Real Estate Chapter 5 (Encumbrances)

* Declaration of Restrictions * CC&Rs

(Covenants, Conditions, and Restrictions) Normally recorded then referenced in the deeds that convey the lots in a subdivision.

Types of Non-Financial Encumbrances

* Easements * Profits * Private Restrictions / Deed Restrictions / Restrictive Covenants

Ways to Create an Easement

* Express Grant * Express Reservation * Necessity * Implication * Prescription * Dedication * Condemnation

Other Tax Liens

* Federal Income Tax * Estate or inheritance taxes * Gift Taxes These are mostly involuntary, GENERAL liens

Lien Priority

* It is generally the date that the lien was RECORDED that prioritizes which liens are paid first, NOT the date that the lien was created. * Property Tax Liens and Special Assessment Liens are rewarded FIRST * Mechanic's Liens are prioritized by the date they attach (which may before they are recorded), not when they are recorded

Types of Voluntary Liens

* Mortgage * Deed of Trust

Types of Financial Encumbrances (Liens)

* Mortgage * Deeds of Trust * Mechanic's Lien * Judgment Lien * Attachment Lien * Property Tax Lien * Special Assessments * Other Tax Liens * Miscellaneous Liens

Prescription (Easement)

* Open and notorious * Hostile * Reasonably Continuous -- Does not have to exclude use by the landowner Can be guarded against by recording a Notice of Consent for the particular purpose and then later revoking it.

Ways to Terminate and Easment

* Release * Merger * Failure of Purpose * Abandonment * Prescription

Types of Involuntary Liens

* Tax Liens * Judgment Liens

* Secured Creditor * Lienholder * Lienor

A creditor who has a lien against (a security interest in) a debtor's property

Ejectment

A judicial action that orders the removal of an encroachment

Express Reservation

A landowner who conveys a portion of land may reserve an easement in that parcel to benefit the parcel that has been retained. Must be put into writing

Attachment Lien

A lien that is attached to a property once a lawsuit is filed if there is a thought that the defendant will sell the property prior to a judgment being issued.

Prescription (termination of Easement)

A prescriptive easement can be terminated if the servient tenant prevents the dominant tenant from using the easement for the period of time required by state law that created the prescription

Homestead exemption

A specific amount of money that will be paid to the homeowner upon foreclosure of his home before money is paid to lien holders

Nuisance

An activity or condition on a neighboring property that interferes with the property owner's reasonable use or enjoyment of his own property e.g. Odors, noises, and interference with communication signals

Trespass (encroachment)

An encroachment can be considered a trespass if it violates a property owner's rights of posession

Trustee

An independent third part in a trust deed, most often an attorney or a title insurance company

Judgment Lien

An involuntary, general lien that can be claimed by a person who has won a money judgement against another party (losing party / judgement debtor) * Ordinarily only attached to properties in the same county where the judgment was issued. * Normally attaches to any property that is acquired by debtor during the lien period

Property Tax Liens

An involuntary, specific lien that attaches to a property once a tax is levied until the tax is paid. * This has the highest priority to get paid

Special Assessments

An involuntary, specific lien that attaches to property when certain properties in a county (but not all) receive benefit from a special project such as paving or sewer lines.

Writ of Attachment

An order that directs the sheriff to place an attachment lien on a defendants property that will satisfy the judgment that the plaintiff is seeking

Necessity (Easement)

Arises when purchased land is locked in by private land and has no access to a public road. An easement is normally created to the closest public road. Some states this is automatic, and others requires a court order.

Specific Lien

Attaches only to a particular piece of property (e.g. mortgage)

Easement in Gross

Benefits a person (a dominant tenant) rather than a parcel of land. Therefore there is not dominant tenement, only a servient tenement. * This easement also "follows the land", which means that if the servient tenement is sold, the dominant tenant still has the right to the easement Used commerically and commonly with utility companies that allow its employees to enter property and install and service utility lines

Easement Appurtenant

Burdens one parcel of land for the benefit of another parcel of land (e.g. An easement that gives one property owner the right to cross another property owner's land in order to access his own land -- driveway easement) * These are automatically transferred with both parcels of land if sold, and do not have to be mentioned in the deed in order to be binding on future owners. Party wall easement a special case of an easement appurtenant

Miscellaneous Liens

Depend on the state, but may include: * Child support * Alimony * Bail Bonds * Condominium and Homeowner's Association assessments

License (vs. Easement)

