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Chapter 6
encumbrances and liens
| Question | Answer |
|---|---|
| what is an encumbrance? | an interest in and right to real property that limits the legal owner's freehold interest. (encumbrance not an estate) |
| what are the 2 most common types of encumbrances? | easements and liens (those that affect the property's use and those that affect legal ownership, value and transfer). |
| what are the types of encumbrances that restrict the owner's use by others'rights to use. | -easements -encroachments -licenses -deed restrictions |
| what are the types of encumbrances that restrict on the ownership, value and transfer? | liens and deed conditions |
| what is an easement? | an interest in real property that gives the holder the right to use portions of the legal owner's real property in a defined way. |
| the receiver of the easement right is the ________; the giver of the easement right is the _______ | benefited party; burdened party |
| True or False: one can not own an easement over one's own property | true |
| True or False: an easement pertains to a specific PHYSICAL area within the property boundaries. | true |
| what are the 2 basic types of easements? | appurtenant and gross |
| what is an easement appurtenant? | (permanent) gives a property owner a right of usage to portions of an adjoining property owned by another party. |
| Easement appurtenant: the individual enjoying the right is called the_______. The individual containing the physical easement itself is the______. | dominant tenement; servient tenement. ex: easement: dominant, encumbrance: servient |
| How do transfers in easement appurtenant work? | they automatically transfer with the property |
| what is a easement by necessity? | an easement appurtenant granted by a court of law to a property owner because of a circumstance of necessity. ex: need to access road |
| what is a party wall easement? | a party wall is a common wall shared by two separate structures along a property boundary (can be terminated with destruction of wall). ex: fence |
| what is an easement in gross? | a personal right that one party grants to another to use the grantor's real property. (does not attach to estate/ not permanent) |
| what are the two types of easements in gross? | personal and commercial |
| what is a personal easement in gross? | granted for the grantee's lifetime, not revocable during that period. |
| what is a commercial easement in gross? | granted to a business entity rather than a private party. Not tied to anyone's lifetime ex: utility company |
| what is an easement creation? | the 4 ways an easement can be created: voluntary, necessity, prescriptive, and by government power of eminent domain. |
| what is an easement by prescription? | when someone uses another's property as an easement without permission for a statutory period of time. Under certain conditions a court order may give the user the easement right by prescription (regardless of owners desire). |
| what are the 3 requirements for a prescriptive easement to be granted? | -adverse and hostile use (used without permission) -open and notorious use (owner knows of the use) -continuous use (uninterrupted use) |
| what is an encroachment? | the unauthorized, physical intrusion of one owner's real property into that of another. ex; tree limb |
| True or False: encroachments cause infringements on the rights of the trespassed owner, and may diminish the property's value. | true |
| what happens to an encroachment if an owner is aware yet they do not take action? | the encroachment may become an easement by prescription |
| what is a license? | like a personal easement in gross. It is a personal right that a property owner grants to another to use the property for a specific purpose. (verbal agreement, not transferable, can be revoked, ends with death of either party). |
| what is a deed restriction? | a limitation imposed on a buyer's use of a property by stipulation in the deed of conveyance (puts restrictions on quality of property) ex: size and type of structure |
| True or False: deed restrictions are either covenants or conditions. | true |
| what is a condition in a deed restriction? | can only be created with transfer of Ownership |
| what is a covenant in a deed restriction? | can be created by mutual agreement |
| what is a lien? | a creditor's claim against personal or real property as security for a debt of the property owner. (collateral) |
| True or false: a lien is not an encumbrance that restricts free and clear ownership by securing the liened property as collateral for a debt. | False, a lien is an encumbrance |
| the creditor who places a lien on a property is called the______ and the debtor who owns the property is the _____. | lienor; lienee |
| what are the 4 legal features of a lien? | a lien: -does not convey ownership (one exception being a mortgage lien) -attaches to the property -a property may be subject to multiple liens -terminates on payment of the debt and recording of documents |
| what is the difference between a voluntary and involuntary lien? | a voluntary lien is created to borrow money or some other asset secured by mortgage. while an involuntary lien is one that a legal process places against property regardless of owners desires. |
| what is the difference between a statutory and equitable lien? | -statutory lien: statutory law imposes involuntary lien (real estate tax lien) -equitable lien: court action imposes an involuntary lien (judgment lien) |
| what is a general lien? | lien placed against any and all real and personal property owned by a particular debtor |
| what is a specific lien? | lien that attaches to a single item of real and personal property ex: conventional mortgage lien |
| what is the difference between a superior and inferior lien? | superior/senior: ranks above inferior, receive first payment from the proceeds of a foreclosure. (real estate, special assessment, inheritance tax) inferior/junior: order of importance based on date of recording. |
| what is a mechanic's lien? | an exception to the recording rule of inferior liens. Its priority date is based on when the work commenced or ended. It secures the costs of labor, materials, and supplies incurred in the repair or construction of real property improvements. |
| what is subordination? | a lienor can change the priority of a junior lien by voluntarily agreeing to lower the liens position. |
| what are the 3 superior liens? | real estate tax liens: ad valorem tax lien special assessment: benefit from government improvement federal and state inheritance tax liens: taxes owned by a decedent's estate. |
| what are examples of junior liens? | all tax liens other than real estate tax, assessment, and estate tax are junior liens. ex: federal income tax lien, state corporate income tax lien, etc |
| what is a judgment lien? | attaches to real and personal property as a result of a money judgment issued by a court. |
| what is a writ of execution in a judgment lien? | a court order that forces the sale of attached property and collection of debt. |
| True or False homestead property is exempt from judgment liens | True |
| what is a mortgage and trust deed lien? | in lien-theory: mortgages and trust deeds secure loans made on real property. (mortgage lien is voluntary) |
| what is a vendor's lien? | secures a purchase money mortgage, a sellers loan to a buyer to finance the sale of a property. |
| what is a municipal utility lien? | a municipality may place a utility lien against a residentś real property for a failure to pay utility bills. |
| what is foreclosure? | a lender attempts to recover the balance of a loan from a borrower by forcing the sale of the asset used as the collateral for the loan. |
| what are the 3 types of foreclosure process that enforce mortgage liens? | -judicial foreclosure -non-judicial foreclosure -strict foreclosure |
| what is judicial foreclosure? | occurs in states that use a (borrower and lender) that does not contain a "power of sale". |
| what is a lis pendens? | in a foreclosure suit, it gives public notice that the mortgaged property may soon have a judgment issued against it. |
| what is public sale and sale proceeds? | after public notice of the sale, the property is auctioned to the highest bidder. |
| what is the deficiency judgment? | if the sale does not yield sufficient funds to cover amount owed, mortgagee ask court for deficiency judgment. allows lender to attach and foreclose a judgment lien on the other property of borrower |
| what is the right of redemption? | the right to reclaim property that has been foreclosed by paying off amounts owed by creditors. (only possible within a redemption period). |
| what is non-judicial foreclosure? | when there is a "power of sale" clause which allows order of public sale without court decree. Can force sale of liened property without a foreclosure suit. NO REDEMPTION RIGHT |
| what is strict foreclosure? | gives the lender title directly by court order. |
| what is deed in lieu of foreclosure? | a borrower who faces foreclosure may avoid it by voluntarily by deeding property to lender. |
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