Lesson 4: Encumbrances: Pop Quiz
Bart owns a piece of property. Which one of the following would not be an encumbrance on it? A.A license B.A pending foreclosure lawsuit C.A gross easement for a utility company D.Judgment in a suit for breach of contract
A.A license A license is revocable, non-assignable permission to use another person's land for a particular purpose, and therefore is not an encumbrance. The other choices are encumbrances because they affect the physical use of or title to the property.
A deed restriction is used to: A.control future uses of the property B.limit housing costs in a subdivision C.prevent housing from being encumbered D.require the use of high-quality building materials and construction techniques
A.control future uses of the property Deed restrictions are limitations on what property owners can and cannot do. Since these restrictions run with the land, they limit the ways future owners may use the property.
White is owed money by Green. Green has a parcel of prime real estate that's worth millions of dollars. The land is owned by Green free and clear of any liens. Green recently listed the property with a local real estate agent. White is worried that Green will sell the property before White can get a judgment against him (the judgment would allow White to place a lien on the property). During the course of White's lawsuit against Green, White should: A.seek an attachment on Green's property B.tell Green's listing agent that he (White) has an interest in Green's property C.ask the judge for a summary judgment D.make sure that Green knows that if he sells the property before the end of the lawsuit, he will be committing fraud
A.seek an attachment on Green's property White should seek an attachment on Green's property to protect his interests during the lawsuit.
A lis pendens is a: A.notice filed when the property is foreclosed B.recorded notice that a property owner is a party to litigation that could result in a lien against the property C.recorded notice filed at the conclusion of a suit to quiet title D.notice to lien holders prior to a property owner's bankruptcy
B.recorded notice that a property owner is a party to litigation that could result in a lien against the property A lis pendens is a document that provides constructive notice of a pending lawsuit that may affect title to real property and that could bind a purchaser of the property.
The deed restrictions in a subdivision prohibit homeowners from building fences. However, the city where the subdivision is located permits the construction of fences. Which of the following is true? A.Deed restrictions cannot address matters such as fence construction B.The city's ordinances would take precedence, because it is a governmental entity C.The deed restrictions would take precedence, because they are more restrictive D.The deed restrictions would be found unenforceable as against public policy
C.The deed restrictions would take precedence, because they are more restrictive When deed restrictions and zoning regulations are in conflict, whichever is more restrictive will apply. In this case, the deed restriction is more restrictive (it prohibits fences, while the municipal ordinance allows them), so it takes precedence.
K buys a piece of landlocked property from L on the condition that L provide an easement across the property for ingress and egress. The easement isn't recorded. K later sells the property. Is the easement still valid for the new owner? A.No, because it wasn't recorded B.No, because it wasn't mentioned in the deed C.Yes, because an easement of this type runs with the land, rather than belonging to an individual D.Yes, because K is the servient tenant and L is the dominant tenant
C.Yes, because an easement of this type runs with the land, rather than belonging to an individual An easement for ingress and egress is a type of easement appurtenant. Easements appurtenant run with the land. Easements ordinarily need to be in writing and recorded in order to run with the land, but if the use is apparent an easement can run with the land even if not recorded.
Specific liens include all of the following except: A.a deed of trust or mortgage B.a construction lien C.an IRS lien D.real estate (property) taxes
C.an IRS lien An IRS lien is an involuntary, general lien.
Three of the following are appurtenances that would transfer when the property is sold. Which of the following would not automatically transfer? A.A deed restriction B.Water rights C.An easement D.A license
D.A license A license is not an appurtenance; it's a privilege that can be revoked, and it does not run with the land.
Encroachments are: A.spoken permission to use someone else's property B.activities that interfere with a neighboring owner's use of his property C.protected against by standard title insurance D.considered a trespass
D.considered a trespass An encroachment is considered a trespass if it violates a neighboring owner's right to possession, and can be the basis for an ejectment action.
A lis pendens is: A.a foreclosure notice B.a bankruptcy notice of pending sale, issued by the trustee C.actual notice of a tax lien D.constructive notice of a pending lawsuit that could result in a future lien or other encumbrance
D.constructive notice of a pending lawsuit that could result in a future lien or other encumbrance The term is Latin for lawsuit pending. It is a recorded notice stating that there is a lawsuit pending that may affect title to the defendant's real estate.
