Liens and Easements

Question 1

Define encumbrance

Answer 1

right or interest in a property held by a party who is NOT the owner of the property

Question 2

Identify the two categories of encumbrances

Answer 2

1. Liens - financial claims against the property

2. usage encumbrances - restrictions, easements, encroachments

Question 3

Describe how an encumbrance is different from a license.

Answer 3

A license is not a permanent right
a privilege to enter the land or to use something of another for a specific purpose
EXAMPLES: permission to park in a neighbor’s driveway or to erect a billboard. The permission given by a license may be withdrawn. The primary feature of a license is that the license is terminable at the will of the licensor (the issuer of the license).

Question 4

Define lien

Answer 4

A financial claim or charge against real estate that provides security for a debt or obligation of the property owner

Question 5

Describe what is meant by voluntary, involuntary, general, and specific liens

Answer 5

There are 2 types of liens: voluntary (owner’s voluntary actions - placing a mortgage loan) and involuntary (created by law - real estate tax lien)

Liens can be classified as: general (affects ALL the property of a debtor - real and personal) or specific (secured by a specific parcel of real estate and affect only that particular property)

Question 6

Describe what is meant by voluntary, involuntary, general, and specific liens (Big Four)

Answer 6

The Big Four

Real Estate Tax Lien—specific, involuntary
Mechanic’s Lien—specific, involuntary
Judgment—general, involuntary
Mortgage Lien—specific, voluntary

Question 7

Explain how a lien is released

Answer 7

paid or has otherwise been considered satisfied then the party benefiting from the lien needs to remove the lien.
achieved through recording of a document referred to as a release of lien or satisfaction of lien.

Satisfy a judgment creditor, judgments can be enforced through the sale of the debtor’s real or personal property by a sheriff - it affords the creditor with collection options on the judgment
If the sale yields enough to satisfy the debt after any liens with priority have first been satisfied, the sheriff’s report of sale will show that the sale yielded sufficient money to satisfy the debt and the record will be cleared of the judgment.

A judgment also can be satisfied by the debtor’s payment of the debt in full. Debtors who pay such a debt and fail to record a satisfaction piece—a document that states that the debt has been paid in full—are often surprised to find the judgment still on their credit records years later.
Currently in New York, a judgment lien bears statutory interest rates of 9% per annum on the monetary judgment amount.
This rate of post-judgment interest is set by the civil procedural law titled the Civil Practice Law and Rules (CPLR). CPLR Section 5004 not only fixes the post-judgment rate of interest at 9% per year, but CPLR Section 5003 further states that interest must run from the date of entry of the judgment.

Question 8

Describe and identify general liens

Answer 8

judgments 
estate and inheritance taxes
debts of a deceased person 
corporation franchise taxes
federal and state income taxes

Question 9

Describe and identify judgments.

Answer 9

court orders to pay a debt, such as an unpaid bill. They become liens against all real property owned by an individual in that county when they are docketed (filed) in the county clerk’s office.
They also may be filed in other counties in New York State and against personal property.
Judgement differs from a mortgage in that a specific parcel of real estate was never given as security for the debt.

A judgment takes priority from the date the judgment is docketed in the county clerk’s office.

A lis pendens is not itself a lien, but rather notice of a possible future lien. Recording a lis pendens notifies prospective purchasers and lenders that there is a potential claim against the property.

a general involuntary lien on all real property in the county owned by the debtor when it is docketed (filed, recorded) with the county clerk. Transcripts of the lien also may be docketed in any other county in New York against the debtor’s other real property.

A judgment is a lien against real property for ten years and can be renewed for ten more

Question 10

Describe and identify specific liens, particularly real estate tax liens, mortgage liens, and mechanics’ liens.

Answer 10

Include mechanics’ liens, mortgages, real estate taxes, special assessments, liens for certain public utilities, vendors’ liens, vendees’ liens, and surety bail bond liens

Question 11

Describe and identify real estate tax liens

Answer 11

specific and involuntary
NYC operates on fiscal year July 1 - June 30
real property tax liens have property over all other liens

Question 12

Describe and identify mortgage liens

Answer 12

mortgage or collateral - voluntary lien
given to a lender by a borrower as security for the repayment of a loan. It becomes a lien on real property when
-the mortgage funds are disbursed,
-the mortgage document is signed by the borrower (mortgagor),
-the same is delivered to the mortgagee (lender), and
-the mortgage is recorded.

The lender files or records the mortgage in the office of the county clerk or register of the county where the property is located.
Mortgage lenders generally require a first mortgage lien; this means that (aside from taxes) no other liens against the property will take priority over the mortgage lien.
Second mortgages and home equity loans do not, of course, have first priority. When the debt is fully paid, the lien is removed from the property by filing a satisfaction of mortgage certificate signed by the lender.
In addition, a lien can be removed by recording a document called a “release of lien.” For this to occur, the party holding the lien (lienor) must execute the release document in favor of the liened party (lienee).

