Real Estate Principles Chapter 3

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Encumbrance

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Encumbrance is a right or interest in real property other than an ownership or tenancy interest

Two types of encumbrance are liens and items that affect the physical condition or use of the property blanket encumbrance or blanket trust deed

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Blanket encumbrance or blanket trust deed

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Is a voluntary lien for money owed placed over more than one parcel

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Release clause

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A release clause releases portions of the property

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Lien

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A Lien is a document that uses the property to secure the payment of a debt for the discharge of an obligation

Liens are voluntary or involuntary, and either specific or general.

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Voluntary liens

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Are many debts that an owner agrees to pay

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Involuntary liens

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Our money obligations that create a burden on a property by government taxes or legal action because of unpaid bills

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Specific Liens

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Are liens against just one property

Example is property taxes

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General liens

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Are liens on all the properties of the owner, not just one. This can be federal or state income taxes and judgment liens can be general liens

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Trust deed

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Is a written instrument that makes real property collateral for a loan

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Mortgage

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A lien that secures real property for the payment of a promissory note or debt

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Mechanics lien's

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Are liens that may be filed against the property by a person who was not paid after furnishing labor or materials for construction work on that property

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Preliminary notice

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A written notice that must be given before filing a mechanics lien and within 20 days of supplying labor services

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Scheme of improvements

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A mechanics lien dates back to the beginning of work on the project. This is known as the scheme of improvements

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Notice of completion

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Should be recorded by the owner within 10 days of completion this limits the general contractor to 60 days to file a claim and subcontractors to 30 days

If the owner does not file suppliers of services has up to a 90 day period.

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Notice of nonresponsibility

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This is posted on the properties stating that the owner is not responsible for the work being done.

An example would be if a tenant installs carpet in your apartment without your authorization you can file a notice of nonresponsibility

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Tax liens

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Government tax is not paid it may become a lien.

Property can be sold to pay back taxes. They are either specific liens or general liens

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Special assessments

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Local improvements are paid by the property owner in a given district through special assessments. Improvements such as streets, sewers, streetlighting are generally paid for by the property owner who have benefited from the work. If these are not paid they become a lien against the property

Property can be transferred without the assessment being paid, the buyer and seller must agree

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Mello roos bonds

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Developers finance roads, schools, and other off-site improvements with these bonds, which become a specific tax levied against homeowners. Sellers must disclose if the property is subject to a Mello-Roos lien

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Judgments (involuntary and general liens)

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A court decision determining the rights of the parties involved in the amount of compensation

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Abstract of judgment

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For a judgment to become a lien, an abstract of judgment, or formal filing of the judgment, must be recorded.

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Small claims court

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$10,000 limit, anyone can take anyone to small claims court

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Termination of judgment lien (judgment is satisfied)

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A judgment is satisfied by the payment of money or the return of property

Should be filed with the clerk of the court to clear the lien from the recordattachment

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Attachment Lien

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Attachment lien is a process of the law that creates A lien.

it gives custody of real or personal property to the court to assure payment of a pending lawsuit in that county

Example is if somebody has property and transfers the title into a close relatives name therefore no property to satisfy the judgment

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Plaintiff

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Person filing a court action to obtain an attachment lien

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Defendant

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Person who is being sued

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Lis pendens

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Is the recording of a notice with the county recorders office warning all persons that a certain type of lawsuit is pending concerning a particular property

This is to stop transfer of the property before court date

This place is a cloud on the title, and is effective when filed. The property is not marketable until the Lis pendens is removed

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Writ execution

Sheriff's sale

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A writ of execution is a court order requiring the sale of certain property to satisfy a judgment

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Sheriffs sale

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Is the forced sale of the debtors property to satisfy a judgment under a writ of execution

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Injunction (court order to stop)

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An injunction is a court order which can restrict a party and doing an act such as violating private deed restrictions.