Peter gives his neighbor Michelle the right to use his driveway to reach her property. Michelle's right is called a/an: A.emblement B.profit C.prescriptive right D.easement
D.easement An easement is the legal right to use another's land. The right does not include ownership of the land.
A plaintiff files a lawsuit involving a property and also files a separate document intended to provide notice of the lawsuit. This recorded notice of a pending legal action is called a/an: A.abstract of judgment B.petition for alienation C.writ of execution D.lis pendens
D.lis pendens A lis pendens is a recorded notice stating that there is a lawsuit pending that may affect title to the defendant's real estate and that could bind the purchaser of the property.
A property investor sells his 100-acre rural parcel of land with the restriction that the buyer may not divide the land into parcels smaller than one acre each. This restriction is: A.invalid; this restriction violates the rule against perpetuities B.invalid; one cannot put private restrictions on rural land C.valid; restrictions are always valid on agricultural land D.valid; this restriction doesn't violate public policy
D.valid; this restriction doesn't violate public policy Deed restrictions are generally valid, so long as they aren't unconstitutional, a violation of a law, or contrary to judicial determinations of public policy. For example, deed restrictions prohibiting sale to non-white buyers are invalid on public policy grounds.
A local charitable organization obtained the right to put a billboard on Sam's property. Sam most likely gave it a/an: A.easement in gross B.easement appurtenant C.prescriptive easement D.easement by necessity
A.easement in gross An easement in gross benefits a party, not a parcel of land.
A general lien's priority is normally established by the: A.date on the document B.recording date C.court D.value of the lien
B.recording date Normally, a lien's priority is established by the date it's entered in the public record.
A buyer is about to purchase a vacant lot in a new subdivision. The development plans for the subdivision state that all lots must be a minimum size of one acre. If the buyer goes through with the purchase, his deed would be subject to a/an: A.easement B.encroachment C.lien D.restriction
D.restriction A limitation on the use of the land, such as a minimum lot size requirement that would prohibit partitioning the lot, would be considered a deed restriction. It is not an easement, as it does not benefit another property or person, and it is not a lien, as it is not a financial interest secured by the property.
For how long is a deed restriction valid? A.Potentially forever B.Only as to the first purchaser of the property C.Only if the restriction is a covenant, not a condition D.Until a subsequent buyer and seller agree to release it
A.Potentially forever Deed restrictions "run with the land," meaning they bind all subsequent owners of the property. A court may find that a deed restriction is no longer enforceable, for instance, if it violates public policy or hasn't been enforced by residents, but it will continue to remain part of the deed.
Of the following liens, what's listed in the correct priority? A.Property taxes, then first mortgage B.First mortgage, then property taxes C.Income tax liens, then special assessments D.Income tax liens, then property tax liens
A.Property taxes, then first mortgage While the general rule is "first to record, first in right," general real estate taxes (also called ad valorem taxes, or property taxes) always have first lien priority over mortgage liens. Income tax (IRS) liens, special assessments, and property tax liens have equal priority with each other.
What would cause a judgment lien to be imposed on a landowner's property? A.Foreclosure B.Lawsuit C.Unpaid construction project D.Unpaid property taxes
B.Lawsuit A judgment lien may attach to the property of someone who loses a lawsuit and is ordered to pay damages. (This person is referred to as the judgment debtor.) If the judgment debtor doesn't pay off the lien, the court can issue a writ of execution ordering the sale of the property.
A writ of attachment, an easement in gross, and a special assessment all have what in common? A.They're court actions B.They're encumbrances C.They're restrictions D.They're taxes
B.They're encumbrances Writs of attachment and special assessments are financial encumbrances (liens), while an easement is a nonfinancial encumbrance (one that affects the use of the property), but all three are encumbrances.
An easement for ingress and egress that is created by a court of law where it is reasonably necessary for the enjoyment of the property is an easement: A.appurtenant B.by necessity C.by prescription D.in gross
B.by necessity A court may find that an easement by necessity (or easement by implication) is created where it is reasonably necessary for enjoyment of the property, and there was apparent prior use. This may occur where a grantor divides a property into more than one lot, and forgets to grant or reserve an easement for the benefit of the new lot. A court-created easement doesn't necessarily run with the land, meaning the easement might not be appurtenant.
