©2011 Cengage Learning. Chapter 3 Encumbrances, Liens, and Homesteads California Real Estate Principles ©2011 Cengage Learning

©2011 Cengage Learning

Chapter 3Encumbrances, Liens, and

Homesteads

California Real Estate Principles


Chapter 3

1. Define encumbrance, lien, easement, and encroachment

2. Explain the difference between private deed restrictions and public restrictions

3. Describe the key characteristics of mechanic’s liens, tax liens, and judgment liens

4. Discuss the details of the California homestead law


Encumbrance = BURDEN ON TITLEPHYSICAL = Non-money encumbrances LIENS = Money encumbrancesMonetary and various liens

VoluntaryInvoluntarySpecific General


EASEMENT The limited right to enter and use all or a

portion of the land of another- not a trespasser- no rent paid for the use

Two classes of easements:1. Easement APPURTENANT

Dominant tenement Servient tenement

2. Easement IN GROSS Utility company


EASEMENT


Creating an Easement

1. Deed : May Grant or Reserve

2. Necessity / Implication

3. Dedication - Recorded Plat Map

4. Condemnation

5. Prescription- Estoppel- Encroachment


Terminating an Easement

a. Express release by deed

b. Abandonment

c. Destruction of servient tenement

d. Expiration

e. Merger

f. Lack of use for 5 years (Prescriptive easement only)


Easement by Prescription1. Actual, open and notorious

use

2. Continuous use (5 years, uninterrupted)

3. Hostile (without permission of owner)

4. Claim of right or

color of title

5. No need to pay property taxes


EncroachmentThe wrongful extension (trespass) of a

structure or any improvement (partially or wholly) onto the property of another.

A B

Encroachment B’s garage or shed

*Not covered by standard CLTA title insurance policy.

**May become prescriptive easement or adverse possession

Statute of Limitations is three years ©2011 Cengage Learning

Encroachment

Non Money Encumbrances

Pool Property line

Encroachment

No statute of limitation©2011 Cengage Learning

RESTRICTIONS

1. Private Covenants: (C C & R’s)

Condition: A limitation on ownership

Restriction: Discrimination is unenforceable

2. Public RestrictionsZoning OrdinancesBuilding codesSafety codesHealth codes

Covenant = A PROMISE


$ LIEN $1. Deed of Trust - Trust Deed

2. Mechanic’s Lien

3. Tax Lien

4. Assessment Water District Bond Sidewalks Street Lights Curbs & Gutters

5. Judgment Lien©2011 Cengage Learning

Filing a Mechanic’s LienPriority determined by date of work

commencementPreliminary Notice:

States workers right to file a lien20 Days after work starts

Work considered complete:

1. Owner occupies the property

2. Owner accepts the work as completed Work stops

3. Work stops for continuous 60 days


Statutory Time Periods:

a)a) Notice ofNotice of CompletionCompletion filedOriginal Contractor: 60 Days after filing

All Others: 30 Days after filing

b)NO Notice of Completion filed:Notice of Completion filed:Everyone: 90 Days after Completion

c) Once Mechanic’s Lien is filedMust execute in 90 Days after filing


MECHANIC’S LIENDays (in number order)

DAYS

10 Notice of Non Responsibility (Tenant orders work)

20 Preliminary notice

30 Subcontractors and others

60 General contractor

90 All

90 Statute of Limitations


JUDGMENT LIENCreated by a Court of Law

The judgment process:Writ of Attachment

o Court ordered to seize the propertyJudgment

o Court’s decisionFile an Abstract of Judgment

o Lien created for 10 yearso Recording establishes a General Lien

Writ of Executiono Sale of the property ordered


Major Types of Tax Liens

Unpaid Real Property Taxes

Unpaid Federal Income Taxes

Unpaid State Inheritance Taxes

Unpaid Gift Taxes


Declaration of Homestead

Recorded Document Designed to protect homeowner’s equity Filed showing “Head of Household” Declare claimant is residing on property

(Home, boat, motor home, mobile home on a lot)

Description of property Owner-Occupied residence Only ONE homestead at a time


HOMESTEAD PROTECTIONSingle person $75,000

Head of Household $100,000

Senior (age 65 + ) $175,000

Elder (age 55) with low income $175,000

As of January 2010


Proceeds from forced sale go to:

1. Discharge prior liens

2. Exemption to homestead claimant

3. Satisfaction of the judgment

4. Balance to claimant


Termination of a homestead

Sell the home

File a Notice of Abandonment


Review Quiz Chapter 3

1. A property tax bill is an example of:a. A voluntary lienb. A general lienc. An involuntary liend. Two of the above are correct

2. An easement with only a servient tenement:

a. Easement in gross

b. Easement appurtenant

c. Easement egress

d. Easement for encumbrances©2011 Cengage Learning


3. If an owner files a proper Notice of Completion in the County Recorder’s office, unpaid subcontractors have how many days to file a lien?

a. 30 daysb. 60 daysc. 90 daysd. 180 days


Review Quiz Chapter 34. All of the following are true, except:

a. A violation of a condition in a deed may cause loss of title

b. A suit for removal of an encroaching fence must be brought within 10 years from the date of the encroachment

c. Easements can be eliminated when the dominant tenement deeds to the servient tenement

d. To be valid, a Notice of Completion must be recorded within 10 days after the completion of construction



5. For a single person, under 65 years and not of low income, the homestead exemption is:

a. $25,000b. $75,000c. $100,000d. $175,000


Review Quiz Chapter 36. Once a valid homestead is recorded, which of the

following terminates the homestead?a. Renting the propertyb. Death of one spousec. Selling the homed. Two of the above will terminate the homestead



7. An easement 15 feet wide and 160 feet long is approximately what percent of an acre?

a. 20%b. 15%c. 10%d. 5%

8. Which of the following two terms do not go together?a. Covenant – conditionb. Encroachment – lienc. Grantor – granteed. Abstract of judgment – writ of execution



9. Which of the following best describes the requirement to acquire title by adverse possession?

a. Hostile, continuous use, pay mortgage, open and notorious

b. Color of title, continuous use, pay property taxes, hostile

c. Permission, color of title, pay property taxes, open and notorious

d. Claim of right, hostile, secret use, pay mortgage and property tax


Review Quiz Chapter 310. A judgment is considered to be what type of lien?

a. Constructiveb. Voluntaryc. Generald. specific


Answers to Chapter 3 Review Quiz

1. C 6. C

2. A 7. D

3. A 8. B

4. B 9. B

5. B 10. C


Documents

©2011 Cengage Learning. Chapter 3 Encumbrances, Liens, and Homesteads California Real Estate Principles ©2011 Cengage Learning