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Real Estate Licence - Study > SECTION 2, CHAPTER 6: LIENS AND EASEMENTS > Flashcards

SECTION 2, CHAPTER 6: LIENS AND EASEMENTS Flashcards

1
Q

EASEMENT

A

The limited, legal right to use someone else’s property for their benefit.

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2
Q

Can an EASEMENT include the space beneath the ground, or up in the air?

A

YES

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3
Q

Who can HOLD an EASEMENT?

A

PRIVATE CITIZENS or GOVERNMENTS

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4
Q

LIEN

A

Financial claim (ENCUMBRANCE) placed on someone’s TITLE to real estate.

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5
Q

What does a LIEN do?

A

It gives the CREDITOR a LEGAL RIGHT over a DEBTOR’s REAL and/or PERSONAL property - which serves as SECURITY for repayment of debt.

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6
Q

Does a LIEN always come from an OWED DEBT?

A

YES.

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7
Q

How is a LIEN created?

A

By an AGREEMENT OF THE PARTIES (like getting a mortgage instead of paying cash for a house) or by OPERATION OF LAW (tax lien).

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8
Q

Does a LIEN transfer title of the property?

A

No. It does NOT transfer TITLE of the property.

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9
Q

Does a LIEN affect the right of the owner to CONVEY (will, sell, tranfer) HIS INTERESTS (property) to someone else?

A

NO. However, the LIEN is ATTACHED TO THE PROPERTY.

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10
Q

If a lien is not removed prior to a sale, what happens?

A

The BUYER buys the property with all pre-existing LIENS and other ENCUMBRANCES attached to the property.

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11
Q

What should you consider when dealing with LIENS as ENCUMBRANCES AFFECTING TITLE?

A
  • PRIORITY OF LIENS
  • SATISFACTION OF LIENS
  • ENFORCEMENT OF LIENS
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12
Q

PRIORITY OF A LIEN

A

Refers to who gets paid first after a property is sold to satisfy DEBTORS (LIENS).

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13
Q

How is PRIORITY determined?

A

It’s based off the order in which the creditor(s) FILE/RECORD (RECORDATION) the LIEN into the public record.

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14
Q

Does any particular entity take priority of collection of their LIEN over other entities?

A

YES. REAL ESTATE TAX LIENS and TAX ASSESSMENTS take priority over all other types of LIENS - regardless of the date of recordation.

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15
Q

Is it TRUE that once recorded in the public record, a LIEN creates a CLOUD on the TITLE?

A

YES. The LIENEE (property owner) should make sure that the LIENOR (creditor) records a SATISFACTION OF LIEN as soon as the LIEN has been paid, in order to remove the CLOUD ON TITLE.

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16
Q

How are Liens ENFORCED?

A

By COURT ORDER.

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17
Q

How does a CREDITOR pursue this legal action?

A

They must request the appropriate court to ORDER THE SALE OF THE PROPERTY IN QUESTION.

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18
Q

What happens to the LIENS once a court orders an ENCUMBERED PROPERTY to be sold, to satisfy unpaid debts?

A

LIENS will be paid from the proceeds of the sale IN ORDER OF PRIORITY.

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19
Q

Can the owner of the property receive any proceeds after the court ordered sale of their property?

A

YES. If there is any money left after repaying all CREDITORS, including COURT COSTS and COSTS from the sale, the property owner will receive what is left of the profit of the sell.

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20
Q

What are the 3 kinds of LIENS?

A
  • GENERAL or SPECIFIC
  • VOLUNTARY or INVOLUNTARY
  • STATUTORY or EQUITABLE
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21
Q

What is a GENERAL LIEN?

A

A LIEN that ATTACHES TO ALL PROPERTY (PERSONAL and REAL) owned by the DEBTOR.

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22
Q

Where do GENERAL LIENS originate from?

A
  • COURT JUDGMENTS
  • IRS Taxes,
  • ESTATE Taxes
  • INHERITANCE Taxes.
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23
Q

What is a SPECIFIC LIEN?

A

A LIEN that attaches to ONE SPECIFIC parcel of REAL ESTATE

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24
Q

Do SPECIFIC LIENS attach to people?

A

NO. So if a buyer purchases a new piece of property that has a SPECIFIC LIEN attached to it, the new buyer does not become personally responsible for payment of that debt.

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25
Q

What happens if a court decides to order the sale of a property with a SPECIFIC LIEN attached to it, that someone just recently purchased?