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Mr. Crawford has been burning rubbish on his own property. The neighbors have complained and have secured a court order, ordering Mr. Crawford to stop the offending practice. The court order is called an injunction

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Items that affect physical use – non money encumbrances

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Items that affect physical use our non-– money encumbrances that affect the physical use of real property. They include easements, building restrictions and zoning, and encroachments and leases, which are conditions that limit the physical use of the property

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Easements

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An interest in land owned by another person consisting of the right to use our control the land, or an area above or below it, for specific, limited purpose.

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Ingress

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The right to enter is called ingress

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Egress

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The right to exit is egress

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Two types of easements

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Easements Appurtenant

Easements in gross

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Easement appertenant

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Easement created for and beneficial to the owner of a joining or attached Lands

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Dominant tenement

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Is the land that obtains the benefits of an easement

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Servient tenement

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Is the land that gives the easement or use of the land for the benefit of another

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Easement in gross

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Benefits the general public

Is not attached to any particular land or dominant tenement. It is an easement created for the benefit of others who do not own adjoining or attached Lands.

Example of an easement in gross would be the utility company has the right to run natural gas lines across your land. In this instance your land would become a servient tenement

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Unlocated easement

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A property owner could give the right to cross his or her land and not limit how or where a person could have to cross.

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Which three ways are easements created?

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Express Grant- in writing

Implication of law – implied easement

Long use – prescription

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Express Grant

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a deed or contract that is in writing

A written contract can create an easement between the parties. The contract should be acknowledged and recorded for legal protection

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Implication of law – implied easement

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If an easement is implied in a transfer, or if it is necessary for use of the land, then the easement is said to be implied by law.

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Easement by necessity – landlocked

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Is an easement granted by the court if it is absolutely necessary for access

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long use – easement by prescription

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Is an easement to continue using land by virtue of having used it for a long period of time

Possession for five continuous years can create a prescriptive easement as long as the use is… Open and notorious , uninterrupted for five years, under a claim of right or color of title, hostile – without permission of the owner.

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In what ways may easements be terminated?

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Expressed release- written document can terminate an easement but the usual form is a quick claim deed or release

Merger of dominant and servient tenements- automatically terminated when the dominant and servient tenement merge into a common or single ownership

Excessive use - miss use of the easement that is established through a court can terminate an easement

Abandonment and nonuse- if you abandon the easement you may lose the easement to court action just as easement is gained through prescription(and only prescription easements) of five years so can nonuse of the easement for five years terminate it

Distraction of servient tenement- when the governing body exercises the right of eminent domain, The dominant tenant easement is considered automatically terminated.

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Private deed restrictions

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Limit the use of occupancy of the land

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Covenant

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A covenant is a promise to do or not to do a certain thing

Only some covenants run with the land, but all conditions run with the land.

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Conditions

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Condition is a future and uncertain event which must happen to create an obligation to extinguish an existing obligation. The penalty for not following the set conditions is the reversion of the property to the grantor.

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Public restrictions

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Our limits made by governmental agencies, usually by cities and counties, in the form of zoning

This is to promote health, safety, morals, and general welfare of the public.

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Private restrictions

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made by the president our previous landowners and are created only for their benefit

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Zoning restrictions

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Created by and for the benefit of the general public to ensure health, safety, comfort and morals

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Zoning

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Is a restriction on the use of private property by the local government agency. This dictates how the property can be used, the setbacks required, and the height limit on any structures

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Race restrictions

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In 1961 race restrictions were avoided. This is illegal in California and are removed by the cords from any deed

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Encroachment

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Is the wrongful, unauthorized placement of improvements or permanent fixtures on property by a non-owner of that property.

You must pursue the right to have an encroachment removed within three years or lose your right

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Homestead

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Homestead is not an encumbrance.

Homestead is a special provision of the California law that allows homeowners to protect their homes from for sale to satisfy their debts, within certain limits.

Two types:

Head of the household

Federal Homestead act of 1862

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Homestead declaration

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Is the recorded document that protects a homeowner from foreclosure by certain judgment creditors.

Homestead does not protect a homeowner against foreclosure on a trusteed, mechanics lien, or lien filed prior to the filing of the homestead

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Declaration of abandonment

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The Homestead may be terminated by a declaration of abandonment.