Unit 1: Encumbrances on Real Property Hawaii

Your client, Ada, wants to purchase property that includes a garage apartment that's subject to an existing lease. Ada plans to rent the garage apartment to her sister next year. What should Ada specifically look for when reviewing the existing lease terms to decide if this is the right property for her? A) Duration and renewal options B) Lease start date C) Property management responsibilities D) Rent and security deposit amounts

A) Duration and renewal options

Kurt bought a vacant lot in a development that was 85% completed. When he started working with the builder to lay out where the house and driveway would lie, it was determined that he would need an easement because his driveway would spill over onto the adjacent lot by a few feet. What type of easement is this? A) Easement appurtenant B) Easement by necessity C) Easement by prescription D) Easement in gross

A) Easement appurtenant

What does the concept "first in time" refer to when discussing lien priority? A) First mortgages are paid over property taxes. B) First mortgages are paid over time. C) Junior lien holders will not be paid. D) Liens are paid based on date of filing.

D) Liens are paid based on date of filing.

Karen's house was recently foreclosed on to pay off a lien on her home. What happens to any extra money after the lien and expenses of the sale are paid? A) It goes to Karen. B) It's given to a local government-approved charity. C) The bank receives the rest as compensation. D) The state government receives the extra funds.

A) It goes to Karen.

Sam grants Steve a license to hunt deer on his property. Which of the following statements about the license is true? A) Sam can revoke the license at any time. B) The license is a permanent privilege. C) The license is assignable. D) The license is inheritable.

A) Sam can revoke the license at any time.

What must happen for an easement to be terminated due to abandonment? A) The dominant estate owner takes action that shows a clear intent to stop using the easement. B) The owner of a servient estate buys the dominant estate property. C) The owner of the dominant estate finds an alternate route and no longer needs the easement. D) The owners of both estates decide not to use the easement.

A) The dominant estate owner takes action that shows a clear intent to stop using the easement.

What is an encumbrance? A) A bad neighborhood B) A defect found during inspection C) A defect on a title that can be monetary or physical D) Anything that affects the marketability of a property

C) A defect on a title that can be monetary or physical

What is it called when one party has the right to use land owned by another party for a special purpose? A) Control B) Disposition C) Easement D) Enjoyment

C) Easement

In what order would these liens—mechanic's, mortgage, and property tax—be paid under a court order? A) Mortgage, mechanic's, property tax B) Mortgage, property tax, mechanic's C) Property tax, mortgage, mechanic's D) Tax, mortgage, mechanic's

C) Property tax, mortgage, mechanic's

How are Hawaii mechanic's liens enforced? A) The county clerk transfers the property from the owner to the lienor. B) The filer takes the property from the owner. C) The lien holder can force foreclosure, and the courts settle liens in priority order. D) The lien holder can only collect when the property owner attempts to sell the property.

C) The lien holder can force foreclosure, and the courts settle liens in priority order.

The Sawarynskis are being foreclosed on after failing to make their mortgage payments for several months. In addition to the mortgage, they owe back property taxes, association fees, and a mechanic's lien. Which lien takes priority? A) Homeowners association B) Mechanic's C) Mortgage D) Property tax

D) Property tax

Frank owns a property on which there is walkway to the beach shared by his neighbors on either side. What is Frank's property? A) Dominant estate B) Gross estate C) Prescriptive estate D) Servient estate

D) Servient estate

What type of lien funds public property improvements? A) First mortgage B) Judgment C) Mechanic's D) Special assessment

D) Special assessment

Brandon's home has been foreclosed on. He had an outstanding loan balance of $145,000, which he owed to his lender, XYZ Lending for a loan taken out in 2009. There's also a lien against the property recorded in 2014 for an unpaid student loan of $25,000, and a HELOC established in 2012 of $30,000, of which he'd used $10,000. If his foreclosure nets $150,000, how much will each creditor be paid? A) The student loan will be paid off, then XYZ Lending will receive $125,000 of what it's owed, and his HELOC will receive nothing. B) The student loan will be repaid, then XYZ Lending and the HELOC lender will split the remaining proceeds. C) XYZ Lending and the HELOC will each get half of what they're owed, and the lien holder for the student loan will not be repaid. D) XYZ Lending will receive $145,000, the HELOC lender will receive $5,000, and the lien holder for his student loan will not be repaid.

D) XYZ Lending will receive $145,000, the HELOC lender will receive $5,000, and the lien holder for his student loan will not be repaid.