California Real Estate Principles 10 1 Edition Chapter

California Real Estate Principles, 10. 1 Edition Chapter 7 Encumbrances, Liens, and Homesteads © 2016 On. Course Learning

Chapter 7 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 TITLE • PHYSICAL = Non-money encumbrances • LIENS = Money encumbrances • Monetary and various liens – Voluntary – Involuntary – Specific – 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 Ø Dominant tenement Ø Servient tenement 2. Easement IN GROSS Ø Utility company

EASEMENT

Creating an Easement 1. 2. 3. 4. 5. - Deed : May Grant or Reserve Necessity or by Implication Dedication - Recorded Plat Map Condemnation Prescription Estoppel Encroachment

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

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)

Encroachment • The 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

Encroachment • Non Money Encumbrances Encroachment Pool 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

$ 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

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

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

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 Everyone…if No Notice of Completion Statute of Limitations

JUDGMENT LIEN Created by a Court of Law • The judgment process: v Writ of Attachment o Court ordered to seize the property v Judgment o Court’s decision v File an Abstract of Judgment o Lien created for 10 years o Recording establishes a General Lien v Writ of Execution o 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 Ø Recorded Document Ø Designed to protect homeowner’s equity Ø Filed showing “Head of Household” Ø Declare claimant is residing on property (Home, boat, motor home, mobile home on a lot) Ø Description of property Ø Owner-occupied residence Ø Only ONE homestead at a time

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 2016

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