Question 13

Describe and identify mechanics’ liens

Answer 13

specific property by workers or suppliers who have not been paid for labor or materials used in construction, improvement, or repairs of that property.

Covers a situation in which an owner has not paid for work done on the property or the general contractor has been paid but has not paid subcontractors or suppliers of materials.
A claim for a mechanic’s lien must be placed within four months of the completion of the work on a single dwelling,
while on other types of transactions, liens must be placed within eight months.
A mechanic’s lien expires in one year but may be renewed.
Court action is not required; the lien is simply recorded in the public records.

An example of a lien that falls into the eight-month filing deadline category would be a broker’s lien.
On the theory that the negotiation of a long-term lease constitutes an improvement of commercial property, a broker may enter a lien in the public records for unpaid commissions. Such a lien may be filed only
-if the property is to be used for other than residential purposes,
-if the lease is for three years or longer, and
-if the broker was working under a written commission agreement or listing agreement.

The lien must be filed within eight months of the date when the commission became due.
This includes entitlement of commissions that are paid over a short or long period of time through installments. Each installment when due gives the broker the right to file the lien on the unpaid installment within eight months from the installment’s due date.

Similarly, the RPL allows a broker to file an affidavit of entitlement to commission for negotiation of a contract for the purchase or lease of any real property.

In 2006, the New York Legislature passed the Commission Escrow Act. This bill was expected to aid
residential real estate brokers in collecting their commission on a residential sale. On August 5, 2008, the governor signed into law an amendment to Section 294-b. The amendment provides that an affidavit of entitlement filed by the broker before a closing would require the seller to deposit the broker’s commission in escrow with the county recording officer. In order for this to occur, the listing agreement would have to include a recital of language covering this provision and ultimately allowing the broker to do this. The funds would continue to remain in escrow with the county recording officer until the rights of the interested parties were determined by
-a judge,
-alternative dispute resolution, or
-settlement between the seller and the broker.

The filing would have to occur before the delivery of the deed.

The amendment became law on January 1, 2009

Question 14

Describe the effects of liens on title

Answer 14

If the buyer agreed, an owner could sell a parcel of real estate even though it was encumbered by a lien
lien, remains with the property because liens and other encumbrances run with the land; that is, they will bind successive owners.

Liens attach to property, not to the property owner.

Question 15

Subordination agreements

Answer 15

voluntary written agreements between lien holders to change the priority of mortgage, judgment, and other liens under certain circumstances
it is notable that all leases within income-generating properties will also contain a subordination clause
this clause places the interests of the leaseholder as secondary to that of any past, present, or future financing placed on the property or any underlying ground lease (by which the leaseholder leases land from the land owner).

Question 16

Discuss the priority of liens.

Answer 16

Real estate taxes and special assessments (tax liens) take priority over all other liens.
The oldest recorded lien always has priority over subsequent liens; however, real estate taxes always supersede and have priority over all other recorded liens.
Priority is established by date and time of recording.

outstanding real estate taxes and special assessments will be paid from the proceeds first. The remainder will be used to pay other outstanding liens in the order of their priority.
For example, if the courts ordered a parcel of land sold to satisfy a judgment lien entered in the public record on February 7, 2018, subject to a first mortgage lien recorded January 22, 2014, and to this year’s as-yet-unpaid real estate taxes, the proceeds of the sale would be distributed in the following order:

To the taxing bodies for this year’s real estate taxes
To the mortgage lender for the entire amount of the mortgage loan outstanding as of the date of the sale (if proceeds remain after payments of taxes)
To the creditor named in the judgment lien (if any proceeds remain after paying the first two items)
To the foreclosed-on landowner (if any proceeds remain after paying the first three items plus costs of foreclosure)

Liens placed on a condominium by the condominium board take priority over all other liens except real estate tax liens and first mortgage liens.

It is therefore possible that a condo owner could lose his home to foreclosure and still have to pay off his first mortgage and his real estate taxes.

Liens other than general taxes and special assessments take priority from the date of recording in the public records of the county where the property is located

Question 17

List the effects and identify examples of deed restrictions.

Answer 17

They usually are placed by the owner when the property is sold, and they may be included in the deed.
Deed restrictions typically are imposed by a developer or subdivider.
The purpose behind the usage of deed restrictions is to maintain specific standards in a subdivision or to require that a property be used for a specific purpose.
For example, property owners in a subdivision may not be allowed to park recreational vehicles in the street. Another example would be minimum size requirements for new construction of a home (e.g.,no house may be built that is less than 3,000 square feet).
It is the responsibility of those neighboring occupants to enforce the deed restrictions.
Deed restrictions must be enforced within two years from the time of the violation of a restriction. Failure to do so within the statutory period of time will result in the loss of right to enforce the restriction through the Doctrine of Laches.