A

The new owner could lose her newly purchased piece of property.

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26
Q

Name some different kinds of SPECIFIC LIENS?

A
  • MORTGAGE LIENS
  • PROPERTY TAX LIENS
  • SPECIAL ASSESSMENT LIENS
  • UTILITY LIENS
  • MECHANIC’S LIENS
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27
Q

What is a VOLUNTARY LIEN?

A

It’s when a property owner AGREES to have a LIEN put on their property (VOLUNTARILY).

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28
Q

What is an INVOLUNTARY LIEN?

A

When the property owner has a LIEN placed on their property - against their will (by operation of LAW).

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29
Q

What is the most common kind of VOLUNTARY LIEN?

A

A MORTGAGE.

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30
Q

What are the 2 kinds of INVOLUNTARY LIENS?

A
  1. STATUTORY

2. EQUITABLE

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31
Q

What is a STATUTORY LIEN?

A

A STATUTORY LIEN do not result from a court case. They arise from STATUTE. That means that the LIEN is created under certain circumstances because a law says that in those circumstances, a lien may be created. Most common STATUTORY LIEN is a MECHANIC’S LIEN.

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32
Q

Is it true that in a STATUTORY LIEN, the rights of the CLAIMANT (creditor) are controlled by the laws of the state where the property is located?

A

YES.

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33
Q

Is it true that a CLAIMANT (creditor) must take steps to enforce their claims within a certain period of time?

A

YES.

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34
Q

What are some examples of STATUTORY LIENS?

A
  • Mechanics’ Liens
  • Vendors’ Liens
  • Property Taxes
  • Special Assessments
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35
Q

What is an EQUITABLE LIEN?

A
  1. A type of LIEN which shows an intention to pledge property as security for a debt.
    OR
  2. A type of LIEN that is imposed by the court in order to maintain a certain degree of fairness or “equity.”
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36
Q

What are some of the MOST COMMON kinds of LIENS in use today?

A
  • Property tax liens;
  • Special assessment liens;
  • Federal tax liens;
  • Mortgage liens;
  • Vendor’s liens;
  • Vendee’s liens;
  • Mechanic’s liens;
  • Judgment liens;
  • Attachment liens;
  • Lis pendens.
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37
Q

PROPERTY TAX LIENS

A

GENERAL, INVOLUNTARY LIENS filed against real property at the beginning of each tax year (generally January 1). The effective date of the lien is the date the taxes are assessed..

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38
Q

Is a PROPERTY TAX LIEN considered a SUPERIOR LIEN?

A

YES. They are superior liens, meaning that they take priority over other types of liens regardless of when prior liens were recorded.

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39
Q

SPECIAL ASSESSMENT LIENS

A

GENERAL, usually INVOLUNTARY LIENS filed against those REAL PROPERTIES that will benefit from a proposed public improvement.

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40
Q

When would a SPECIAL ASSESSMENT LIEN be voluntary?

A

If all affected property owners agreed to pay, and petitioned the local government for a public improvement. (sidewalks, curbs, drainage, rec facilities, etc)

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41
Q

Who is REQUIRED to pay the SPECIAL LIEN?

A

Only those properties directly affected by the improvement are required to pay the special lien, since they are the ones who benefit from an enhanced value.

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42
Q

Are SPECIAL ASSESSMENT LIENS considered SUPERIOR LIENS?

A

YES.

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43
Q

How are SPECIAL ASSESSMENTS different from PROPERTY TAXES?

A

They differ from property taxes in that property taxes are for the support of general functions of government, while SPECIAL ASSESSMENTS are to cover the cost of specific local improvements.

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44
Q

FEDERAL TAX LIENS

A

GENERAL, INVOLUNTARY LIENS imposed for non-payment of Federal ESTATE, INCOME , or PAYROLL taxes.

45
Q

Do FEDERAL TAX LIENS attach to all REAL and PERSONAL Property of the DEBTOR?

A

YES. Because these are GENERAL LIENS, they attach to all REAL and PERSONAL property of the debtor.

46
Q

Are REAL ESTATE TAXES and SPECIAL ASSESSMENT LIENS superior to FEDERAL TAX LIENS?

A

YES. However, some FEDERAL TAX LIENS (such as FEDERAL ESTATE TAX LIENS) are SUPERIOR to most other liens, regardless of the date of recording.

