Level 5 Chapter 2: Encumbrances

Question 1

Possessory

Answer 1

An interest in property is possessory if it includes the right to possess and occupy the property, now or in the future. If you own a home, you have a possessory interest in it.

Question 2

Non-Possessory

Answer 2

An interest in property is described as non-possessory if it does NOT include the right to possess or occupy the property.

Question 3

Easement

Answer 3

Type of encumbrance. An interest in, or a right to use, another individual’s land or property, generally for a specific, limited purpose. When someone has a right to use an easement, what they actually have is an interest in the property, but not an estate in it.

Question 4

Lien

Answer 4

Type of encumbrance. A claim made by a creditor against real or personal property pledged by a debtor as collateral. There are several different kinds of liens you may encounter, and we’ll go over them later in this level.

Question 5

Deed Restrictions

Answer 5

Type of encumbrance. Also known as restrictive covenant. A type of non-governmental private land-use control.

Question 6

Leases

Answer 6

Type of encumbrance. A lease is an encumbrance because the party residing in the property does not own the title to the property. In other words, the owner’s (or, the lessor’s) use of the property is significantly limited. If a home is being leased, then the owner can’t just go hang out in the home even though they own it

Question 7

Cloud on the Title

Answer 7

Type of encumbrance. Also known as, encumbrance to title, a dispute on an otherwise clear title. These clouds can come from confusion over who has a claim to the property, changes in ownership like death or divorce, or even something like fraud.

To remove this cloud, an owner may need to initiate a quiet title suit

Some common causes of clouds on a title include:
An owner who dies without a probated will
A divorce
Fraud

Question 8

Quiet Title Suit

Answer 8

A lawsuit against anyone who has a claim on the land. If the property owner wins the suit to quiet title, no further challenges to the title can be brought.

Question 9

Quit-Claim Deed

Answer 9

“Quits” or terminates their rights or claim to the property. Essentially, they’re promising that they definitely do not own the property. That clears up the cloud.

Question 10

Fraud

Answer 10

In the case of a fraud, where more than one person is “sold” a property, the cloud is usually settled in court. Sadly, only one of the potential “owners” will end up with the property.

Question 11

Licenses

Answer 11

The revocable and temporary permission to use someone else’s property for a specific purpose. A license does not run with the land or transfer with the deed or title, which is what makes a license different from an encumbrance. The main difference between a license and an easement is that a license can be withdrawn at any time.

Question 12

Encroachment

Answer 12

Physical property that crosses the boundary into a neighboring landowner’s property.

An encroachment is created when one person’s property (such as a fence, tree, or driveway) crosses the property boundary into an adjacent property. It’s a physical intrusion on someone else’s property without direct permission.

Question 13

Constructive Notice

Answer 13

The legal presumption that individuals will obtain information through due diligence.

Question 14

Actual Notice

Answer 14

The next level of notice; it means the buyer is actually aware of it.