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(Week 1) Chapter 4

Encumbrances

TermDefinition
ENCUMBRANCE Special claim or interest in real property that is held by someone other than the owner and creates a limitations and/ or burden to the real property owner.
Liens DEED RESTRICTION A present owner of real property could restrict a future owner of that property. The previous owner has exerted a type of control over property that he no longer owns.
Liens EASEMENT Not ownership, just the right to use. The right to use the land owned by another person for a specific purpose.
5 types of EASEMENTS 1. APPURTENANT 2. GROSS 3. NECESSITY 4. PRESCRIPTION 5. EMINENT DOMAIN/ CONDEMNATION
EASEMENT APPURTENANT Two adjacent properties with different owners and an easement such as the right to use a driveway exists whereby one property benefits and the other property suffers the burden.
SERVIENT TENEMENT The real property on which an easement exists whereby another party has the right to use that land
DOMINANT TENEMENT The property is an easement APPURTENANT that benefits from the easement
EASEMENT IN GROSS Personal right to use the land of another owner. (Utility) Not in writing on deed, not adjacent Individual not transferable Commercial can be assigned, transferred or inherited
RIGHT OF INGRESS An owner’s right to enter his property even if it is landlocked.
RIGHT OF EGRESS An owner’s right to exit her property even if it’s landlocked.
EASEMENT BY NECESSITY Created as the result of the right to enter and exit landlocked land.
EASEMENT BY PRESCRIPTION Obtaining in court through the prolonged use of the real property of an owner as defined by law. Must believe they have the right
EASEMENT BY CONDEMNATION The government obtains the right to use private property for public use with compensation to the owner.
ENCROACHMENT A trespassing situation that occurs when one owner’s real property extends beyond the property boundary line into the real property of another owner.
LICENSE The temporary permission to enter and use the real property of another for a specific purpose. Temporary and invocable and if you do not comply with rules may have to leave
LIEN A charge against property which provides the property as security for the debt or obligation
2 types of liens 1. Specific 2. General
SPECIFIC LIEN Creditor makes claim against only one particular parcel of real property of the debtor.
GENERAL LIEN Filed by a creditor against all the real and personal property owned by the debtor.
VOLUNTARY LIEN A type of lien that results from a property owner entering into a debt willingly, such as mortgage loan
INVOLUNTARY LIEN Allowed by law that creates a claim against the real property of the owner without the owner’s willing consent, such as unpaid tax or court judgement.
MORTGAGE LIEN Represents a debt of a borrower by which a lender can take foreclosure action against the specific real estate secured by the mortgage.
FORECLOSURE Legal procedure that a lender takes to recover money that has been loaned when a borrower default on the mortgage and can result in the loss of real property.
4 types of FORECLOSURE 1. Judicial 2. Non judicial 3. Strict 4. Deed in lieu of
JUDICIAL FORCLOSURE Court conducts a sale of a property to the highest bidder at the county court house because of the default of the borrower so that the lender can recover the loaned mortgage money.
NON JUDICIAL FORECLOSURE Lender conducts a sale of the mortgaged property so that the lender can recover the mortgage money when the borrower defaults.
STRICT FORECLOSURE There is no sale of the mortgaged property; the lender simply gets title to the real estate if the borrower who is in default fails to pay back the amount of money that is owned by a certain deadline date.
DEED IN LIEU OF FORECLOSURE Owner in severe debt simply walks away from the burden of the mortgage loan payments by giving ownership of the real property to the lender
2 kinds of REDEMPTION 1. Equitable 2. Statutory
EQUITABLE REDEMPTION Right of the borrower in default to pay off all mortgage debts before a foreclosure sale an have the mortgage reinstated.
STATUTORY REDEMPTION Right to allow a borrower in default to pay off all mortgage debts within a certain time period after a foreclosure sale and recover title to the property.
DEFICIENCY JUDGMENT Mortgage provision that allows a lender to seek a court order to collect additional money from a borrower’s assets when a foreclosure sale of the borrower’s pledged property does not pay off the loan debt in full.
NON-RECOURSE FINANCING Loan contract that lacks a deficiency judgement; this prevents the lender from seeking compensation from any of the assets of the borrower other than the one property pledged as collateral security.
MECHANICS LIEN Lien or monetary claim against real property that is filed by a tradesperson, contractor, subcontractor, builder or material supplier who performs work on real property or provides materials and is not paid.
3 basic forms of protection against mechanics liens 1. Waiver of liens 2. Release of liens 3. Mechanics lien insurance
WAIVER OF LIENS Giving up right to file lien. Only protects against liens filed by building contractor.
RELEASE OF LIENS Giving up right to file lien. New construction, no way to verify all subs signed release.
MECHANICS LIEN INSURANCE Insurance policy that is issued through a title insurance company to protect against mechanics liens.
TAX LIEN Filed by local government against an owner for failure to pay the required tax on real property.
TAX SALE Court ordered public sale of real property to the highest bidder conducted by the local government to recover an unpaid property tax. As a result the owner can lose title to the property.
PRIORITY OF LIENS The exact order in which lienholders have legal claims against property. Property tax supersede and take top priority.
SUBORDINATION AGREEMENT Agreement between lien holder to change priority of their liens. Example: refinancing loan
LIS PENDENS (LITIGATIONS PENDING) A notice that is recorded in the county at the time a lawsuit is filed against real property.
WRIT OF ATTACHMENT A document that is issued by the court to prevent title from being conveyed while a court suit is in progress on real property. Can not be transferred
JUDGEMENT An order or decision of the judge in a court of law.
Created by: crochetchick
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