Encumbrances

Question 0

Specific Lien

Answer 0

A lien that targets only a specific piece of property. Example: property tax, mechanics, attachment.

Question 1

Lien

Answer 1

A claim or charge as a security or a debt or obligation one person (lienor) has upon the property of another (Ienee or lienholder)

Question 2

General Lien

Answer 2

On the individual, giving creditor right to all real and personal property. Example: IRS lien

Question 3

Mortgage

Answer 3

Bank liens in which real estate is pledged as security for a debt. The borrower (mortgagor) holds legal title, while the lender (mortgagee) holds the lien and interest in the property.

Question 4

Trust Deed

Answer 4

A lien in which the trustor conveys title to a trustee, who holds it for the beneficiary. The trustor holds all ownership rights while the lender has an equitable interest in the property. Trustee hold bare legal title.
Predominant in AZ.

Question 5

Seller Carryback

Answer 5

Property liens in which a seller assumes the lender’s role and carries the unpaid balance of the purchase price as a loan to the buyer.

Question 6

Agreement for Sale.

Answer 6

The vendor extends credit to the vendee, permitting the buyer (vendee) to a make normal down payment and pay the balance of the selling price in installments. Buyer gets possession and equitable title, while seller keeps legal title until debt is satisfied.

Question 7

Attachment

Answer 7

Seizure of real or personal property by court as security for satisfaction of debt. Legal procedure: Lis Pendens, Writ of Attachment, Garnishment.

Question 8

Judgement

Answer 8

Court decrees which, after being entered and recorded, become liens on all the property of defendants. Legal procedure: recordation, writ of execution, status of limitations, priority, satisfaction.

Question 9

Mechanic’s Lien (Inchoate)

Answer 9

Liens by contractors for unpaid service. Must file a notice and claim of lien within 120 days of completion of work.

Question 10

Title Theory

Answer 10

Lender has legal title to a mortgage property, and the borrower has equitable title.

Question 11

Lien Theory

Answer 11

Borrower has legal title to a mortgaged property, and lender is merely the lien holder. Arizona is lien theory.

Question 12

Hypothecate

Answer 12

Put an asset as collateral while continuing to use it.

Question 13

Promissory note

Answer 13

Debt document, one of two instruments a borrower signs in conjunction with a trust deed or mortgage. Generic IOU.

Question 14

Characteristics of Promissory Note

Answer 14

1) Evidence of debt. 2) Borrower Liability. 3) Negotiable, may be transferred. 4) NOT the recorded document.

Question 15

Estoppel Certificate

Answer 15

When lenders sell a mortgage or deed of trust, they often include an estoppel certificate, a document in which the mortgagor certifies the amount owed on a mortgage, interest, date, etc. Cannot go back on your word. Benefits investors.

Question 16

Easement

Answer 16

A nonpossessory property interest right one person has in land owned by somebody else, which gives the holder limited use or enjoyment of the land.

Question 17

Encumbrance

Answer 17

Anything that affects or limits the fee simple title to property. A right or interest in a property held by someone who is not the legal owner of the property.
4 basic types: easements, deed restrictions, encroachments, and liens.

Question 18

Collateral

Answer 18

A “claim”, security for the promissory note. The recorded document.
2 types: Mortgage and Deed of Trust (trust deed)

Question 19

Duties of a Trustee

Answer 19

1. Hold legal title
2. Return legal title to the borrower when loan is repaid.
3. Hold a trustee sale if the borrower defaults.

Question 20

Duties of borrower

Answer 20

1. Pay the debt as agreed in the note.
2. Pay real estate taxes and assessments.
3. Keep the property insured
4. Abide by all covenants in the note and collateral.

Question 21

Defeasance Clause

Answer 21

The cancellation of certain rights upon a specific occurrence. When a mortgage ( satisfaction of mortgage) of trust deed ( deed of reconveyance) has been repaid.