Chapter 3 - Liens and Encumbrances

Easements terminate by:

-Express release of the right by the easement holder -Merger, as when a dominant tenement acquires the servient property, or vice versa -Purposeful abandonment by the dominant tenement -Condemnation through eminent domain -Change or cessation of the purpose for the easement -Destruction of an easement structure, such as a party fence -Non-use of an easement by prescription

encumbrance

-another's right to use or take possession of a legal owner's property, or to prevent the legal owner from enjoying the full bundle of rights -does not include the right of possession, so not considered estates -can lead to the owner's loss of ownership of the property Two types: -those that affect legal ownership, value and transfer. -those that affect the property's use.

ad valorem tax lien/1.Real estate tax lien-superior lien

1st on lien hierarchy-The local legal taxing authority annually places an ad valorem tax lien against properties as security for payment of the annual property tax.

deed restriction-condition/covenant

A condition can only be created within a transfer of ownership. A covenant can be created by mutual agreement.

deed restriction - subdivision plat

A developer may place restrictions on all properties within a recorded subdivision plat.

Liens have the following legal features.

A lien does not convey ownership, with one exception.The exception is a mortgage lien A lien attaches to the property. A property may be subject to multiple liens. A lien terminates on payment of the debt and recording of documents.

liens - another most common type of encumbrance

A lien, such as a tax lien, can be placed on the property's title, thereby restricting the owner's ability to transfer clear title to another party.

Which tax liens are junior liens?

All tax liens other than those for ad valorem, assessment, and estate tax are junior liens. Federal income tax lien State corporate income tax lien State intangible tax lien State Corporation Franchise Tax Lien

In what kind of easement is there a dominant tenement and a servient tenement?

An easement appurtenant

Essential characteristics of easements include the following:

An easement must involve the owner of the land over which the easement runs, and another, non-owning party. One cannot own an easement over one's own property. An easement pertains to a specified physical area within the property boundaries. An easement may be affirmative, allowing a use, such as a right-of-way, or negative, prohibiting a use, such as an airspace easement that prohibits one property owner from obstructing another's ocean view.

easement-common type of emcumbrance- right of way

An easement, such as a utility easement, enables others to use the property, regardless of the owner's desires non-possessory interest in property owned by someone else Easement rights may apply to a property's surface, subsurface, or airspace, but the affected area must be defined. The affected area must be defined. One cannot own an easement over one's own property

Neighbor Fred built a retaining wall that was 2 feet outside his property line. What has Fred created?

An encroachment

Easement Appurtenant - Dominant and Servient Tenements

Dom - enjoys the usage right from servients land Serv - property that contains the easement itself - serves the easement to dom

Easements-Transfer

Easement appurtenant rights and obligations automatically transfer with the property upon transfer of either the dominant or servient estate, whether mentioned in the deed or not

Encumbrance-Restrictions to use include:

Easements Encroachments Licenses Deed restrictions

Additional ways an easement may be created:

Grant Implication Condemnation

wage lien - inferior lien

If an employer owes back wages to an employee

A homeowner wants to give a neighbor seasonal permission to cross her yard to reach a public basketball court. What kind of lien or encumbrance should she use?

License

Atlas Films has rented a farm from Mr. Vem for a two-week film shoot. What type of agreement is used?

License

Encumbrance-Restrictions to ownership, value and transfer include:

Liens Deed conditions

assessment liens/2.Special Assessment Liens-superior lien

Local government entities place assessment liens against certain properties to ensure payment for local improvement projects.

Personal and Commercial -easement in gross

Personal - granted for the grantee's lifetime. Commercial - granted to a business entity rather than a private party. The duration is not tied to anyone's lifetime.

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?

Real estate tax lien

Superior and Inferior Lien In Order

Superior liens in their rank order include: 1st Real estate tax liens Special assessment liens Federal estate tax liens State inheritance tax liens Inferior liens in their rank order include: 2nd Federal income tax liens State corporate income tax liens State intangible tax liens Judgment liens Mortgage liens Vendor's liens Mechanic's liens (priority by date work was performed)

There was a judgment lien against a person for his debts. He owned a car, boat, farmhouse, and some land. Which would the judgment lien be placed upon?

