Chp. 9 - Liens and Easements

Question 1

Encumbrance

Answer 1

right to use or take possession of a legal owner’s property or to prevent the legal owner from enjoying the full bundle of rights

Question 2

Liens

Answer 2

creditors claim against personal or real property as security for a debt of the property owner

a. lien does not convey ownership except if it is a mortgage lien on a property
b. lien attaches to the property (if property is transferred new owner acquires the lien)
c. property is subject to multiple liens
d. lien terminates on payment of the debt

Question 3

easements/right of way

Answer 3

gives the holder right to use portion of the owner’s property in a defined way

Does not give any possessory rights only the right to enter and exit

Characteristics of easement:

1. must involve the owner of the land an another non-owning party
2. specified physical area within the property
3. May be affirmative (allow use) or negative (prohibit use)

Question 4

Lien types

Answer 4

1. Voluntary lien - to borrow money or other assets
2. Involuntary lien/statutory lien/equitable - one that a legal process places against a property against owner’s wish
3. General lien - placed against any and all real and personal property owned by debtor (ie. inheritance tax lien)
4. Specific lien - attaches to single item of real or personal property (ie., mortgage lien)
5. Judgement lien - results from a lawsuit issued by court in favor of a creditor (lien against property for 10 years)

Question 5

Lis pendens

Answer 5

legal document giving NOTICE of an action that has been filed against a parcel of property.

mortgage lender files a lis pendens at the start of foreclosure

Question 6

Tax liens

Answer 6

liens that arise from taxes owned on estate.

NY requires a tax on all real and personal property heirs inherit. Heirs are allowed to sell property from estate to pay tax bill

Question 7

Federal estate tax

Answer 7

federal government enforces tax on estate of person who passed way.

Question 8

Corporation franchise tax

Answer 8

tax on corporation for doing business in state.

NYC has tax for corporations that do business in the city. If not paid becomes a lien on all the property corporation owns.

Question 9

IRS lien

Answer 9

lien for failure to pay any federal incomes taxes or any taxes relating to income, federal unemployment tax, FICA

Question 10

Ad valorem tax lien

Answer 10

lien placed against properties as security for payment of the property tax.

NY law - real property tax lien has priority over all other liens.

Question 11

Mortgage lien

Answer 11

borrower gives the lien to the lender as security for the loan of the property.

Question 12

Mechanics lien

Answer 12

secures the costs of labor, materials and supplies incurred in repair or construction of real property improvements. Must be place within 4 months of the completion of work on single dwelling and 8 months on other buildings.

If property owner fails to pay for work performed or materials supplied a lien can be filed to force the sale of the property and collect the debt.

Unpaid subcontractors may record mechanic’s lien whether the general contractor has been paid or not

Question 13

Title insurance

Answer 13

uncovers any liens against the property and protect prospective buyer

Question 14

Special assessment lien

Answer 14

local government places liens to ensure payment for local improvement projects like new roads, schools, sewers or libraries

Question 15

State intangible lien

Answer 15

filed for non-payment of taxes on intangible property

Question 16

Vendor lien

Answer 16

or seller’s lien secures a purchase money mortgage to finance sale of property

Question 17

Municipal Utility lien

Answer 17

utility lien against resident’s for failure to pay utility bills.

Question 18

Lien priority

Answer 18

2 factors determine lien priority: categorization as superior or junior and date lien was recorded

Superior lien rank:

1. Real Estate tax lien
2. Special assessment lien
3. Federal estate tax lien
4. State inheritance tax lien

Junior lien rank:

1. Federal income tax lien
2. State corporate income tax lien
3. State intangible tax lien
4. Judgement lien
5. Mortgage lien
6. Vendor lien
7. Mechanics lien

Question 19

subordinate

Answer 19

lienor can change priority of a junior lien by agreeing to lower the liens position

Question 20

deed restrictions

Answer 20

limitation put on buyer’s use of property by stipulation in the deed (may apply to single property or entire subdivision)

Deed restriction apply to:

a. land use
b. size and type of structures may be placed on property
c. minimum cost of structures
d. engineering, architectural and aesthetic standards

Question 21

Two types of easements

Answer 21

1. appurtenant - property owner has right of usage to portions of an adjoining property owned by another party. Property enjoying the usage right is called dominant tenement or dominant estate.
2. gross - personal right one party grants to another to use the grantor’s property.

Question 22

easement by necessity

Answer 22

granted by court of law to owner because of a circumstance of necessity (ie, need for access to a property)

Question 23

easement for light and air

Answer 23

purchase light and air rights so others can’t build a structure to cut off light and air

Question 24

party wall

Answer 24

common wall shared by two separate structures. Half of the wall is shared by each owner

Question 25

Personal easement in gross

Answer 25

granted for grantee’s lifetime and terminates on the grantee’s death. May not be sold, assigned, transferred or willed.

Question 26

Commercial easement in gross

Answer 26

granted by business entity and the right may be assigned, transferred or willed. Usually owned by the government or agency (marina’s right-of-way to a boat ramp)

Question 27

easement may be created by:

Answer 27

1. Voluntary action
2. Necessity
3. Easement by prescription - someone uses another’s property without permission for a period of time

Question 28

easement by grant

Answer 28

created with express written agreement of the property owner

Question 29

easement by implication

Answer 29

grantor conveys portion of the real estate they own or dives a larger tract of land

Question 30

easement by condemnation

Answer 30

government entities reserves portion of property (create new highways, roadways etc…)

Question 31

easements terminate when

Answer 31

1. express release of the right
2. merger
3. purposeful abandonment
4. condemnation
5. change or cessation
6. destruction of an easement structure
7. non-use of an easement

Question 32

appurtenances

Answer 32

rights, privileges and improvement that belong to and pass with the transfer of property

1. easements
2. air rights
3. water rights
4. subsurface rights
5. profit
6. license

Question 33

profit

Answer 33

right to take part of the soil and produce of the land.

Gives right to remove something from the property

Question 34

license

Answer 34

personal right property owner grants to another to use the property for a specific purpose. Licenses are not transferrable.

Question 35

enroachments

Answer 35

unauthorized, physical intrusion of one owner’s real property into that of another

Example:
1 - tree limb extending into the neighbors property violating airspace
2 - driveway extending beyond the lot line onto the neighbors land
3 - fence built beyond property line