Limitations on Property Rights

What are the involuntary liens?

Judgment, mechanic’s, property tax, federal tax, and attachments

What are the voluntary liens?

Mortgage and installment Sales Contract

What are the other ways of saying an installment sales contract?

Conditional Sales Contract, Contract for deed, and Land Contract

The mortgagor is whom?

Borrower

The mortgagee is whom?

Bank/lender

Which liens are always general?

Judgement and federal taxes

Servient Tenant

a person who owns land that someone else has a right to use for a specific purpose.

Dominant Tenant

a person who has the right to use someone else's land for a specific purpose.

Which lien can be either specific or general?

Attachments

What are the specific liens?

Mortgage, installment sales contract, property tax, and mechanic’s

Judgement lien

The final ruling by a court of law about who wins, and who loses, a court case. Often comes with an award of damages (monetary compensation) for the harm suffered by the plaintiff (person bringing the suit). Judgement liens are levied by a court when someone fails to repay a debt. After a judgement of possession is made by a court, a judge may issue a writ of execution to begin the transfer of any real property. If the defendant (person being sued) Pre-Licensing Course National Study Guide FTRS 25 can't pay the judgment, the court will often take their property, sell it in a sheriff's sale, and satisfy the plaintiff with the proceeds from the sale

Mechanic’s lien

A protection for contractors. They are allowed to place a lien against a property for work they did, and weren't paid for. This only applies to work done on real estate; personal property is not eligible

Federal tax lien

Liens placed against a person for unpaid income taxes. They are general liens, and are used by the Internal Revenue Service (IRS) to recoup tax revenue. Estate tax liens are a type of this lien used by the IRS to secure an estate's tax payments.

Property tax lien

Claims against property for municipal property taxes. This means that the taxes are paid first in the event of foreclosure, ahead of all other lienholders (persons or legal entities that have a lien against the property). If a property owner doesn't pay their taxes, the town or city the property is located in will foreclose on the property, and provide the purchaser with a bargain and sale deed or a certificate of sale.

Involuntary liens

claims against the property that are imposed by some third party (usually the government, or a court).

Installment Sales Contract lien

The seller (or vendor) enters into a contract with the buyer (or vendee), which states that the buyer will make payments until the seller has been fully paid for the property. When the contract is fully paid, the buyer receives a deed transferring ownership of the property. Under the contract, the buyer holds what is called equitable title, or a future right to acquire legal title (ownership) to the property. If the buyer defaults on the contract (usually by non-payment), the seller keeps any money the buyer has paid, and the buyer does not receive title to the property.

Mor

Used when borrowing money from a bank, usually for the purchase of real estate. The borrower (mortgagor) gives the bank (mortgagee) the right to sell their home if they do not pay the loan (evidenced in a note, or IOU). The mortgage is a lien against the property in most states

Voluntary lien

make a piece of property collateral for some debt.

Which liens are statutory?

Property tax, Mechanic’s, and federal tax

Which liens are judicial?

Attachments and judgements,

Easement appurtenant

Easements that involve two adjoining lots of land. One owner has a right of way across the other’s property for some limited purpose.

By deed, Implication, necessity, and prescription

How are easements appurtenant created?

By deed easement

The easement is created in the deed when the property is sold. This can either come as an easement grant where the owner of the servient tenement grants the easement, or an express reservation where the owner of the servient tenant reserves the right to use a portion of the property.

By implication deed

The seller implies an easement by the sale of the property. This often occurs when the seller intended to create an easement, but failed to do so. For example, if a property is sold with no legal access road, but could be accessed by crossing the lands of the seller, it might create an implied easement.

By implication

If a property is sole with no legal access road, but could be accessed by crossing the lands of the seller, it might create WHAT TYPE OF EASEMENT?

By necessity easement

If a property owner cannot legally access their property (“landlocked land”) a court might grant an easement so that the owner can access their property

Landlocked land

When a property owner cannot legally access their property. Courts may grant an easement so that the owner can access their property.