A neighbor's fence mistakenly extends onto a property. This would be considered a/an: A.easement B.encroachment C.encumbrance D.license
B.encroachment A physical object that is on someone else's property is an encroachment. It is not an encumbrance, because the encroacher doesn't hold a right or interest in the other property.
With a deed restriction: A.cities can enforce local zoning laws B.property sellers can control the buyer's use of the property C.local building departments can enforce uniform building code D.the purpose of the city's comprehensive plan is carried out
B.property sellers can control the buyer's use of the property Deed restrictions are used by private parties to control the use of property.
Max would like to know if there's an encroachment on his boundary line. He should: A.examine the legal description B.order an appraisal C.order a survey D.do a title search
C.order a survey The best way to ascertain if a physical object encroaches on a boundary line would be through a survey.
Some encumbrances affect the use of property; others do not. Which of the following would affect the use of a property? A.A construction lien B.A tax lien C.A mortgage D.An easement
D.An easement Easements affect the use of property; liens generally do not.
An easement appurtenant is one that: A.can only be created by prescription B.is of more benefit to the servient tenant than the dominant tenant C.is given to a commercial tenant D.runs with the land
D.runs with the land An easement appurtenant runs with the land; in other words, subsequent owners of the properties that benefit from or are burdened by the easement will also be subject to the easement. An easement appurtenant benefits the dominant tenant, not the servient tenant.
Alta Vista, a new subdivision outside city limits, has a deed restriction that does not allow tree houses. A new buyer moves into the subdivision and promptly builds a tree house in the back yard. How many neighbors will it take to enforce the deed restriction and what action should be taken? A.One neighbor needs to take action through the court system B.One neighbor needs to take action through the local building code department C.51 percent of the neighbors must take action through court action D.51 percent of the neighbors must sign a petition that will be given to the local building code department
A.One neighbor needs to take action through the court system A private restriction can be enforced in court by any other property owner subject to the same restrictions. However, if residents have failed to enforce a particular restriction in the past, the attempt to enforce it may fail.
Jones and Smith live across the street from each other in a subdivision that has deed restrictions prohibiting the keeping of large animals as pets. Jones realizes that Smith is keeping a pet Shetland pony in the backyard. Jones can: A.enforce the deed restriction against Smith via lawsuit B.do nothing, because Smith's ownership rights take precedence over deed restrictions C.do nothing, because only a next-door neighbor can enforce such a deed restriction against Smith D.notify the local zoning authority, who will investigate
A.enforce the deed restriction against Smith via lawsuit Jones or any other homeowner in the subdivision can file a suit for an injunction against Smith; it isn't necessary to be a next-door neighbor. However, if other owners in the subdivision have also been violating the restriction for some time, the court might rule that the restriction has been abandoned and can no longer be enforced.
An agent studying the results of a survey found two easements against the property: a utility easement and a pipeline easement. These easements are: A.gross easements B.easements by necessity C.easements by implication D.prescriptive easements
A.gross easements Many easements in gross are commercial easements, such as those given to utility companies. They allow company employees to enter the property to perform necessary services.
A real estate tax lien has priority over a/an: A.mortgage lien B.easement C.encumbrance D.deed restriction
A.mortgage lien While lien priority is normally established by recording date, real estate (property) tax liens always have higher priority than other types of liens, including mortgage liens. The other options, while encumbrances, are not liens.
A lien on real estate would include a/an: A.recorded mortgage B.encroachment C.gross easement D.deed restriction
A.recorded mortgage A lien is a financial encumbrance, and a mortgage is a type of lien. The other options are examples of nonfinancial encumbrances.
Each of the following is a typical subdivision rule or regulation, except: A.the property cannot be sold and used as a waste disposal site B.a tree house cannot be built on the property C. the walls and fences shall not exceed four feet in height D.no structure of a temporary character shall be constructed on any lot
A.the property cannot be sold and used as a waste disposal site Regulation of whether a property can be used for waste disposal is likely to occur through laws or ordinances. The other options, however, are common rules imposed by homeowners associations.
A subdivision has deed restrictions that create a community nature trail from the rear ten feet of every owner's property. One owner decided that he wanted to use that part of his yard to have a storage shed instead. If the other owners want to keep him from doing that, they should: A.file an unlawful detainer action B.file for an injunction in the appropriate court C.not do anything, because they do not have authority to stop the owner D.request a cease and desist order from state real estate licensing authorities
B.file for an injunction in the appropriate court Homeowners who wish to enforce a deed restriction against another owner who plans to violate the restriction may do so by seeking an injunction, which is a legal order that prohibits a person from taking a particular action.
