Chapter 4 (Encumbrances)

Covenant

A restriction can be classified either as a covenant or as a condition. The consequences of violating a covenant are different from those of violating a condition. A covenant is a legally enforceable promise to do or not do something. Violation of a covenant can result in a court order (an injunction) directing that the violation be stopped. The court may also order the violator to pay money damages to someone who has suffered harm as a result of the violation.

Merger

An easement appurtenant is terminated by merger if the same person comes to own both the dominant property and the servient property. It isn't possible to have an easement against your own property.

Easements Appurtenant

An easement appurtenant, sometimes called an appurtenant easement, burdens one piece of land for the benefit of another piece of land. The land that receives the benefit of the easement is called the dominant tenement. The land burdened by the easement is the servient tenement. The owner of the dominant tenement is called the dominant tenant, and the owner of the servient tenement is the servient tenant. The land is the tenement, and the owner is the tenant. an easement agreement or a deed creating an easement must be in writing in order for the easement to be valid. To make the easement run with the land, the document usually much also be recorded. In some situations, though, if it would be immediately apparent to a person visiting the property that an easement is in use, the easement could run with the land even though it was never written down or recorded. An easement that benefits a parcel of land is called an easement appurtenant because it goes along with ownership of land. It is an appurtenance that adds to the value of the land, just like air rights or mineral rights. The easement is appurtenant to the dominant tenement. However, an easement appurtenant can't be severed from the land and sold separately. Whoever owns the dominant tenement also owns the easement rights.

Express Grant

An easement by express grant is created when a property owner executes a document granting someone else an easement on her property. The owner deliberately makes her property into a servient tenement. In other cases, a person who needs an easement simply offers to pay the property owner for granting an easement. For instance, someone whose access route to his property is inconvenient might ask a neighboring owner to sell him an easement over her land for more convenient ingress and egress.

Prescription

An easement by prescription is created through long-term use of land without the permission of the landowner. Acquiring an easement by prescription is similar to acquiring ownership through adverse possession. Here are the requirements for obtaining an easement by prescription. The use must be open and notorious (conspicuous to the owner). The use must be hostile (without the owner's permission). The use must be reasonably continuous for the length of time required by statute (in Washington, ten years) Here's an example of an easement by prescription: As a shortcut, Karen regularly uses a path on Ned's property to get to and from her property. Karen has not obtained Ned's permission to use the path, but he has not stopped her, either. After ten years, this use could ripen into a permanent easement right.

Abandonment

An easement can be terminated by abandonment, but abandonment involves more than mere failure to use the easement. For an easement to be terminated by abandonment, the easement holder (the dominant tenant) must do something that indicates an intent to stop using the easement forever. Here's an example of termination by abandonment: Ken has an easement that allows him to cut across Sally's property to reach his own. If Ken simply stopped using the easement, that would not terminate it. But suppose he built a permanent fence that closed off the easement. Sally, the servient tenant, could interpret this as an act of abandonment.

Terminating an Easement

An easement can be terminated in any of the ways shown here: -release -merger -failure of purpose -abandonment -prescription

Release

An easement is terminated by release if the dominant tenant agrees to give up the interest. A written release is required; usually the dominant tenant executes a quitclaim deed in favor of the servient tenant, and the servient tenant records the deed.

Encroachment

An encroachment occurs when a tree, a structure, or something else on one property intrudes onto the neighboring property. In the example on your screen, a large evergreen tree in Bart's yard is encroaching on Alison's property. Most encroachments are unintentional. It's often difficult to tell exactly where property lines are. But whether an encroachment is accidental or not, it is legally a trespass. If neighbors get into a dispute over an encroachment, the one who believes her property is being encroached upon can sue the other. The court may order the defendant to remove the encroachment through a judicial action called an ejectment. If removal would cost too much, the court may order the defendant to pay money to the other property owner instead. An encroachment isn't an encumbrance, because it isn't a right or interest in property. But if an encroachment continues for long enough, it can create a prescriptive easement, or even cause a transfer of title by adverse possession.

