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Real Estate 101 > Topic 6 > Flashcards

Topic 6 Flashcards

Encumbrances

1
Q

A claim or burden on a property which limits, restricts or otherwise affects one’s right, interest or use of that property. Anything which diminishes a person’s rights of ownership. Does not represent ownership of another party’s property. It only grants the right to use a certain property in a certain way, or the right to attach a monetary claim against it.

A

Encumbrance

Almost all private property is voluntarily or involuntarily encumbered in some way, either by the government or by private parties.

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2
Q

The state is permitted to encumber real property in four ways to protect the rights and interest of the public…
(INVOLUNTARY ENCUMBRANCES)

A
  1. ) Police powers
  2. ) Eminent domain
  3. ) Taxation
  4. ) Escheat

PETE

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3
Q

The government’s power to enact and enforce laws to protect the health, safety, morals and welfare of the general public. Can regulate where on a site a building may be built, how it is built, and even if it can be built.

A

Police powers

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4
Q

The state’s authority to enact and enforce police powers is passed on to the municipalities through…

A

enabling acts

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5
Q

Police powers which encumber real property are:

A

1.) zoning regulations

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6
Q

regulations controlling the use of land to protect property values and promote the health, safety, and welfare of the general public. Local governments create a master plan for the development of the city, and zoning ordinances are used to enforce the plan.

A

zoning regulations

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7
Q

is concerned primarily with the function of land. Used to promote the highest and best use of the land.

A

directive zoning

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8
Q

The state’s authority to enact and enforce police powers is passed on to the municipalities through…

A

enabling acts

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9
Q

Police powers which encumber real property are:

A

1.) zoning regulations

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10
Q

regulations controlling the use of land to

protect property values and promote the health, safety, and welfare of the general public.

A

zoning regulations

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11
Q

Local governments create a _________ for the development of the city, and zoning ordinances are used to enforce the plan.

A

master plan

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12
Q

Concerned primarily with the function of land. Used to promote the highest and best use of the land.

A

Directive zoning

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13
Q

Regulates the size and placement of buildings on their lots, population density, and overall use of space.

A

protective zoning

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14
Q

Examples of protective zoning…

A
  1. ) setbacks

2. ) Regulating the number of units in a condo building relative to the number of parking spaces.

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15
Q

Regulates the distance from streets and sidewalks that buildings can be erected

A

Setbacks

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16
Q

A building which was built before a zoning ordinance was enacted may not conform to current zoning regulations. This is often allowed to continue until the building is torn down, or the current use of the building is changed.

A

non-conforming use

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17
Q

Property owners who believe that their interests have been unfairly limited by zoning regulations may present their grievances to the _______.

A

Zoning Review Board

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18
Q

The owner may appeal for _____, a permit which exempts the owner from a particular zoning ordinance.

A

variance

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19
Q

Exemption allows the non-conforming use of a property if this use benefits the general public.

A

conditional use permit or zoning exception

ex. A power substation may be permitted in a residential area if it’s needed to service the residents there.

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20
Q

A change in zoning from a high density use to a lower density use

A

downzoning

ex. From residential to agricultural

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21
Q

Created for the purpose of separating one land use from another

A

buffer zones

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22
Q

Zoning in which certain portions of a district are set aside for uses other than those for which the district itself is zoned.

A

Spot zoning

ex. a busy intersection in a residential district may be zoned commercial to provide access to stores for the residents.

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23
Q

Enacted to specify the standards for construction of new buildings and alteration or repairing of old ones

A

building codes

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24
Q

A developer of a subdivision must submit a subdivision plan, or plat survey, showing the proposed location of lots, sewers, roads, utilities, schools, and other public facilities. The plan must comply with zoning ordinances.

A

Subdivision regulations

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25
Q

The government’s responsibility to protect and promote the health, safety, and welfare of the public extends to the protection of the environment itself.

A

environmental protection laws

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26
Q

Enacted to preserve America’s natural resources. Projects authorized or supported by the government in any way must file an environmental impact statement to become eligible for federal assistance. The act also established the Environmental Protection Agency which has enacted laws to control air quality, water pollution, noise control, and coastal management.

A

National Environmental Policy Act of 1970

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27
Q

codes imposed for the protection of the health and safety of the public

A

health and safety codes

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28
Q

Gov’t-imposed restrictions on the amount of rent an owner can charge. These have been used during war time or to protect against inflation

A

rent controls

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29
Q

power allows the gov’t to temporarily or permanently claim private property for public use without consent of the owner. The gov’t must prove the property is needed and must pay the owner compensation (a sum of money equal to fair market value of the property)

A

eminent domain

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30
Q

What happens if the owner refuses gov’ts offer of just compensation?