Alex owns 35 acres of vacant land that he would like to deed to a local wildlife conservancy. However, a title search reveals that timber rights and an easement to use the property were sold to Giant Lumber Company in 1963. Since this lumber company went out of business in 1987, Alex should: A.cancel the transaction, because the lumber company went bankrupt B.seek advice from an attorney, since the easement may still be valid C.claim a prescriptive easement, since the requisite number of years has passed D.cancel the transaction, because the easement will still be valid
B.seek advice from an attorney, since the easement may still be valid Even though the original easement holder no longer exists, a commercial easement in gross can be assigned. So the easement rights may have been transferred to another company, and it would be prudent to ask an attorney to investigate.
Moe has an appurtenant easement over Ray's land. Ray's land is called a/an: A.dominant estate B.servient estate C.encroachment D.license
B.servient estate Moe is the dominant tenant and Moe's land is the dominant tenement (estate), benefited by the easement. Ray is the servient tenant and Ray's land is the servient tenement (estate), burdened by the easement.
Maria buys a home in a subdivision that is subject to restrictive covenants. The city Maria lives in allows fences, but the subdivision's restrictive covenants don't. Of the following, which is true? A.Restrictive covenants only limit lot size; they don't limit fencing B.The city is a government entity, so its rules take precedence over private restrictions C.The deed's restrictive covenants take precedence over the city because they are more restrictive D.Maria owns the property, so she has a legal right to build a fence regardless of the deed's restrictions
C.The deed's restrictive covenants take precedence over the city because they are more restrictive When zoning ordinances and private restrictions conflict, the more restrictive of the two prevails.
All of the following are true, except: A.Ad valorem taxes are tax deductible B.Unpaid ad valorem taxes create a specific lien on the property C.Unpaid ad valorem taxes create a general lien on the property D.An ad valorem tax lien is also known as a property tax lien
C.Unpaid ad valorem taxes create a general lien on the property Ad valorem taxes (also known as property taxes, or general real estate taxes) are based on the value of real property. Unpaid ad valorem taxes create a specific (not general), involuntary lien against real property.
A homeowner has an unpaid hospital bill for $20,000. The hospital files suit and wins a judgment for the full amount. Is the homeowner's home (which he owns free and clear) at risk? A.No, because the debt must be at least $25,000 to force a sale B.No, because the debt must exceed the value of the homestead C.Yes, but he may be partly or fully protected by state homestead laws D.Yes, a court may always force a sale to fulfill a judgment
C.Yes, but he may be partly or fully protected by state homestead laws Homestead laws are state-level laws that give limited protection against foreclosure over judgment liens. Generally, foreclosure is not allowed unless the net value of the property exceeds the homestead exemption amount.
The main difference between a general lien and a specific lien is: A.a creditor files a general lien, while the property owner files the specific lien B.a general lien is filed on personal property, while a specific lien is filed on real estate C.a general lien could be filed on any real or personal property owned by the debtor, while a specific lien is filed against a specific piece of real property D.a general lien is filed at the office of the county clerk, while a specific lien is filed with the assessor's office
C.a general lien could be filed on any real or personal property owned by the debtor, while a specific lien is filed against a specific piece of real property A general lien can be filed against any property owned by the debtor; a specific lien can be filed only against one specific parcel of real property owned by the debtor.
Branches from a neighbor's apple tree hang over the fence and overripe fruit falls into a homeowner's yard. This is an example of a/an: A.easement in gross B.emblement C.encroachment D.lien
C.encroachment An object that extends over a property's boundary line is an encroachment. An encroachment is not an encumbrance because it is not a right or use held by the encroaching property owner; however, if it is in place long enough, it may ripen into an easement.
Compared to an appurtenance, an encumbrance: A.must be tangible B.must be physically attached to the land C.is a claim or liability that affects the value or use of the property D.is a claim or liability that can be created by a court only
C.is a claim or liability that affects the value or use of the property An encumbrance is any nonpossessory right that is held by someone other than the property's owner. It can affect the title to or the use of the property.