Express Reservation

An owner who sells part of her property may create an easement by express reservation. In this case, the seller reserves an easement against the parcel she's selling to benefit the one she's keeping. For example, suppose Karen sells Mark the front half of her land, the part that's next to Cedar Road. In the deed, she can reserve an easement against Mark's parcel for the benefit of her parcel, so that she'll still have access to the road. An easement by express reservation must be created in writing, and the document should be recorded.

Failure of Purpose

Another way an easement can be terminated is by failure of purpose. An easement is a right to use another's property for a particular purpose, and if that purpose no longer exists, neither does the easement. For example, if an easement was created for a railroad, and of the railroad company later discontinued its use and removed the rails, the easement would be terminated through failure of purpose

Creating an Easement

Easements (whether apputenant or in gross) can be created in any of the following ways: -express grant -express reservation -implication -prescription -dedication -condemnation

homestead

Homestead is a dwelling occupied by the owner, plus the land and any outbuildings appurtenant to the dwelling. In Washington, homestead protection is automatic. An owner is covered by the homestead law from the day she moves into her home. An owner may obtain homestead protection in advance for property she intends to occupy, by recording a declaration of homestead. A person can only have one homestead at a time.

Exemption (homestead)

Homestead protection creates an exemption. In the event of foreclosure, a certain amount of the homeowner's equity in the homestead property is exempt from the claims of judgment creditors. In Washington, the exemption amount is $125,000. This means a judgment creditor can't foreclose on a homestead unless the property's net value is more than $125,000. The net value is the market value minus the total amount of the senior liens—those that have higher priority than the lien being foreclosed on. Here's an example: A homestead property is worth $275,000. A judgment creditor would like to foreclose. However, there are liens against the homestead that have higher priority than the judgment creditor's lien. These higher-priority liens (called senior liens) total $195,000, so the net value is only $80,000. Because the net value is less than $125,000, the homestead is out of this judgment creditor's reach. If the net value exceeds the $125,000 exemption amount, the homestead property can be sold in a judgment lien foreclosure. Out of the foreclosure sale proceeds, the $125,000 exemption amount will be set aside for the property owner. This money cannot be reached by the judgment creditors. The former homeowner can reinvest the funds in a new homestead.

Lien Priority

If a piece of property has more than one lien against it, and one of the lienholders decides to foreclose, other lienholders may be entitled to some of the foreclosure sale proceeds. But the proceeds may not be enough to pay off all the liens in full. In this situation, the proceeds are not divided up proportionately among all the lienholders. Instead, each lien is paid off in order of priority. Once the creditor with first lien position has been paid, if there's any money left over, it will be applied to the debt owed to the second lienholder. Then if there's still money remaining, the third lienholder will be paid, and so on. This process continues until the sale proceeds are exhausted or all the liens are paid off. Here's an example: The liens against Suzanne's house total $78,500, but the foreclosure sale proceeds are only $60,000. The $2,000 property tax lien has first priority, and it gets paid in full. That leaves $58,000 to be applied to a $67,000 deed of trust, which is next in line. The deed of trust lender won't receive payment in full, and the remaining lienholders won't get any share of the proceeds. Suppose Bakerman borrows money from two banks--$5000 from National Bank on March 17th, and $5000 from Stat Bank on May 5th of the same year. Bakerman gives mortgages to both banks when the loan funds are received. If National Bank does not record its mortgage until July 14th, but State Bank records its mortgage promptly on May 5th, State Bank's lien will be paid before National Bank's in the event of foreclosure. Special priorities are: property tax, special assessment liens have priority over all other liens. Construction liens are another exemption. Their priority is determined by the date the claimant began working on the project, even though the claim of lien was recorded later on.

Termination of Restrictions

If property owners in a subdivision fail to enforce a particular restriction that's being violated, it may eventually become unenforceable. A court may rule that the restriction has been abandoned. For example, the subdivision's CC&Rs state that recreational vehicles may not be parked within view of the street. Over the years, however, many homeowners have broken this rule and their neighbors haven't complained. If someone tries to enforce a particular restriction in the past, they may no longer be able to enforce it. If the character of a neighborhood changes drastically over time, that may terminate certain kinds of private restrictions. For example, suppose a neighborhood that was originally zoned for residential use is now rezoned to allow commercial use. One by one, over several years, houses are torn down and replaced with commercial buildings. Finally, there are just a few houses left, surrounded by a noisy commercial area. If there are private restrictions limiting any of these properties to residential use, those restrictions would no longer be enforceable. And finally, if a property owner is herself in violation of a private restriction, she cannot sue her neighbor for violating the same restriction. For instance, if Martha and Bob are neighbors, and both have built fences that violate the development's private restrictions, Martha could not sue Bob to enforce the restriction.