A

the government then must initiate a condemnation action in which the government must demonstrate that the property it wishes to appropriate is needed for public use, and the fair market value must be established.

In LA, term for condemnation is expropriation

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31
Q

A third government power is the power to seize ownerless land. This power is used when a person dies without a will and with no heirs. His property would then _____ to the state.

A

escheat

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32
Q

The power of taxation is exercised in two ways:

A
  1. ) ad valorem taxes

2. ) special assessments

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33
Q

______ is an involuntary specific lien

A

taxation

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34
Q

a monetary claim upon property which uses the property itself as a security for payment of debt

A

lien

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35
Q

attaches itself to all of a person’s property, real and personal

A

general lien

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36
Q

attaches only to the property explicitly encumbered by the lien.

A

specific lien

ex. property taxes. If not paid, property may be seized and sold at a tax sale to satisfy the lien.

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37
Q

a main source of revenue for local gov’ts

A

ad valorem taxes

means “according to value”

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38
Q

Steps in ad valorem taxing…

A

1.) The market value of the property is established and then multiplied by an assessment ratio to produce the assessed value.

(In LA, assessed value is:

  • 10% of market value for residential property
  • 15% of m.v. for commercial improvements (not land)
  • 10% of m.v. for lots)

2.) The assessed value is then reduced by the amount of the homestead exemption, if applicable.

(Amount is $7,500 in LA)

3.) The assessed value is multiplied by the tax rate or millage to determine the amount of tax due. Formula:

Tax = Tax rate X # of 1000’s of assessed value

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39
Q

In LA, a purchaser of tax sale property will not get title to the property immediately. The tax payer has a period of redemption that extends from ________ to ______.

A

a minimum of three years

a maximum of five years past the sale date

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40
Q

Who is exempt from property taxes?

A
  • Real property held by fed’l, state, and local gov’ts
  • hospitals
  • private educational institutions
  • cemeteries
  • properties used by religious and charitable groups
41
Q

never used by gov’ts to raise revenue. Imposed only on specific segments of the community, and only at such times as specific improvements for those segments are deemed necessary. May be initiate by the property owners themselves or by the appropriate public body.

A

Special assessments

improvements may include: street lights, water lines, curbs, streets, recreational facilities

42
Q

Process of initiating a special assessment…

A
  1. ) public hearings are held in which affected property owners may express their views.
  2. ) An ordinance is passed detailing the nature and cost of improvements
    - The area receiving the improvement is called the assessment district or special taxing district.
43
Q

Private individuals may also place liens against real property.

A

Private lien

In LA, called a privilege.

44
Q

The most common ways in which private property is encumbered are through….

A
  • mortgages
  • mechanic’s liens
  • vendor’s and vendee’s liens
  • court judgments.
45
Q

to pledge or hypothecate real property as security for payment of a debt or obligation.

A

mortgage

*If the debt isn’t satisfied, the mortgage may be foreclosed and the property sold to satisfy the debt.

46
Q

Properties encumbered by mortgage have ____ placed against them.

A

specific voluntary liens

47
Q

A specific voluntary lien. Used in connection with the purchase money mortgage. To protect his interest in the property, the seller has the right to place this against the property for the outstanding balance. The seller may foreclose if the buyer defaults on the payments.

A

vendor’s lien

48
Q

A mortgage arrangement in which the seller accepts a downpayment from the buyer and gives the buyer a mortgage on the balance owed on the property.

A

purchase money mortgage

49
Q

If a buyer has given a seller a deposit for the purchase of real property and the sales contract has been signed and the seller defaults, the buyer has the right to place this lien on the property to recover the deposit. Enforced by foreclosure.

A

Vendee’s lien

50
Q

Protects workmen, contractors, engineers, architects, suppliers of materials, and others who provide labor or material to build or improve real property

A

mechanic’s lien

51
Q

How does one qualify for a mechanic’s lien?

A
  1. ) Mechanic must perform the work with the owner’s consent and must also give preliminary notice that the property may be attached if the mechanic’s claim is not paid.
  2. ) When work’s completed, the mechanic must file a notice of completion with the county clerk.
  3. ) The lien myst be filed within a specified period of time. (In LA, 60 days after the last work has been completed on the project.)
  4. ) The owner’s property may then be attached, and if the debt isn’t satisfied, may be sold at an execution sale.
52
Q

Mechanic’s liens, recorded or unrecorded, take priority over new or second mortgages on a property, if…

A

those mortgages were recorded after work on the property began.