By prescription

An easement acquired by the Open, Notorious, Continuous, Hostile, and Adverse (NACHO) use of the right of way for more than 20 years. For example, property owner A uses property owner B’s path for 25 years. Property owner B never says anything about it; they don’t give owner A permission, ask them to stop, or post “No Trespassing” signs. Owner A has been using the path openly (they aren’t sneaking by at night), notoriously (publicly), continuously (they didn’t move away in the middle of the 25 years), and hostilely and adversely (against B’s property rights). In this situation, owner A could go to court, prove that they’ve been using the path for 25 years, and be granted an easement by prescription by the court.

More than 20 years.

How long must an owner be using another’s property for an easement to be acquired?

True

TRUE OR FALSE: An owner must be using another’s property for more than 20 years for an easement to be acquired/granted.

Combine 2 lots into one and reason for easement no longer exists.

What are the two ways to remove easements appurtenant?

Encroachments

Intrusions of an improvement on another’s lands

20 years

If an encroachment occurs, within how many years does that property owner have to take action?

Financial limitation

Another name for a lien?

Encroachment

A misaligned fence would be an example of what?

Encroachment

A misaligned shed would be an example of what?

C

Which of the following is NOT an example of an encroachment?

• A) A fence that extends beyond the property line into a neighbor's yard.

• B) A driveway that crosses over the boundary onto adjacent land.

• C) A utility easement running under the property.

• D) A tree that leans over and drops branches onto a neighboring property.

A

Which of the following is NOT an example of an encroachment?

• A) A fence that extends beyond the property line into a neighbor's yard.

• B) A driveway that crosses over the boundary onto adjacent land.

• C) A utility easement running under the property.

• D) A tree that leans over and drops branches onto a neighboring property.

yes

Is an easement a right ?

no

Is an easement ownership?

Environmental Impact Statements

Primarily applied to commercial real estate and property development. Required to determine how a development will impact an area and how a developer will handle that.

B

What is the possible outcome if an encroachment is not addressed within the statute of limitations?

• A) The property owner automatically loses ownership of the encroached portion.

• B) The encroaching party may gain legal rights to the encroached area through adverse possession.

• C) The encroachment must be removed at the property owner's expense.

• D) The property owner can no longer sell their property.

B

If a property owner discovers an encroachment, what is their first step?

• A) Remove the encroachment immediately.

• B) Contact the encroaching party to discuss the issue.

• C) File a lawsuit against the encroaching party.

• D) Record the encroachment with the local county recorder.

Acretion

An increase of property by wind or water. For example: A slow increase of a beach.

Alluvion

An increase of land area along a shore deposited alluvium or by the recession of water (ex: the slow increase of a riverbank).

Alluvium

The sand, gravel, silt, or clay deposited via alluvion.

Aeolian soil

Loose sandy soil deposited by wind

Avulsion

The sudden separation of land from one property or its attachment to another, usually caused by flooding, a storm, or a change in the course of a river.

Erosion

The gradual subtraction of land by wind or water

Relicition

An increase of the land by the sudden retreat of the sea, lake, river, or other body of water (ex: a sudden decrease in the water table)

D

Which term describes the process of land being washed away or eroded by water action?

• A) Accretion

• B) Alluvion

• C) Reliction

• D) Avulsion

C

Which of the following terms describes the gradual addition of land by natural forces, such as sediment deposits along a river?

• A) Avulsion

• B) Reliction

• C) Accretion

• D) Alluvion

D

Which term refers to the sudden and perceptible loss or gain of land typically caused by a natural event like a flood or earthquake?

• A) Accretion

• B) Alluvion

• C) Reliction

• D) Avulsion

B

What term describes the gradual buildup of soil on a riverbank, often resulting in the creation of new land?

• A) Avulsion

• B) Alluvion

• C) Reliction

• D) Accretion

C

• Which of the following best defines the process where water permanently recedes, exposing land that was previously underwater?

  • A) Alluvion

  • B) Accretion

  • C) Reliction

  • D) Avulsion

D

Which term is used to describe the gradual and natural accumulation of land due to the action of water depositing soil or sediment?

