Encumbrances & Liens Flashcards
Encumbrances
- non-possessory interests limiting legal owner’s rights
- does not include possession
Two types of encumbrance?
- encumbrances that affect use
- encumbrances that affect ownership, value, transfer
Encumbrance affecting use include?
easements, encroachments, licenses, deed restrictions
Encumbrances affecting ownership, value, transfer include?
liens, deed conditions
Easements - Characteristics
- rights to use portions of another’s property
- affirmative easement: allows a use
- negative easement: prohibits a use
Affirmative easement allows?
use of another’s property
Negative easement prohibits?
use of another’s property
Easements - Appurtenant
- attaches to the estate
- dominant tenement’s right to use or restrict adjacent servient tenement
- by necessity, to landlocked owners
- party wall easement in a shared structure: to not damage or destroy
A party wall easement in a shared structure is?
to not damage or destroy
Easements - In Gross
- does not attach to the estate
- personal – not transferrable, ends upon death of easement holder
- commercial – transferrable, granted to a business
Easements - By Prescription
- property used without permission; can come to exist regardless of owner’s consent
- obtainable through continuous, open, adverse use over a period of time which varies by state
Easements - License
- personal right to use a property
- does not attach
- non-transferrable
- revocable
- ceases upon death of owner
Encroachments
- unauthorized intrusion of one’s owner’s real property onto another’s
- may require survey to detect
- may become prescriptive easements if not remedied over prescription period
Deed Restrictions
- conditions, covenants imposed on property by deed or subdivision plat
- goes with the property upon transfer
- established to control quality, standards of a subdivision
- apply to land use, type of structure, setbacks, minimum house size, etc.
Deed Convenants
-created by mutual agreement
- enforceable by injunction
Liens
- claims attaching to real and personal property as security for debt
- recorded on title effectively reducing equity in the amount of the lien
- does not convey ownership unless a mortgage in a title theory state
- lien attaches to the property
- property can be encumbered by multiple liens
- lien termination upon payment, recording satisfaction
Voluntary / Involuntary
mortgage lien / tax lien
General / Specific
against any & all assets / against car or house
Superior / Junior
paid before juniors / paid after superiors by date of recording
Lien Priority
- order in which liens against a property are satisfied
- determined by superior v junior class and by date of recordation
- the highest priority lien is paid by foreclosure proceeds before any other lien
Superior Liens by rank ( not by date of recordation; paid before junior liens)
- real estate tax liens
- special assessment liens
- federal estate tax liens
- state inheritance tax liens
Junior Liens ( by date of recording) including
- federal income tax liens
- judgment liens
- mortgage liens
- vendors’ liens
- mechanics’ liens (priority by date work performed)
Foreclosure
liquidation or transfer of collateral property by judicial, non-judicial, or strict foreclosure
Mortgage Lien Foreclosure
liquidation of collateral property by judicial, non-judicial, or strict foreclosure
Judicial Foreclosure
- lawsuit by creditor followed by court-ordered public sale to enforce lien; may entail deficiency judgments, redemption rights
Deficiency Judgment
judgment by court on borrower to forfeit other property to pay off any shortfall from foreclosure
Redemption Right
borrower’s right to reclaim property before or after foreclosure sale
Non-judicial Foreclosure
“power of sale” granted to lender; no suit; no deficiency
Strict Foreclosure
court orders legal transfer of title directly to lender without public sale
Deed in Lieu of Foreclosure
“power of sale” granted to lender; no suit; no deficiency judgment; no redemption period after sale
Lien Theory State
lender of mortgaged property holds equitable title rather than legal title; borrower holds legal title
Title Theory State
lender holds legal title to the mortgaged property until the mortgagor satisfies the terms and obligations of the loan