Question 18

Distinguish between the various forms of easements and how they are created.

Answer 18

A right acquired by one party to use the land of another party for a special purpose is an easement. Easements commonly are created by written agreement between the parties.

Four Types of Easements

Appurtenant - Principal
In gross - principal
By necessity
By prescription

Question 19

Easement appurtenant and how they are created.

Answer 19

The permanent right to use another’s land for the benefit of a neighboring parcel is an easement appurtenant.

An easement appurtenant runs with the land (is permanent), so that if B sells the property to C, C acquires the same right-of-way over A’sland. If A sells to D, B still owns the easement.
Easements appurtenant involve two adjoining parcels of land. The public often refers to such an easement as a right-of-way.

The property that benefits is called the dominant estate; the one that is used is the servient estate.
An easement appurtenant is ended if the two adjoining parcels are merged into one, owned by a single owner. It also may be terminated if the owner of the dominant estate (tenement) releases or abandons the easement. In some cases, an easement was only meant to last for a specific length of time and automatically expires.

Question 20

In gross easements and how they are created.

Answer 20

Easement in Gross -mere right to use the land of another, does not involve any adjoining estate. Common examples are the right to run high-tension, telephone, or cable TV lines. Utility lines run by right of an easement along the boundary line between the lots.

Question 21

By necessity easements and how they are created.

Answer 21

Easement by Necessity
Only access to a parcel is through another’s property; that is, entry to one’s property is landlocked by the property of another. In these situations, the owners may acquire an easement by necessity to reach their land. An easement by necessity would be terminated if the need for it no longer existed.

An easement by necessity is distinguished from an easement by implication in that the former easement arises only when “strictly necessary,” whereas the latter can arrive when “reasonably necessary.” An easement by implication is an easement created by the actions of the parties involved.

Question 22

Easement by prescription and how they are created.

Answer 22

Easement by Prescription
Under specific circumstances, one may acquire the permanent right to use another’s property by doing so for a period (in New York) of 10 years, creating an easement by prescription.
Tacking allows consecutive owners to accumulate the 10 years’ usage.
Adverse possession, sometimes allows the user to acquire actual ownership.)
Through tacking, a party who did not use the property for the entire required period may still claim an easement by prescription. The parties must have been successors in interest, such as an ancestor and heir, a landlord and tenant, or a seller and buyer.
The required tacked periods must be at least 10 consecutive years with no breaks.

Question 23

Easements- other and how they are created.

Answer 23

Less common
easement by grant (one created deliberately, usually through a deed, by the landowner)
easement by condemnation (the government’s right to use land, for example, as a sidewalk).

An owner has no natural right to light and air and cannot complain when a neighbor erects a structure that cuts off light and air. To eliminate this possibility, some abutting owners attempt to purchase an easement for light and air over a neighbor’s property. Such an easement should be granted in writing.

Nonpossessory rights would indicate that a person does not occupy the property nor has any rights to that property. Easements fall into the category of nonpossessory rights or interests within land owned by another.

Question 24

Describe and give examples of encroachments

Answer 24

When a building, fence, or driveway extends illegally beyond the land of its owner and covers some land of an adjoining owner or a street, an encroachment arises.
Encroachments usually are disclosed by either a physical inspection of the property or a survey.
A survey shows the location of all improvements on a property and whether any improvements extend over the lot lines.

An encroachment is the physical intrusion of some improvement on another’s land. Adverse possession is a means of obtaining or losing property to another. To achieve success, the adverse possessing party is required to openly and notoriously occupy the property of another for the statutory prescribed perio

Question 25

Encroachments and describe the relationship of encroachments and adverse possession.

Answer 25

If a building encroaches on neighboring land, the neighbor may be able to recover damages or secure removal of the portion of the building that encroaches.

Encroachments of 10 years may give rise to ownership by adverse possession (a method by which title to real property is acquired if possessed but not owned for a statutorily prescribed period of time under certain conditions) or an easement by prescription.
To be successful in adversely possessing the land of another, the following must occur at a minimum:
-Occupation of the property must be open and notorious
-Occupation must be for a continuous and an uninterrupted period of at least 10 years
-Occupation of the property must be for the purpose of title
-The lawsuit brought forth is called a suit to quiet title.

On July 8, 2008, the governor signed an amendment into law modifying the state’s controversial law covering adverse possession. Although most of the current law remains in place, the governor eliminated some of the ways that seemed absurd to lawmakers that, by way of case law, had previously supported a claim made by another. As a result of this amendment,
the existence of de minimus nonstructural encroachments was deemed permissive and nonadverse.
This would include but is not limited to the following:

Fences
Hedges
Shrubbery
Plantings
Sheds and nonstructural walls
Lawn mowing/similar maintenance performed on the property of an adjoining neighbor