53
Q

liens may also be placed against real property through court proceedings.

A

court judgments

54
Q

Process of court judgment…

A
  1. ) Plaintiff files a lis pendons
  2. ) Plaintiff may also be permitted to file an attachment against the defendant’s property
  3. ) The judgment itself is the court’s actual decision. If the court rewards a monetary payment, once recorded, the judgement becomes a general lien against the defendant’s personal and real property.
55
Q

a recorded notice of impending litigation against the property

A

lis pendens

56
Q

allows the court to seize the property to assure that the plaintiff will be able to acquire his just portion of the assets if his suit is successful

A

attachment

57
Q

Priority of liens if in foreclosure…

A
  1. ) Federal taxes
  2. ) State taxes
  3. ) Property taxes and Special assessments
  4. ) Mechanics’ liens (some states don’t give priority to)
  5. ) Other liens by date recorded
58
Q

A ____ changes the priority of liens.

A

subordination agreement

59
Q

Types of liens..

A

Specific:

  1. ) Voluntary mortgage
  2. ) Involuntary mortgage

General:
1.) Involuntary taxes

60
Q

a lien which is created intentionally

A

voluntary lien

61
Q

a lien which isn’t a matter of choice

A

involuntary lien

62
Q

affects all property, both real and personal

A

general lien

63
Q

affects only the particular property

A

specific lien

64
Q

Types of private liens:

A
  1. ) Mortgages
  2. ) Vendor’s Lien
  3. ) Vendee’s Lien
  4. ) Mechanic’s Lien
  5. ) Court Judgments
65
Q

Types of non-lien private encumbrances:

A
  1. ) Deed restrictions
  2. ) Easements
  3. ) License
  4. ) Enroachments
66
Q

Private parties may encumber real property without placing a lien against it. Such encumbrances may be effected by deeds or written contracts. Such encumbrances are referred to as…

A

“covenants, conditions, restrictions, rights of way and recorded easements”

(CCR’s)

67
Q

are made by the executor of the deed (grantor) and conveyed to the party receiving the property (grantee) by a clause in the deed.

A

deed restrictions

68
Q

Two types of deed restrictions…

A
  1. ) Restrictive conditions

2. ) Restrictive convenants

69
Q

Places limitations on the grantee’s property. Used to set up determinable, or qualified fee estates. They may require that a property be used only for a certain purpose, or that it not be used for a certain purpose.

A

Restrictive conditions

70
Q

Restrictive conditions are accompanied by a ….

A

reverter clause which allows the grantor to take the grantee to court if he fails to uphold the provisions of the restrictive condition. If the court rules in favor of the grantor, the property will revert back to him.

71
Q

a promise by contract or deed between a private person and a subdivider. They may specify the possible uses of the property, construction methods, size and style of improvements, lot size, etc.

A

restrictive covenants or subdivision restrictions

72
Q

In areas where no zoning exists, _______ are the main method of controlling land uses.

A

restrictive covenants

If there is a conflict between zoning ordinances and restrictive covenants, the most restrictive one takes precedence.

73
Q

grants a designated person or persons the right to use a portion of the land of another for a specific purpose. Typically grants a right of way, that is, the right to walk or drive across a neighboring property. grants only an interest in the land and NOT the rights of possession or occupancy. It is not intended for the personal gain or profit of the holder of the easement.

A

easements

Utility companies also acquire easements to run power lines or water lines. Easements granting air rights and drainage rights are also common

74
Q

In LA the term used for easement is _______. Actually grants much broader rights than the common law easement. It is defined as a charge or burden on something for the benefit of something else. Can be for the benefit of a person, or for the benefit of a dominant estate.

A

servitude

75
Q

Two types of easements…

A
  1. ) easement appurtenant

2. ) easement in gross

76
Q

In this kind of easement, the rights are vested in the land itself, and not in a person. When ownership of the property is conveyed, the easement transfers with the property automatically, if it has been properly recorded. An easement appurtenant always involves at least two tracts of neighboring land, one needing access, (called ingress and egress) and one granting access.

A

easement appurtenant

*In LA, called predial servitude

77
Q

The land benefiting from the easement is called the ______.

A

dominant tenement or dominant estate

*Only the dominant tenement can terminate the easement.