47
Q

MORTGAGE LIEN

A

SPECIFIC, VOLUNTARY LIEN filed by a Mortgage Lender against a piece of REAL PROPERTY that has been pledged as collateral for repayment of a debt.

48
Q

VENDOR’s (SELLER) LIEN

A

SPECIFIC, EQUITABLE, INVOLUNTARY LIENS filed by a seller (vendor), against the property sold, in the amount of any unpaid purchase price.

49
Q

Does a VENDOR’s LIEN give the SELLER (vendor) a DIRECT INTEREST in the property?

A

NO. It is instead, an EQUITABLE RIGHT in case all of the purchase money is not paid to the seller.

50
Q

VENDEE (BUYER) LIEN

A

SPECIFIC, EQUITABLE, INVOLUNTARY, LIENS filed by a BUYER (VENDEE) when the buyer has purchased the property but has not yet received title.

51
Q

When do we usually see a VENDEE LIEN?

A

When PROPERTY is purchased under a contract for deed (installment sales contract, agreement for deed)

52
Q

What is a CONTRACT FOR DEED?

A

A type of LAND CONTRACT that allows the buyer, after putting money down, to purchase property over time, by making monthly payments.

53
Q

Is there a MORTGAGE on a CONTRACT FOR DEED (LAND CONTRACT) PURCHASE?

A

NO. There is no mortgage. The VENDEE (buyer) receives title after making all (usually monthly) payments.

54
Q

What happens if the VENDOR (SELLER) cannot or does not deliver a clean title after all terms of the contract have been met?

A

The VENDEE’s LIEN would cover all monies paid for the property PLUS the value of any improvements made to the property by the buyer.

55
Q

MECHANIC’S LIEN

A

Specific, Statutory, INVOLUNTARY LIEN filed against real property by WORKERS for non-payment of WORK, and/or MATERIALS and/or MAINTENANCE the owner had done to her property.

56
Q

Why do WORKERS have a LEGAL RIGHT to file a LIEN against a property that they’ve worked on?

A

Because their work and/or materials have enhanced the value of the property; therefore, the parties performing the work should be given a right-of-lien.

57
Q

Is it TRUE that MECHANIC’S LIENS can only demand payment for work and materials that have actually become a PERMANENT part of the building or the land?

A

YES.

58
Q

Can subcontractors and laborers file MECHANIC’s LIENS independently of a general contractor?

A

YES - in most states.

59
Q

How can a PROPERTY OWNER protect themselves from SUB-CONTRACTOR’s filing MECHANIC’s LIENS?

A

When working with a GENERAL CONTRACTOR, the OWNER should make sure they receive a RELEASE OF LIENS from all subcontractors and suppliers in their contract or upon final payment.

60
Q

Is it true that Suppliers and Materialmen must have a contract (express or implied) before they are entitled to file a LIEN against an owner’s property?

A

YES.

61
Q

What should a Property Owner do if they do not want to be held responsible for work contracted by a tenant?

A

They should post a NOTICE OF NON-RESPONSIBILITY on the property and should record a copy of this notice in the public record.

62
Q

Does the EFFECTIVE DATE of a mechanic’s lien varies from state to state?

A

YES. In some states it is the day that work visibly commences.

63
Q

JUDGEMENT LIENS

A

General, Statutory, Involuntary LIENS that attach to a BORROWER’S (debtor’s) real and personal property.

64
Q

Is it TRUE that JUDGEMENT LIENS only cover REAL PROPERTY located in the county where the judgment is rendered?

A

YES.

65
Q

How are JUDGEMENT LIENS created?

A

Usually as a result of a COURT ACTION (lawsuit).

66
Q

Can a CREDITOR ile notices in other counties if he wishes to extend the lien coverage?

A

YES.

67
Q

How are JUDGEMENT LIENS enforced?

A

When the court issues a WRIT OF EXECUTION, directing the sheriff to SEIZE and SELL as much of the DEBTOR’s REAL and PERSONAL property as is necessary to pay the debt and cover the expenses of the sale.

68
Q

ATTACHMENT LIEN

A

A LIEN that SEIZES a DEFENDANT’S REAL and PERSONAL PROPERTY and HOLDS IT in the custody of the court as security, while a lawsuit is being decided.

69
Q

How is the ATTACHMENT LIEN created and how is NOTICE given of the LIEN’s CREATION?

A

By recording a copy of the WRIT OF ATTACHMENT in the public record.