• A) Reliction

• B) Avulsion

• C) Alluvion

• D) Accretion

D

Which of the following terms describes the sudden shift of a river’s course, resulting in the immediate alteration of property boundaries?

• A) Accretion

• B) Alluvion

• C) Reliction

• D) Avulsion

Hazardous Material Transportation Act

Regulates the removal, labelling, and transport of hazardous materials (e.g. from a construction site). It is enforced by the Department of Transportation (DOT).

Endangered Species Act of 1973

Designed to protect critically imperiled species from extinction as a, "consequence of economic growth and development un-tempered by adequate concern and conservation." May limit property use and development if the presence of an endangered species is discovered on a piece of property.

Endangered Species Act of 1973

A federal law designed to protect coastal zones (like the Gulf of Mexico or Long Island Sound) from the harmful effects of real estate development. It limits, or completely eliminates, development in those zones.

Wetlands

areas that are either permanently or seasonally wet, where the soil and the plant community have adapted to that moisture (e.g. riverbanks, marshes, etc.).

Wetlands

Riverbanks and marshes are examples of what?

National Flood Insurance Program

Established by Congress in 1968 as part of the National Flood Insurance Act, and administered by the Federal Emergency Management Agency (FEMA). Requires property owners in "high risk flood zones" (think: waterfront property) to purchase flood insurance if their community participates in the NFIP and if they have a federally backed mortgage.

1968

When was the National Flood Insurance Program established?

Clean Water Act of 1972

Regulates pollution of navigable (and connected) waters. Established the goals of eliminating the release of high amounts of toxic substances into water, eliminating water pollution, and ensuring that surface waters meet standards necessary for human sports and recreation. Limits (and can prohibit) the filling of wetlands and other property development near navigable waters, especially if the filling/development would substantially degrade water quality.

1972

When was the Clean Water Act established?

Leaking Underground Storage Tank Program

Sometimes called the LUST or OST, LUST regulates underground fuel tank installation, maintenance, and spill prevention and monitoring. It is enforced and administered by the EPA. Certain tanks are exempt from regulations under LUST, including: tanks under 110 gallons, tanks used for heating oil, and motor fuel tanks less than 1,100 gallons on residential and farm properties.

UST or Underground Storage Tank program

What is the Leaking Underground Storage Tank Program sometimes called?

Superfund Act

The Comprehensive Environmental Response Compensation, and liability Act of 1980 is commonly referred to as what?

Comprehensive Environmental Response, Compensation, and liability act of 1980 (CERCLA)

was designed to clean up sites contaminated with hazardous substances, and to create liability for those who contaminate properties. CERCLA created the Agency for Toxic Substances and Disease Registry (ATSDR). The law allows the Environmental Protection Agency (EPA) to identify who is responsible for contamination of sites and compel them to clean up the sites. If the responsible party cannot be found, the EPA can clean up the site using a special trust fund. A superfund site assessment is often used to confirm or evaluate property contamination.

1980

The Comprehensive Environmental Response, Compensation, and Liability Act of WAS CREATED WHEN?

Environmental Protection Agency

Who identifies who is responsible for contamination of sites and compels them to clean up the sites?

The more restrictive

If there is ever a conflict between private restrictions and public zoning, WHO WINS?

Lis pendens

Recorded to inform the public that the property is subject to lawsuit. This happens in an attachment lien.

Statutory

Put in place by laws

Judicial

Put in place by a court

True

True or false: Liens are usually paid according to, "first in time, first in right," meaning that the first lien put in place is paid first, and so on.

C

John sold his property to pay off his debts. There were three liens recorded against his property in the following order:

1. A mortgage lien recorded on January 1, 2010, for $100,000.

2. A tax lien recorded on June 1, 2015, for $20,000.

3. A judgment lien recorded on December 1, 2018, for $10,000.

If the property sold for $120,000, which of the following correctly describes the order in which the liens will be paid off?

A) The judgment lien will be paid first, followed by the tax lien, and then the mortgage lien.

B) The tax lien will be paid first, followed by the judgment lien, and then the mortgage lien.