The car, boat, farmhouse, and the land

deed restrictions typically apply to:

The land use The size and type of structures that may be placed on the property Minimum costs of structures Engineering, architectural, and aesthetic standards, such as setbacks or specific standards of construction

Two factors primarily determine lien priority:

The lien's categorization as superior or junior. The date the lien was recorded.

Easements-Non-Exclusive Use

The servient tenement may use the easement area, provided the use does not unreasonably obstruct the dominant use.

Which of the following is true of easements in general?

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

An easement may be created by:

Voluntary Action Necessity Prescription Adverse and hostile use; Open and notorious use; Continuous use (ten years).

One difference between a condition and a covenant is that

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 party wall easement.

A court might grant an easement by prescription if

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

general lien - generally all possessions

any and all possessions for debt. one placed against any and all real and personal property owned by a particular debtor

Inheritance tax liens-3.Fed and 4.State Inheritance Tax Lien-superior liens

arise from taxes owed by a decedent's estate.

specific lien - single possession

attaches to a single item of real or personal property, and does not affect other property owned by the debtor ex. A conventional mortgage lien is an example, where the property is the only asset attached by the lien.

4. judgment lien-inferior or junior lien

attaches to real and personal property as a result of a money judgment issued by a court in favor of a creditor.

Easement by voluntary action

by express grant in a sale contract, or as a reserved right expressed in a deed.

lienor

can change the priority of a junior lien by voluntarily agreeing to subordinate, or lower, the lien's position in the hierarchy

party wall - part of appurtenant easement

common wall shared by two separate structures along a property boundary Other structures that are subject to party agreements are common fences, driveways and walkways.

equitable lien - jugdment lien

court action imposes an involuntary lien An example is a judgment lien placed on a property as security for a money judgment.

Easement created by Implication

created when a grantor conveys a portion of the real estate he or she owns or when he or she divides a larger tract among separate grantees. In either case, a severance of parcels occurs, which is a necessary prerequisite to an implied easement. For example, property owner Jess sells off the mineral rights to his property. The mining company has an easement by implication to go onto the property to mine the minerals - but mining is the only reason the company may enter the property.

Easement created by Grant- or reservation

created with the express written agreement of the property owners For example, the grantor can convey fee interest in Lot 1 to the grantee, while reserving a non-exclusive easement for ingress and egress over the driveway located on Lot 1.

writ of execution-judgement lien

creditor uses to force the sale of attached property and collect the debt

lien

creditor's claim against personal or real property as security for a debt of the property owner A lien does not convey ownership, with one exception. A lien attaches to the property. A property may be subject to multiple liens. A lien terminates on payment of the debt and recording of documents. A lien is an encumbrance that restricts the free and clear ownership of the property. If a property is being sold, all liens should be paid in full before the property transfers ownership.

A lien is a

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

Other than its categorization as inferior or superior, a lien's priority is generally determined by the

date of recordation.

satisfaction of judgment-judgement lien

debtor obtains to clear the title records.

Easement created by condemnation

exercise of eminent domain, wherein they condemn a portion of a property and cause it to be sold "for the greater good." A typical example is a town's condemnation of private land to create a new municipal sewer system.

utility lien-junior or inferior lien

failure to pay utility bills

easement - burdened party

giver of easement right

Easement Appurtenant - most common

gives a property owner a right of usage to portions of an adjoining property owned by another party automatically transfers with new ownership with dom or serv tenement estate For example, John grants Mary the right to share his driveway at any time over a five-year period, and the grant is duly recorded. If Mary sells her property in two years, the easement right transfers to the buyer as part of the estate. The servient tenement, as well as the dominant tenement, may use the easement area, provided the use does not unreasonably obstruct the dominant use.