Termination (homestead)

If the homestead claimant buys a new home within the one-year period, the exemption remains in effect and attaches to the new home. If a new home is not purchased in that time, the exemption terminates.

Profit

In addition to easements, there are two other categories of nonfinancial encumbrances: profits and private restrictions. A profit is the right to take something from land belonging to someone else. It could be the right to pick apples or the right to take limestone from a quarry. The only difference between an easement and a profit is that a profit includes the right to take something away from the land. A Profit must be created in writing or by prescription

IRS Lien

Income taxes also can create liens. Internal Revenue Service liens result from failure to pay federal income taxes. Unlike a property tax lien or a special assessment lien, an IRS lien is a general lien. It attaches to everything the taxpayer owns, not just to a specific piece of property. An IRS lien attaches only when payment of income taxes is overdue.

Judgment Liens

Judgment liens are involuntary, general liens. If a lawsuit results in a money judgment against the loser, the winner (judgment creditor) may obtain a lien against the loser's (the judgment debtor's) property. The lien attaches to all the property owned by the debtor in the county where the judgment was entered, and also attaches to any property acquired by the debtor during the lien period (the length of time the judgment creditor has to take action on the lien). If the debtor owns property in other counties, the judgment creditor can make the lien attach to that property by recording an abstract of judgment in those counties. Once the judgment lien has attached, the debtor must pay the judgment to free the property from the lien. If it's not paid, the property can be sold by a designated official to satisfy the judgment. to do this, the court issues a writ of execution. A judgment lien lasts until it is paid, or until it expires. In Washington, the lien expires ten years after the judgment was entered.

Licenses

Like someone who has an easement, someone who has a license has the right to enter and use land that belongs to another person. There are important differences between easements and licenses, however. As we mentioned, a license isn't an encumbrance, and it doesn't create an interest in real property. As a result, unlike an easement, a license doesn't have to be created in writing. A license can simply be a landowner's verbal permission to use his property. Here is an example of a license. Nate asked his neighbor, Martha, whether she would mind if he and his grandson fished off of her dock occasionally. Martha says she wouldn't mind at all. Now Nate has a license to fish on Martha's property. Because Nate's use is with Martha's permission, it can't ripen into an easement by prescription. A property owner who grants an easement can't just change her mind and eliminate the easement. Because a license doesn't create an interest in the property, however, the property owner can revoke the license at any time. A licensee doesn't have the right to assign or transfer the license to anyone else, and the license terminates automatically if the licensee dies. A license also doesn't run with the land. If the property is sold, the new owner doesn't have to honor a license given by the previous owner.

Condition

On the other hand, if a restriction is classified as a condition, ownership of the property depends on compliance with the restriction. Someone who violates a condition may actually forfeit title to the property. A person who owns property subject to a condition has a fee simple qualified estate (also called a conditional fee estate). After breach of a condition, title would revert to the grantor who originally placed the condition on the title. If the grantor were no longer living, title would revert to the grantor's heirs. Whether a private restriction is a covenant or a condition depends on its wording. If the wording is ambiguous, a court will interpret the restriction as a covenant, to avoid the harsh result of the owner forfeiting title. Today, conditions are rare. The great majority of private restrictions are covenants. It is very unlikely that a property owner who violated a restriction would forfeit title as a result.

Prescription (Terminating an Easement)

Prescription is not only a way in which easements may arise, it's also a way in which they may terminate. Sometimes a servient tenant takes action to prevent the dominant tenant from using the easement. If this effort is successful for long enough (ten years, in Washington), the easement is terminated by prescription. Here's an example of how an easement may be terminated by prescription. Ken's easement allows him to cut across Sally's property to reach his own. Sally builds a fence that closes off the easement. Ken has a legal right to object to having his easement blocked. But he doesn't want to get into a dispute with his neighbor, so he stops using the easement. If Sally's fence remains in place for the entire ten-year statutory period, Ken's easement will terminate by prescription. Ken will no longer be able to enforce the easement right, and neither will any subsequent owners of the dominant property.