C) The mortgage lien will be paid first, followed by the tax lien, and then the judgment lien.

D) All liens will be paid equally from the proceeds of the sale.

General lien

covers all property of the debtor in a lien (both real and personal)

Specific lien

Only covers the property identified by the lien (ex: a home)

True

TRUE OR FALSE: Liability under CERCLA generally runs with ownership or possession of the land, so property owners or tenants not responsible for contamination, but in possession when the contamination is discovered, may still be held liable (this is called retroactive liability).

Retroactive liability

Liability under CERCLA generally runs with the ownership or possession of the land, so property owners or tenants not responsible for contamination, but in possession when the contamination is discovered, but still be held liable.

Superfund Amendments and Reauthorization Act

provides for "innocent landowner" status, which allows landowners who did not contaminate the property to avoid liability. Typically, an environmental assessment will be done before purchase to determine if the owner needs to seek immunity protections under SARA.

C

Who can be held responsible under retroactive liability for contamination found on a property?

A) Only the current owner of the property.

B) Only the previous owner of the property.

C) Both current and previous owners, as well as tenants, who were associated with the property when the contamination occurred.

D) Only the party who caused the contamination, regardless of their association with the property.

SARA

What is the abbreviation for Superfund Amendments and Reauthorization Act?

CERCLA

What is the abbreviation for the Comprehensive Environmental Response, Compensation, and Liability Act of 1980?

Environmental impact statement

Under the NEPA (National Environmental Policy Act), what is required to determine what, if any, environmental impacts a development might have on an area and how a developer might handle those issues?

B

A property owner wants to build a tall fence around their property for privacy. However, the city has an ordinance limiting fence heights to no more than 6 feet. The property owner’s homeowner association (HOA) allows fences up to 8 feet. Which of the following statements is correct regarding the limitations on building the fence?

A) The property owner can build an 8-foot fence because the HOA allows it.

B) The property owner must adhere to the city ordinance and build no higher than a 6-foot fence.

C) The property owner can choose which regulation to follow, either the city ordinance or the HOA rule.

D) The property owner cannot build a fence at all due to the conflicting regulations.

B

A property owner wants to operate a home-based business. The local zoning laws permit home-based businesses, but the property owner's subdivision has a restrictive covenant prohibiting any business activities. Which of the following statements is correct regarding the property owner's ability to operate the business?

A) The property owner can operate the business because local zoning laws permit it.

B) The property owner cannot operate the business due to the restrictive covenant in the subdivision.

C) The property owner can operate the business only if they get permission from the local zoning board.

D) The property owner can operate the business because private covenants cannot override public zoning laws.

Police power, eminent domain, taxes, and escheat

What are the Four governmental limitations (or public limitations) on what property owners can do with their real estate?

Police power

The right of the government to regulate private activity if it's in the public interest to do so. In real estate, police power usually refers to the local zoning ordinances and building codes.

PETE

What is the Abbreviation for the Four government limitations on what property owners can do with their real estate?

Eminent domain

The right of the government to force the sale of privately owned property if it is in the public interest. Under the 5th Amendment of the United States Constitution, the government must pay the property owner fair market value for the property. The legal process for taking the land by eminent domain is condemnation. If the government takes only a portion of the land by eminent domain, but not the whole parcel, the owner may receive severance damage. If government action in an adjacent lot of land causes a diminishment of property value, a property owner can claim compensation under inverse condemnation.

Condemnation

The legal process for taking the land by eminent domain

Severance damage

If the government only takes a portion of the land by eminent domain, but not the whole parcel, the OWNER may receive what?

Inverse condemnation

If government action in an adjacent lot of land causes a diminishment of property value, a property owner can claim compensation under WHAT?

Taxes

Municipal property taxes. They are the primary source of revenue for municipal governments (the local town or city).

Escheat

The reversionary interest the state maintains in all privately owned property. If a property owner dies without a will or heirs, their property transfers to the government.

Zoning

Means of regulating and controlling land use

Comprehensive or master plan

Towns use what for zoning and their future developments?