78
Q

The land over which the easement runs is called the _____.

A

servient tenement or servient estate

79
Q

A ______ may be an exterior wall that lies on the boundary line between two lots. Each owner owns half the wall and each has an appurtenant easement in the other half of the wall. A written agreement is necessary to create it.

A

party wall easement

ex. a party driveway

80
Q

An _______ is an appurtenant easement that arises when an owner sells a part of his land which has no access to the street except across the original owner’s land. This type of easement is created by court order based on the principle that an owner can not be landlocked.

A

easement by necessity

81
Q

Types of predial servitude…

A
  1. ) natural servitude (drainage)
  2. ) legal servitude (levees)
  3. ) conventional servitude (right of way)
82
Q

requires only one tract of land. It is granted to an individual or corporation, neither of which need be a landowner. Most commonly, such easements are granted for installation of utilities on a property (electrical lines, water lines, or for railroad tracks or pipelines). Such commercial easements may ordinarily be assigned, conveyed, and inherited. On the other hand, these easements held by a private person usually terminates upon the person’s death.

A

easement in gross

*In LA, called personal servitude

83
Q

Types of personal servitude…

A
  1. ) the right of usufruct (to use the fruits of the property)
  2. ) the right of habitation ( of a person to dwell in the house of another)
  3. ) the right of use (the limited right of one person to a specific use of another’s property i.e. license)
84
Q

How easements are created:

A
  1. ) By mutual agreement
  2. ) By necessity
  3. ) By implication
  4. ) By prescription
  5. ) By condemnation
  6. ) By reservation
85
Q

Ex. neighbors agree to construct and share a pier centered on the line dividing their lake front properties.

A

creation of easement by mutual agreement

86
Q

Ownership of real property is understood to convey the rights of ingress and egress. In most states, owners of landlocked property may claim an easement appurtenant across adjoining land.

A

creation of easement by necessity

87
Q

arise from an unexpressed, but legally binding understanding between parties involved. For example, if an owner sells the rights to the oil on his property he does so with the implied understanding that he will allow the purchaser to enter the property to extract the oil.

A

creation of easement by implication

88
Q

can be created only through one party’s open, hostile, exclusive, notorious and uninterrupted use of a portion of the land of another for a period of time specified by state law. This use must be without the owner’s implied or explicit consent. Cannot be acquired against property owned by the government, or against owners judged legally incompetent.

A

creation of easement by prescription

89
Q

the acquisition of private lands for public use, in exchange for just compensation.

A

creation of easement by condemnation

90
Q

created when a seller of a property reserves an easement for his use after the sale.

A

creation of easement by reservation

91
Q

How easements are terminated…

A
  1. ) By merger
  2. ) By voluntary relinquishment
  3. ) By prescription

Usually the time it takes to terminate an easement in this way is as long as it takes to gain an easement by prescription.

  1. ) For lack of purpose
  2. ) By expiration of mutually agreed upon time period
92
Q

In the case of the merger of the dominant and servient tenements, the easement is terminated because it is impossible for a person to hold an easement on his own property.

A

Termination of easement by merger

*In LA, called confusion

93
Q

An easement may be given up voluntarily. For example, a railroad may
relinquish its easement rights when it discontinues service.

A

Termination of easement by voluntary relinquishment

94
Q

If the owner of a servient tenement uses it in such a way as to prevent the possessor of easement rights to the property from exercising those rights, the easement may terminate after a length of time as set by state law.

A

Termination of easement by prescription

95
Q

If the holder of an easement no longer has a need for it, the easement can terminate.

A

Termination of easement for lack of purpose

96
Q

If the easement rights were agreed upon by both parties to expire on a specific date, this terminates the easement.

A

Termination of easement by expiration of mutually agreed upon time period

97
Q

usually an oral agreement granting the short term use of real property. Grants a privilege or permission whereas an easement grants a right. Is revocable at any time by the owner unless otherwise noted. Can’t be transferred nor inherited.

A

license

Ex. permission to hunt on private property or attend movie theaters or sporting events

98
Q

constitutes the unauthorized use or occupation of another’s property. Occur most often when real property trespasses upon real property. If permitted to stand beyond a length of time as set by state law, it may be allowed to continue as an easement by prescription on the basis of adverse possession. Constitute actual notice (notice given by physical occupation of a property), and are typically discovered by survey.

A

enroachment

Common encroachments include trees, fences, driveways and garages which intrude on neighboring property.

Real Estate 101 (11 decks)

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