70
Q

Can the PROCESS/METHOD OF ATTACHMENT be used when dealing with a secured obligation such as a mortgage?

A

NO. A mortgagee must first try to satisfy the debt by seeking the sale of the mortgaged property. Then, if part of the debt still remains unpaid, the mortgagee may attach the rest of the debtor’s property.

71
Q

When can THE PROCESS/METHOD OF ATTACHMENT not be used?

A

When dealing with a SECURED OBLIGATION such as a mortgage. A mortgagee/LENDER must first try to satisfy the debt by seeking the sale of the mortgaged property.

72
Q

What happens if, even after selling the borrower’s property, part of the LENDOR’s debt still remains upaid?

A

The LENDER may THEN attach the rest of the debtor’s PERSONAL PROPERTY.

73
Q

What is LIS PENDENS?

A

It is NOT A LIEN. It means “ACTION PENDING” and is NOTICE of a POSSIBLE FUTURE LIEN.

74
Q

How does LIS PENDENS work?

A

It gives NOTICE to the world that an action affecting a PARTICULAR PIECE OF PROPERTY has been FILED and that the property IS, or IS ABOUT TO BECOME, involved in a lawsuit that may result in a judgment AGAINST the property.

75
Q

If a LIS PENDENS Lawsuit is successful, what will be the PRIORITY of the LIEN?

A

If successful, the LIS LIEN will date back to when the LIS PENDENS was filed.

76
Q

Do EASEMENTS create an OWNERSHIP INTEREST in LAND?

A

NO. ONLY the RIGHT TO USE the LAND.

77
Q

How are EASEMENTS created?

A

By agreement, by adverse or hostile use, or by condemnation proceedings.

78
Q

Is it TRUE that if EASEMENTS exist pursuant to agreement, as opposed to adverse possession or condemnation proceedings, then the easement must be in writing because the statute of frauds requires that conveyances of interests in land be in writing?

A

YES.

79
Q

Is it TRUE, that a buyer purchases a parcel of land, he buys it subject to any easements attached to it?

A

YES.

80
Q

Can an EASEMENT negative impact the value of property?

A

YES. Especially an EASEMENT that grants the right to cross another’s land in order to gain access.

81
Q

What is a LICENSE?

A

A LICENSE is a personal, non-assignable PRIVILEGE granted by one person to another person.

82
Q

How is a LICENSE different from an EASEMENT?

A

A LICENSE is NOT an interest in land and DOES NOT HAVE TO BE IN WRITING. It attaches to the individual and is not an encumbrance on real property and can be REVOKED at any time.

83
Q

What is an example of a LICENSE?

A

if a landowner gives a person oral permission to cross his land in order to gain access to the grantee’s land, that is a license to use the land, not an easement. When the landowner sells the land, the license to use dies and the new landowner is not obligated in any way.

84
Q

What are the 3 main CLASSIFICATIONS of EASEMENTS?

A
  1. Easements Appurtenant;
  2. Personal Easements in Gross
  3. Commercial Easements in gross.
85
Q

What is an EASEMENT APPURTENANT?

A

The right of one landowner to use the property of an adjoining landowner for a specific purpose.

86
Q

What type of condition needs to be present to create an EASEMENT APPURTENANT?

A

There must be two adjoining parcels of land that are owned by different parties.

87
Q

What is the DOMINANT ESTATE?

A

The BENEFITS the Property Owner who has the RIGHT OF USE (for the easement), receives.

88
Q

What is the SERVIENT ESTATE?

A

The BURDEN that the Property Owner of the LAND BEING USED (for the easement), receives.

89
Q

Does an EASEMENT APPURTENANT remain in force and unaffected, even after property is SOLD, WILLED TO HEIRS or GIVEN AWAY?

A

YES.

90
Q

What is a PERSONAL EASEMENT IN GROSS?

A

Property rights given to an individual. They are personal in nature and do not attach to any particular piece of land.

91
Q

How are PERSONAL EASEMENTS IN GROSS different from an EASEMENT APPURTENANT?

A

PERSONAL EASEMENTS IN GROSS are SERVIENT, NOT DOMINANT, so the EASEMENT attaches to a person, not to the land. If that person goes away, the PERSONAL EASEMENT goes with them and does not attach to the new Property Owner.

92
Q

COMMERCIAL EASEMENTS IN GROSS

A

Property rights held by a business entity.

93
Q

What are some examples of COMMERCIAL EASEMENTS IN GROSS?

