. breach of a covenant leads to forfeiture of ownership. b. a covenant can be enforced in court. c. a condition can be created at any time. d. a condition can be created only when there is a transfer of ownership.

d. a condition can be created only when there is a transfer of ownership.

Property A and property B share a common wall along the property boundary. To ensure that neither owner destroys the wall, the owners of A and B should create a. an easement by necessity. b. a perpetual encroachment. c. a license. d. a party wall easement.

d. a party wall easement.

There are two adjoining properties. An easement allows property A to use the access road that belongs to property B. In this situation, property A is said to be which of the following in relation to property B? a. subservient estate b. servient estate c. senior tenant d. dominant tenement

d. dominant tenement

Deed restrictions generally concern a. the form of ownership in which a property may be held. b. how long a property must be owned before it can be legally transferred. c. what groups of people are legally excluded from future ownership of a property. d. how a property may be used and what structures may be built on it.

d. how a property may be used and what structures may be built on it.

A general lien is a lien a. imposed by statutory law. b. imposed by court order. c. placed against an individual rather than against any particular property. d. placed against any and all property owned by an individual.

d. placed against any and all property owned by an individual.

The lien priority of junior liens can be changed by a lienor's agreement to a. forgive portions of the debt b. assign the note c. foreclose on the note d. subordinate

d. subordinate

A lien holder can change the priority of a junior lien by agreeing to a. change the date of recording. b. lower the amount of the claim. c. vacate the lien. d. subordinate the lien.

d. subordinate the lien.

Deed in Lieu of Foreclosure

defaulted borrower deeds property to lender to avoid foreclosure action does not get rid of any liens

Mortgage Foreclosure Lien

liquidation or transfer of collateral property by judicial, non-judicial, or strict foreclosure

Party wall

negative easement in a shared structure A wall that is located on or at a boundary line between two adjoining parcels of land and is used or is intended to be used by the owners of both properties. ex: fence

Licenses

personal rights to use a property; do not attach; non-transferrable; revocable ex: letting someone fish on your pond or letting someone park their boat in your driveway

Junior Liens

rank by recording date: judgment; mortgage, vendor's, utility, mechanic's, other tax liens; mechanic's lien priority "dates back" to when work or sale transpired By date of recording: -Income tax lien -Judgment lien -Mortgage lien -Mechanics lien

Lien Priority

rank ordering of claims established by lien classification and date of recording; determines who gets paid first if lienee defaults

Superior Liens

rank over junior liens; not ranked by recording date; real estate tax and assessment liens and inheritance taxes By rank: -Real estate tax lien -Special assessment lien -Federal estate tax lien -State inheritance tax lien

Encroachments

unauthorized physical intrusion onto someone else's property ex: someones tree or tree branches that fall onto their neighbors yard May require survey to detect May become prescriptive easements if not remedied over prescription period

Lien types

voluntary and involuntary general and specific superior and junior