Chapter 3- Encumbrances

Question 1

Encumbrance

Answer 1

A right or interest in real property other than an ownership or tenancy interest.
It is a burden to the property that limits its use and may lessen its value.

Two main types of encumbrances: liens and items that affect the physical condition or use of the property

Question 2

Blanket Encumbrance

Answer 2

a voluntary lien (for money owed) placed over more than one parcel.

Question 3

Lien

Answer 3

a document that uses a property to secure the payment of a debt or the discharge of an obligation.

It is money owed for one reason or another on a property.

Liens include trust deeds or mortgages, tax liens, special assessments, mechanic’s liens, judgments, and attachments.

Question 4

Specific Liens

Answer 4

Liens against just one property.

Property taxes assessed against real property automatically become a specific lien on only that property on Jan 1st of each year.

Question 5

General Liens

Answer 5

Liens on all the properties of the owner, not just one.

Federal or state income taxes and judgment liens can become a general lien on all your real property.

Question 6

Trust Deed

Answer 6

(Deed of Trust)
A written instrument that makes real property collateral for a loan.

The evidence of debt is created by the PROMISSORY NOTE that accompanies the trust deed.

THe trust deed pledges (hypothecates) the property as collateral, or security, for the note.

IN CA, the trust deed is the usual security device for real property.
In eastern states, the mortgage is the typical financing instrument.

Question 7

Mortgage

Answer 7

a lien that secures real property for the payment of a promissory note (debt).

In CA, many people use the term ‘mortgage’ to mean a property loan, but they are usually talking about trust deeds.

* IMPORTANT TO KNOW DIFFERENCE*

Question 8

Mechanic’s Lien

Answer 8

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

A mechanic’s lien is a lien against the property itself. The property cannot be transferred until the obligation is paid and the title cleared.

Question 9

Preliminary Notice

Answer 9

A written notice that must be given before filing a mechanic’s lien and within 20 days of supplying labor or services.

The notice must contain a general description of the labor or materials furnished, who supplied them, and the person who contracted for these services.

As a matter of good practice, most suppliers include a preliminary notice as part of the original contract.

Question 10

Abstract of Judgment

Answer 10

A condensation or summary of the essential provisions of a court judgment

Question 11

Attachment

Answer 11

(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.

This is to assure that there will be enough property to satisfy the judgment should the plaintiff prevail.

Good for 3 years

Question 12

Conditions

Answer 12

A qualification of an estate granted which can be imposed only in conveyances. They are classified as conditions precedent and conditions subsequent.

More stringent than breaking a covenant– can lose title.

A future and uncertain event which must happen to create an obligation to extinguish an existing obligation

Question 13

Covenant

Answer 13

A promise to do or not to do a certain thing.

Promise broken, sue for damages.

Ex. a property could sell with a covenant stating that the property shall never be used to sell alcoholic beverages. If the covenant is broken, the usual court remedy would be an action for money damages,
A court may also grant an injunction requiring compliance with the covenant.

Question 14

Declaration of Abandonment

Answer 14

A homestead may be terminated by a DECLARATION OF ABANDONMENT.

It must be acknowledged and recorded by the involved parties.
A sale or other conveyance of the property also terminates the homestead.

Question 15

Declaration of Homestead

Answer 15

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

A homestead does NOT protect a homeowner against foreclosure on a trust deed, mechanic’s lien, or lien filed prior to the filing of the homestead

Question 16

Defendant

Answer 16

The person being sued.

During an unlawful detainer action for collection of past due rents, it may be advantageous for a PLAINTIFF to obtain an ATTACHMENT against the DEFENDANT.

Question 17

Dominant Tenement

Answer 17

the LAND that obtains the benefits of an easement.

Question 18

Easement

Answer 18

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

Gives a person the right to pass through or use another’s property.

The local sewer company may gain easements from all the owners on a block to lay a new pipe line across their properties, or your next-door neighbor may request an easement to create a vegetable garden in part of your yard that is much sunnier than his yard.

Question 19

Easement Appurtenant

Answer 19

An easement ‘created for and beneficial to’ the owner of adjoining or attached lands.

An easement is REAL property, not personal, but it is not an estate.

These easements are permanent once negotiated, that is, each time the property with the easement and the property that granted the easement are sold, the agreement continues in force.

Appurtenant easements may be overhead, surface, and underground.

Question 20

Easement in Gross

Answer 20

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.

It is a personal property right.

Even though it is a personal right, it is still a servient tenement.

Ex. a utility company or person obtaining the right to run natural gas lines across your land. In this instance your land would become a servient tenement

Question 21

Encroachment

Answer 21

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

It is something that intrudes on another person’s property, such as a tree over the fence. Accidental or deliberate, it is still an ENCUMBRANCE on the neighbor’s property.

Question 22

Homestead

Answer 22

A special provision of the CA law that allows homeowners to protect their homes from forced sale to satisfy their debts, within certain limits.

A homestead is NOT an ENCUMBRANCE.

Question 23

Lis Pendens

Answer 23

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

Attorneys often file a lis pendens before a court date is set in order to stop the transfer of the property.

Suit Pending

Question 24

Notice of Non-Responsibility

Answer 24

A notice provided by law designed to relieve a property owner from responsibility for the cost of work done on the property or materials furnished therefore, when contracted by a tenant or vendee on a land contract notice must be verified, recorded, and posted.

Action releases an owner from any liability caused by the unauthorized activity and prevents suppliers from filing a valid mechanic’s lien.

Question 25

Plaintiff

Answer 25

Person filing a court action to obtain an attachment lien.

Question 26

Restrictions

Answer 26

A typical restriction limits the types of buildings on a given piece of land to single-family residences.

Also a restriction might require future construction to meet specific standards.

Ex. all houses erected on a property must be at least 5000 sq ft

Three types: Covenants, Conditions, and Restrictions.

Main purpose ist o keep use of the land uniform throughout certain tracts of land.

Question 27

Satisfaction

Answer 27

Discharge of mortgage or trust deed lien from the records upon payment of the evidenced debt.

Question 28

Servient Tenement

Answer 28

the LAND that gives the easement (use of the land) for the benefit of another.
Bestows the benefit

Question 29

Sheriff’s Sale

Answer 29

The forced sale of a debtor’s property to satisfy a judgment under a WRIT OF EXECUTION.

In CA, the sheriff’s sale is the usual method of forcing the sale of property to pay off a judgment

Question 30

Writ of Execution

Answer 30

(Sale)
A court order requiring the sale of certain property to satisfy a judgment.

It extends the lien against the real property for one year.

If the judgment has already been recorded as a lien on the property, the writ of execution will not create a new lien.