1. ©2011 Cengage Learning

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

3. 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 ©2011 Cengage Learning

4. Encumbrance = BURDEN ON TITLE PHYSICAL = Non-money encumbrances LIENS = Money encumbrances Monetary and various liens Voluntary Involuntary Specific General ©2011 Cengage Learning

5. 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 ©2011 Cengage Learning

6. EASEMENT ©2011 Cengage Learning

7. Creating an Easement 1. Deed : May Grant or Reserve 2. Necessity / Implication 3. Dedication - Recorded Plat Map 4. Condemnation 5. Prescription - Estoppel - Encroachment ©2011 Cengage Learning

8. 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) ©2011 Cengage Learning

9. Easement by Prescription 1.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 ©2011 Cengage Learning

10. Encroachment The wrongful extension (trespass) of a structure or any improvement (partially or wholly) onto the property of another. AB 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

11. Encroachment Non Money Encumbrances Pool Property line Encroachment No statute of limitation ©2011 Cengage Learning

12. RESTRICTIONS 1. Private Covenants: (C C & R’s) Condition: A limitation on ownership Restriction: Discrimination is unenforceable 2. Public Restrictions Zoning Ordinances Building codes Safety codes Health codes Covenant = A PROMISE ©2011 Cengage Learning

13. $ 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

14. Filing a Mechanic’s Lien Priority determined by date of work commencement Preliminary Notice: States workers right to file a lien 20 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 ©2011 Cengage Learning

15. Statutory Time Periods: a)Notice of Completion a)Notice of Completion filed Original Contractor: 60 Days after filing All Others: 30 Days after filing Notice of Completion filed: b)NO Notice of Completion filed: Everyone: 90 Days after Completion c)Once Mechanic’s Lien is filed Must execute in 90 Days after filing ©2011 Cengage Learning

16. MECHANIC’S LIEN Days (in number order) DAYS 10Notice of Non Responsibility (Tenant orders work) 20Preliminary notice 30Subcontractors and others 60General contractor 90All 90Statute of Limitations ©2011 Cengage Learning

17. JUDGMENT LIEN Created by a Court of Law The judgment process:  Writ of Attachment o Court ordered to seize the property  Judgment o Court’s decision  File an Abstract of Judgment o Lien created for 10 years o Recording establishes a General Lien  Writ of Execution o Sale of the property ordered ©2011 Cengage Learning

18. Major Types of Tax Liens Unpaid Real Property Taxes Unpaid Federal Income Taxes Unpaid State Inheritance Taxes Unpaid Gift Taxes ©2011 Cengage Learning

19. 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 ©2011 Cengage Learning

20. HOMESTEAD PROTECTION Single 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 ©2011 Cengage Learning

21. Proceeds from forced sale go to: 1. Discharge prior liens 2. Exemption to homestead claimant 3. Satisfaction of the judgment 4. Balance to claimant ©2011 Cengage Learning

22. Termination of a homestead Sell the home File a Notice of Abandonment ©2011 Cengage Learning

23. Review Quiz Chapter 3 1. A property tax bill is an example of: a. A voluntary lien b. A general lien c. An involuntary lien d. 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

24. Review Quiz Chapter 3 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 days b. 60 days c. 90 days d. 180 days ©2011 Cengage Learning

25. Review Quiz Chapter 3 4. 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 ©2011 Cengage Learning

26. Review Quiz Chapter 3 5. For a single person, under 65 years and not of low income, the homestead exemption is: a. $25,000 b. $75,000 c. $100,000 d. $175,000 ©2011 Cengage Learning

27. Review Quiz Chapter 3 6. Once a valid homestead is recorded, which of the following terminates the homestead? a. Renting the property b. Death of one spouse c. Selling the home d. Two of the above will terminate the homestead ©2011 Cengage Learning

28. Review Quiz Chapter 3 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 – condition b. Encroachment – lien c. Grantor – grantee d. Abstract of judgment – writ of execution ©2011 Cengage Learning

29. Review Quiz Chapter 3 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 ©2011 Cengage Learning

30. Review Quiz Chapter 3 10. A judgment is considered to be what type of lien? a. Constructive b. Voluntary c. General d. specific ©2011 Cengage Learning

31. Answers to Chapter 3 Review Quiz 1.C6. C 2.A7. D 3.A8. B 4.B9. B 5.B 10. C ©2011 Cengage Learning