©2011 Cengage Learning
California Real Estate
Principles
Chapter 3
Encumbrances, Liens, and
Homesteads
©2011 Cengage Learning
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
Encumbrance = BURDEN ON TITLE
 PHYSICAL = Non-money encumbrances
 LIENS = Money encumbrances
 Monetary and various liens
 Voluntary
 Involuntary
 Specific
 General
©2011 Cengage Learning
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
EASEMENT
©2011 Cengage Learning
Creating an Easement
1.
2.
3.
4.
5.
-
Deed : May Grant or Reserve
Necessity / Implication
Dedication - Recorded Plat Map
Condemnation
Prescription
Estoppel
Encroachment
©2011 Cengage Learning
Terminating an Easement
a.
b.
c.
d.
e.
f.
Express release by deed
Abandonment
Destruction of servient tenement
Expiration
Merger
Lack of use for 5 years (Prescriptive
easement only)
©2011 Cengage Learning
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
Encroachment
 The wrongful extension (trespass) of a
structure or any improvement (partially or
wholly) onto the property of another.
A
Encroachment
B
B’s garage or shed
*Not covered by standard CLTA title insurance policy.
**May become prescriptive easement or adverse possession
©2011 Cengage Learning
Statute of Limitations is three years
Encroachment
 Non Money Encumbrances
Encroachment
Pool
©2011 Cengage Learning
Property line
No statute of limitation
RESTRICTIONS
1.
Private Covenants:
(C C & R’s)
Covenant = A PROMISE
Condition: A limitation on ownership
Restriction: Discrimination is unenforceable
2. Public Restrictions
Zoning Ordinances
Building codes
Safety codes
Health codes
©2011 Cengage Learning
$
1.
LIEN
$
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 Lien
Priority determined by date of work
commencement
Preliminary Notice:
States workers right to file a lien
20 Days after work starts
1.
2.
3.
Work considered complete:
Owner occupies the property
Owner accepts the work as completed Work
stops
Work stops for continuous 60 days
©2011 Cengage Learning
Statutory Time Periods:
a) Notice of Completion filed
Original Contractor: 60 Days after filing
All Others: 30 Days after filing
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
MECHANIC’S LIEN
Days (in number order)
DAYS
10 Notice of Non Responsibility (Tenant orders
work)
20
30
60
90
90
Preliminary notice
Subcontractors and others
General contractor
All
Statute of Limitations
©2011 Cengage Learning
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
Major Types of Tax Liens
Unpaid Real Property Taxes
Unpaid Federal Income Taxes
Unpaid State Inheritance Taxes
Unpaid Gift Taxes
©2011 Cengage Learning
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
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
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
Termination of a homestead
 Sell the home
 File a Notice of Abandonment
©2011 Cengage Learning
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
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
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
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
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
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
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
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
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
©2011 Cengage Learning