A

Telephone, electric, and gas company right-of-ways

94
Q

Do COMMERCIAL EASEMENTS IN GROSS attach to the UTILITY COMPANY and NOT to a PIECE OF PROPERTY?

A

YES. Thus, there is no DOMINANT ESTATE. The SERVIENT ESTATE therefore, is the property that must give the utility company a right-of-way.

95
Q

Unlike personal easements in gross, commercial easements in gross usually give the holder_____?

A

The right (such as the utility) to SELL, ASSIGN, or WILL the EASEMENT.

96
Q

EASEMENTS can be created by:

A
  • Express Grant
  • Express Reservation
  • Necessity
  • Implication
  • Prescription
  • Agreement
  • Condemnation
97
Q

EXPRESS GRANT EASEMENT

A

An EASEMENT created in writing by the landowner on his own land. This is MOST OFTEN contained on the deed, which also conveys TITLE to the land.

98
Q

What happens if the EXPRESS GRANT is NOT contained on a DEED, but on a different document instead?

A

Then that document should contain all the formal elements of a DEED, since it is conveying an interest in land. And it should carefully describe the easement, the land subject to it, and should also address such matters as repairs and maintenance. Furthermore, it should be signed, acknowledged, and recorded.

99
Q

What is an EXPRESS RESERVATION EASEMENT?

A

An EASEMENT that may be created by EXPRESS RESERVATION when a landowner sells a portion of his property to another, but reserves an EASEMENT over that sold land by placing a RESERVATION in the DEED.

100
Q

On an EXPRESS RESERVATION EASEMENT, which property is the DOMINANT ESTATE and which property is the SERVIENT ESTATE?

A

The RETAINED PROPERTY with the RIGHT of USE is the DOMINANT ESTATE, and the SOLD PORTION is the SERVIENT ESTATE.

101
Q

What is an EASEMENT OF NECESSITY?

A

An EASEMENT created by OPERATION OF LAW rather than by a formal written agreement.

102
Q

What is a classic example of EASEMENT OF NECESSITY?

A

A piece of property is LANDLOCKED. The law provides that all owners should have the RIGHT OF INGRESS TO their property and a RIGHT OF EGRESS FROM their property. Therefore, if a piece of property is locked in by land on all sides, the OWNER must be afforded an EASEMENT to a road through an adjoining parcel (usually through the land owned by the same person who sold or gave away the landlocked parcel). Since this is accomplished by operation of law, it need not be in writing in order to be enforced against the SERVIENT ESTATE.

103
Q

Can an EASEMENT arise by IMPLICATION from the or conduct of the parties?

A

YES. For example, a person who has acquired mineral rights on a property also acquires an implied easement to enter the property for the purpose of removing the minerals.

104
Q

PRESCRIPTIVE EASEMENT

A

A right acquired by an adverse user. This type of easement is only acquired by the adverse, hostile, exclusive, open, uninterrupted and continued use of another’s property for a certain prescribed length of time (anywhere from seven to twenty years depending on the state).

105
Q

Is PRESCRIPTIVE EASEMENT and ADVERSE POSSESSION the same thing?

A

NO. Although they are based on the same legal principle, adverse possession involves an ownership interest, while an easement by prescription involves the right of use only, gained by adverse means.

106
Q

Can two ADJACENT OWNERS create an EASEMENT with just a written agreement?

A

YES. An example is a party wall agreement whereby two adjacent owners agree to share a common wall. Typically the wall will be located on the property line, it would provide structural support to both structures, and both owners would share equally in maintenance and repair costs. Such an agreement should be in writing, signed, acknowledged, and recorded. That wall would then become an appurtenance that would remain when either property is sold.

107
Q

Can an EASEMENT be created by Government’s power of EMINENT DOMAIN?

A

YES. In CONDEMNATION PROCEEDINGS. It is used to establish easements that are necessary for public purposes. As with all condemnation proceedings where private land is taken for public purposes, landowners must be fairly compensated for any loss in property value.

108
Q

What are some of the ways that EASEMENTS TERMINATED?

A

They can be TERMINATED when:

  • The necessity for the easement no longer exists
  • The dominant and SERVIENT ESTATES are merged
  • The easement owner (dominant estate) releases the SERVIENT ESTATE
  • The dominant estate is abandoned
  • The SERVIENT ESTATE is destroyed
  • A court terminates it (as with a quiet title suit).

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