Juanita is purchasing an apartment building. To finance the purchase, she is obtaining both a first and a second mortgage, each from a different lender. The most important way that the first mortgage differs from the second mortgage is that: A.the first mortgage would have a significantly higher interest rate than the second mortgage B.the first mortgage would require a higher loan-to-value ratio than the second mortgage C.the first mortgage would have a senior lien position, and the second mortgage would have a junior lien position D.the first mortgage would be more likely to require a balloon payment than the second mortgage
C.the first mortgage would have a senior lien position, and the second mortgage would have a junior lien position First mortgages have a senior lien position, compared to junior mortgages.
According to the rules of lien priority: A.liens filed by businesses have priority over liens filed by individuals B.the date on the document or lien determines priority C.the recording date usually determines priority D.a construction lien always has first priority
C.the recording date usually determines priority Generally, the recording date of a lien determines its priority.
At closing (settlement), it's discovered that a recorded lien was not removed from the title to the property. What is the status of the lien? A.It's no longer valid, since the property was transferred to someone else B.It must be recorded again, since the property was transferred C.It follows the seller, because it's the seller's debt D.It remains a lien on record against the property
D.It remains a lien on record against the property A lien doesn't prevent a property from being transferred, but the new owner will take title subject to the existing lien, and a creditor can still foreclose against the property if the debt remains unpaid
A new subdivision requires payment of homeowners association dues. If unpaid, what type of lien do they create? A.General lien applying to all property owned by the homeowner B.Involuntary lien that does not pass to the next buyer of the property C.Personal debt that is not secured by real property D.Specific lien that encumbers the property
D.Specific lien that encumbers the property Unpaid homeowners association dues create a specific lien, meaning that the lien attaches only to a particular piece of property. A lien is an encumbrance, so it is not terminated by the sale of the property and would affect the next buyer's title.
Allen begins providing construction services on May 2 and records a construction lien on May 5. Bart begins providing services on May 3 and records a construction lien on May 4. On May 10, a judgment lien against the property is recorded. The property's owner also receives notice on May 10 that he is in arrears on his property tax payments. Which lien has lien priority? A.Allen's lien B.Bart's lien C.Judgment lien D.Tax lien
D.Tax lien Property tax liens take priority over other liens, including construction liens. Allen's lien still takes priority over Bart's lien, as construction liens take priority based on the date of the start of construction, but the tax lien takes priority over both. Property tax liens get recorded automatically when levied.
A testator left property to a charity in his will, but restricted the property's use to single-family dwellings only. The property is in a neighborhood that is zoned for multi-family use. Which of the following is true? A.The charity (the devisee) can build either single-family or multi-family dwellings on the property, because it is now the true owner of the property B.Because zoning ordinances always take precedence over private restrictions, the charity can build multi-family dwellings on the property C.If the charity sells the property to another party, that party could build multi-family dwellings on the property, because the restrictions apply only to the charity D.The most stringent restrictions always apply, so the charity cannot build multi-family dwellings on the property
D.The most stringent restrictions always apply, so the charity cannot build multi-family dwellings on the property If private and public restrictions conflict, the most stringent apply. In this case, the private restriction was more restrictive, so it applies. The charity (or anyone it sells the property to) cannot build multi-family housing on the property.
A deed restriction is a covenant that: A.controls housing costs in a subdivision B.lasts forever C.prevents the property from becoming encumbered D.restricts future owners of the property
D.restricts future owners of the property A deed restriction is a private agreement that limits uses of a property. It runs with the land, so it affects future owners of the property. While it potentially could last forever, there are a number of ways in which a deed restriction may be terminated.
Carl is housebound and never goes outside. Neighbor Salvador plants a vegetable garden on a corner of Carl's property that is not visible from the main house. After the required period of time, Salvador claims a prescriptive easement over this portion of Carl's land. This easement is: A.not valid, because Salvador had a duty to inform Carl of his intended use B.not valid, because Carl didn't know of the use and had no chance to formally object C.valid, because Salvador's vegetable garden is a productive use of the land D.valid, because the use was open, and Carl's knowledge of the use isn't considered
D.valid, because the use was open, and Carl's knowledge of the use isn't considered A prescriptive easement requires a use that is open and notorious, meaning that it should be reasonably apparent to the landowner. Someone establishing an easement by prescription is not expected to find out whether the true owner is living on the property, what his limitations are, or whether he is actually aware of the prescriptive use. The rule only requires actions that would be enough to put the typical owner on notice that his property interest is threatened.