Gives someone permission to use another person's land. * Normally spoken permission rather than in writing * Can be revoked at any time (unlike an easement)

Condemnation (Easement)

Government may use power of eminent domain to allow the use of private property for the use of the public (e.g. construction of a road). Can also be exercised by some private utility companies

Deed of Trust (Trust Deed)

Has 3 parties, rather than 2 (like in a mortgage) * Have a different foreclosure process than a mortgage

Release (termination of Easement)

Holder of the easement renounces his rights in the servient tenement. Done in a written document (normally a quitclaim deed from the easement holder to the owner of the servient tenement)

Merger (termination of Easement)

If the dominant and servient tenement comes to be owned by the same person, the easement is no longer necessary, and is therefore terminated

Failure of Purpose (termination of Easement)

If the purpose for which the easement was created no longer exists, then the easement terminates. e.g. Landlocked owner buys an adjoining parcel that has access to a public roadway.

Lis Pendens

Latin for "action pending" A document that gives notice of a lawsuit that may affect title to real property. It is not a lien, but it is recorded and provides constructive notice of the pending lawsuit to anyone who purchases the identified property, and therefore is bound by any judgment that results from the suit, even though that person is not a party to the lawsuit

Encumbrance

Nonpossessory right or interest in real property held by someone other than the property owner

General Lien

One that attaches to ALL of a debtor's property (e.g. judgement lien)

Dedication (Easement)

Private landowner may grant an easement to the public (e.g. sidewalk). May be expressed or implied

Covenant vs. Condition

Private restrictions can be covenants or conditions. Covenant - a promise to do or not do something. Violator can be sued, leading to an injunction or payment of damages Condition - can have more serious consequences, if condition in the deed makes title conditional giving him fee simple defeasible rather than fee simple absolute). BREACH OF CONDITION CAN CAUSE FORFITURE OF TITLE!

Homestead Laws

Provide protection to owner-occupied dwellings against a certain dollar amount against judgment liens and attachment liens. Normally does not protect against child support or alimony.

* Private Restrictions * Deed Restrictions * Restrictive Covenants

Restrictions on a property's use that were imposed by a previous owner. These can "run with the land" and be binding to all future owner's of the property. * May be imposed in a deed or by a written agreement with a neighbor Often used in subdivisions (see CC&Rs)

Materialman's Lien

Similar to a mechanic's lien, but it is claimed by someone who has provided MATERIALS

Encroachments

Something that intrudes on one person's land from another's without authorization

Trustor

The borrower in a trust deed

Mortgagee

The creditor (lender)

Abandonment (termination of Easement)

The easement holder abandons it by some type of act that indicates an intent to abandon it. e.g. A dominant tenant builds a fence that blocks further use of the easement used for ingress and egress * Non-use is NOT considered abandonment (except in some states that a certain time of non-use will terminate a prescriptive easement)

Beneficiary

The lender/creditor in a trust deed

Writ of Execution

The order issued by a court to force the sale of a property in a foreclosure

Attractive Nuisance doctine

The owner of property with a feature that is dangerous and attractive to children (e.g. unfenced swimming pool) may be held liable for harm resulting from failure to keep out trespassing children

Dominant Tenant

The owner of the dominant tenement

Servient Tenant

The owner of the servient tenement

Dominant Tenement

The parcel with the benefit in an easement appurtenant

Servient Tenement

The parcel with the burden in an easement appurtenant

Attach

The process of a lien becoming legally effective, it is said to attach to the property

Mortgagor

The property owner

Express Grant

The property owner grants someone else the right to use the property. Grant must be in writing and comply with all the requirements for conveying interest in land

Profit

The right to take something away from someone's land, rather than just a right to use it. e.g. Right to take away timber, gravel, etc. Must be created in writing or by prescription.

Easement

The right to use another person's land for a particular purpose. It is a nonpossessory interest in the land (no title or right of possession)

Perfecting (a lien)

When a claim of lien is filed, it is said to have been perfected

Foreclosure

When a lien holder forces the property to be in order to collect the debt out of the sale proceeds

Mechanic's Lien (Construction Lien)

When a person who has provided LABOR to a particular property places a lien on it in order to get payment for work performed. It is a specific, involuntary lien

Implication (Easement)

When property is divided and part of it is transferred to another owner, and the conveyance forgot (did not) include an express grant/reservation. Has two requirements: 1.) Easement must be reasonably necessary for enjoyment of the property 2.) There must have been apparent prior use Similar (in some states it is the same) to a necessity easement