Private Restrictions

Private restrictions, on the other hand, restrict how an owner may use her own property. For instance, Paula owns a one-story home on an acre of land. A private restriction on her property prohibits structures over 18 feet high. Paula would like to add a full second story to her house, but she can't, because that would violate the building height restriction. Private restrictions are placed on property by the owner—not so much to restrict his own use of the property, but to restrict all subsequent owners. Nowadays, private restrictions are most often imposed by the original developer of a residential subdivision. The developer draws up a list of restrictions, called a declaration of restrictions or CC&Rs (which stands for covenants, conditions, and restrictions). The developer records the CC&Rs, and also includes a reference to them in the first deed for each lot in the subdivision. Here is an example of how CC&Rs work. A developer records a declaration of restrictions, which states that it applies to all lots within Lowland Heights. Among other things, the restrictions permit only one single-family home per lot. When the developer sells an individual lot, the developer gives the buyer a deed that says, "Subject to that declaration of restrictions recorded October 15, 2016, under recording number 0710150154." The main purpose of CC&Rs is to establish certain standards for the subdivision that will help maintain property values. They give homeowners a way to prevent their neighbors from doing certain things that could have a negative effect on the subdivision. If one lot owner violates the CC&Rs, other owners in the subdivision (or the subdivision's homeowners association, if there is one) can file a lawsuit against the violator. The judge will issue an injunction ordering that the violation be stopped. Private restrictions that violate a law or a provision of the federal or state constitution are not enforceable. An example of an illegal restriction is one that prohibits sale of the property to persons of a particular race or religion.

Easements in Gross

Some easements aren't appurtenant rights. Instead, they're personal rights, not tied to ownership of a parcel of land. This type of easement is called an easement in gross. An easement in gross benefits a particular person rather than a parcel of land. Someone who has an easement in gross may be called a dominant tenant, but there's no dominant tenement. The only property involved is the servient tenement, the parcel burdened by the easement. Here's an example of an easement in gross: George owned some land that included a large pond. When he sold the land and moved into town to live with his son's family, he reserved the right to come back to swim in the pond. The land that George sold is now burdened by George's easement. It's an easement in gross because it benefits a person, not a parcel of land. It isn't tied to ownership of any land. The burden of an easement in gross runs with the land. In our example, not just the people who purchased the property from George, but also any subsequent owners, will have to allow George to come swim in the pond. On the other hand, the benefit of an easement in gross is considered a personal right that can't be assigned to someone else. George can't sell or give away his easement rights to another person. And when George dies, his easement in gross will be extinguished.

Implication

Some easements arise by implication. These easements are called easements by implication or implied easements. An easement by implication typically comes about when part of a larger tract is sold and the grantor neglects to create an easement in the deed. As a result, one of the parcels is left without an access route. For example, suppose Karen sells the back half of her land to Mark, but fails to include an easement in the deed. If Mark's parcel has no other access to a public road, he may be considered to have an implied easement across the front parcel. There are two basic requirements for an easement by implication. First, the easement must be reasonably necessary for the enjoyment of the dominant tenement. Second, there must have been apparent prior use at the time of the sale. The "apparent prior use" requirement ensures that the owner of the servient tenement had good reason to expect that the owner of the dominant tenement would use the existing access route for ingress and egress. However, if no prior use is apparent, a court may still declare an easement if it is strictly necessary because there is no other way to reach a landlocked parcel. In this case, it may be known instead as an easement by necessity.

Special Assessments

Special assessment result from local improvements, such as road paving or sewer lines, that benefit some but not all, property owners within the county. The properties that have benefited from the improvement are assessed for their share of the cost of the improvement. The assessment creates and involuntary, specific lien against the property. Any owners who fail to pay the special assessment bill may face foreclosure.

commercial easement

There's an important exception to the rule preventing assignment of an easement in gross. The rule doesn't apply to a commercial easement in gross. A commercial easement in gross is held by a company for business purposes, rather than by an individual for personal purposes. The most common example is a utility easement, which allows a utility company to enter someone's property to install and repair utility lines. A commercial easement in gross may be assigned from one entity to another. For example, if a utility company were taken over by a larger utility company, its commercial easement rights could be assigned to the larger company. It wouldn't be necessary to obtain the property owners' consent.