Easement created by Necessity - also called easement by implied grant

granted by a court of law to a property owner because of a circumstance of necessity, most commonly the need for access to a property. reason for it, not just for convenience Two elements are essential to this type of easement: There must have been a common grantor of the dominant and servient estates. There must be a reasonable necessity for the easement, not just for convenience.

Personal Easement in Gross

granted for the grantee's lifetime The right is irrevocable during this period but terminates on the grantee's death A personal gross easement differs from a license in that the grantor of a license may revoke the usage right

Commercial Easement in Gross

granted to a business entity rather than a private party not tied to anyone's lifetime may be assigned, transferred, or willed usually owned by the government, a government agency, or a public utility Examples: A marina's right-of-way to a boat ramp A utility company's right-of-way across a lot owner's property to install and maintain telephone lines

statutory lien - real estate taxes

if statutory or state law imposes an involuntary lien ex. real estate taxes weren't paid.

junior lien- inferior or subordinate in order

is automatically inferior or subordinate, to a superior lien Among junior liens, date of recording determines priority.

Encroachments

is the unauthorized, physical intrusion of one owner's real property into that of another often do not appear on a property's title records. An owner may sue for removal of an encroachment or for compensation for damages. cause infringements on the rights may diminish the property's value An owner may sue for removal of an encroachment or for compensation for damages. If an encroached owner takes no remedial action over a prescribed number of years, the encroachment may become an easement by prescription. ex. a tree limb or fence

Homestead property and joint tenancy estates are exempt from?

judgment liens

Mortgage and Trust Deed - junior lien #5

lien-theory states, mortgages and trust deeds secure loans made on real property

subordination - sub junior liens order

lienor can change the priority of a junior lien by voluntarily agreeing to subordinate, or lower, the lien's position in the hierarchy

deed restriction

limitation imposed on a buyer's use of a property Deed restrictions are either covenants or conditions.

municipality

may place a utility lien against a resident's real property for failure to pay utility bills.

surety bail bond lien- inferior lien

may put up real estate instead of cash to pay bail is recorded if the owner can prove that he has a net worth of at least twice the amount of the bail.

Licenses

not transferrable and do not attach to the land owner grants to another to use the property unlike gross easement...is revocable A farmer granting a neighbor permission to cross his land to reach and fish in his pond is an example of a license.

involuntary lien - legally done

one that a legal process places against a property regardless of the owner's desires.

voluntary lien- volunteer loan to fix bathroom

owner can create a voluntary lien to borrow money or some other asset secured by a mortgage

easement for light and air - appurtenant easement

owner could attempt to purchase this for over neighbors land. should be in writing For example, if an owner has a wonderful view of a beautiful local lake which is located on the other side of his or her neighbor's property, the owner might try to get an easement for light and air over the neighbor's property. If the easement is correctly created and recorded, neither the current owner nor any subsequent owners could build a structure in the airspace.

Easement in gross - most common

personal right that one party grants to another to use the grantor's real property. The right does not attach to the grantor's estate. no dominant or servient estates in an easement in gross.

writ of attachment-judgement lien

plantiff creditor may secure to prevent the debtor from selling property.

Superior liens - order

receive first payment from the proceeds of a foreclosure All superior liens take precedence over all junior liens regardless of recording date

easement-benefited party

receiver of easement right

vendor's lien/sellers lien- junior lien #6

secures a purchase money mortgage, a seller's loan to a buyer to finance the sale of a property. a seller has a vendor's lien when the cash has not yet been received for the property

mechanic's lien-junior lien priority last

secures the costs of labor, materials, and supplies incurred in the repair or construction of real property improvements. It is possible for an owner to have to double-pay a bill in order to eliminate the mechanic's lien if the general contractor neglects to pay the subcontractors. The priority of a mechanic's lien dates from the time when the work was begun or completed.

vendee's lien-junior or inferior lien

seller did not deliver title

Judgment liens take priority based on?

the date the judgment is recorded in the county clerk's office.