The Homestead Law

This law gives homeowners limited protection against lien foreclosure. Homestead law offers only against general judgment liens. Not specific liens.

Attachment Liens

When someone files a lawsuit, there is a danger that by the time a judgment is entered, the defendant (the party sued) will have sold this property and disappeared, leaving the other party with little more than a piece of paper. To prevent this, the plaintiff (the person who stated the lawsuit) can ask the court to issue a writ of attachment. A writ of attachment directs the sheriff to attach enough of the defendant's property to satisfy the judgment the plaintiff is seeking. when the writ of attachment is recorded, it creates a lien on the defendant's real property.

Condemnation

When the government needs a particular piece of private property for a public purpose (a highway or a public school, for example), it has the constitutional power to force the private owner to sell the property to the government. This is carried out by the legal process known as condemnation. The government will pay the owners for the easement rights, because the Constitution requires the government to compensate private owners for property taken by condemnation.

Nuisances

While a nuisance isn't really an encumbrance, it does affect an owner's right to use and enjoy her property. A nuisance is an activity or condition of a neighboring property that interferes with an owner's use of her property. Nuisances include such things as odors and noises. Nuisances can be private or public. A private nuisance affects only a few people. For instance, the smells and sounds of a neighbor's pet pigs would be a private nuisance. A public nuisance affects many more landowners. Pollution from a nearby factory would be an example of a public nuisance. A property owner affected by a private or public nuisance can sue for an injunction to stop the nuisance or for compensatory damages. Property owners should also be aware of a legal doctrine called the attractive nuisance doctrine. If a property has a feature that is dangerous and attractive to children, the owner will be held liable for any harm resulting to trespassing children. An example of an attractive nuisance is an unfenced swimming pool.

Nonfinancial Encumbrances

While liens usually affect only a property owner's title, without affecting his use of the property, nonfinancial encumbrances commonly affect both title and use. As you'll see, they may prevent the owner from using his property in a way that he'd like to. An easement is a right to use someone else's land for a particular purpose. The easement holder (the person who has the easement) has a nonpossessory interest in that other person's property. From the property owner's point of view, the easement is an encumbrance that burdens her title. The easement holder has a legal right to use the other person's property in some specific, limited way, but doesn't have the right to take possession of the property as an owner or a tenant would. Here is an example of a typical easement: Walter and Caroline are neighboring landowners. Walter has a driveway easement over part of Caroline's land that allows him to cross her property to reach his own. Walter has the right to use the driveway on Caroline's land for that purpose, but not for anything else. For instance, he couldn't build a shed on the driveway, or plow it up and plant vegetables. An easement like the one in the previous example is often called an easement for ingress and egress, which means entering and exiting. It's an access easement, allowing a landowner to enter and exit his property by crossing the neighboring land. There are two basic types of easements. Every easement is classified either as an easement appurtenant or as an easement in gross.

Dedication

a private landowner may grant an easement to the public to use some portion of his property for a public purpose, such as sidewalk. The dedication may be expressly stated or implied. When a private property owner transfers an interest in property to the government as a gift, it's called dedication. For instance, a philanthropist might dedicate some land he owns to the city for a park. An easement allowing the public to use private property can also be created by dedication. If the dedication is voluntary, the easement should be put into writing and recorded. But dedication sometimes occurs involuntarily, by implication. If the public makes use of private property over a long period without the owner's permission, an easement may be created by implied dedication. For example, this might happen if an owner fails to stop the public from fishing or hunting on his land.

Property Tax Liens

property is assessed (appraised for tax purposes) and taxed according to its value. When property taxes are levied, a lien attaches to the property until they are paid. Property tax liens are involuntary, specific liens. One of the ways local governments raise revenue to pay for government services is by taxing the value of real property on an annual basis. These taxes create a specific lien, attaching only to the piece of property that has been taxed. If the property taxes become delinquent, the property tax lien allows the government to foreclose on the property and collect the taxes from the proceeds of the foreclosure sale.