I. OWNERSHIP - learnanytime.net · I. OWNERSHIP In olden times all land was owned by the king or emperor. Individuals who ... The right of enjoyment assures against interference from

Rights

Chapter 2 - 1Georgia Inst i tute of Real Estate ©2011

I. OWNERSHIP

In olden times all land was owned by the king or emperor. Individuals who were allowed to live on the land were tenants owing loyalty and service to the king in exchange for the right to occupy the land. This right was not inheritable. Thanks to social changes, in modern nations we now enjoy the allodial system of land ownership. Under this system any individual who has the means can acquire rights of ownership and our government protects these rights. Some nations do not enjoy the right of private ownership, so those of us who do should value it highly.

POSSE S SI ON

ENJOY M

EN

T

CONT R OL DISP O SITI ON

Figure 2-1 • Bundle of Rights

As indicated in Chapter 1, the bundle of rights that go with private ownership is divided into four categories. (See FIGURE 2-1.)

A. POSSESSION.

The right of possession includes the right to occupy your property and to have ingress and egress (a way to get in and a way to get out).

2r i g h t s

Rights

Chapter 2 - 2 Georgia Inst i tute of Real Estate ©2011

B. USE OR CONTROL.

The right to use or control includes making a profit from the land, removing objects from it, building on it, farming it, drilling or mining on it, leasing it to others, excluding others from it, mortgaging it, and granting an easement or license to others.

C. ENJOYMENT.

The right of enjoyment assures against interference from others or nuisances from neighbors. It includes some rights over adjoining land such as the right to light, air, water and lateral support.

D. DISPOSITION.

The right of disposition allows the owner to sell the land, give it away or pass it on to heirs.

The individual rights may be separated from “the bundle” and owned independently of each other. For example, an owner may sell the mineral rights and retain ownership of all the other rights in the bundle. The two different owners may then have the rights of possession, control, enjoyment, and disposition over their separate interests.

The rights are not unlimited. They are limited to a greater or lesser extent by the powers of government and by the rights of other people who may have a legal interest in the property.

Figure 2-2 • Rights & Interests in Real Estate

Influence

Influence

EasementsEncroachments

LiensRestrictions

Bundle of Rights

PrivateOwnership

Other Person'sRights

GovernmentRights

ControlDispositionEnjoymentPossession

Eminent DomainEscheat

Police PowerTaxation

Estates In Land

Rights & InterestIn Real Estate

Influence

The value of property is determined by its physical characteristics, the rights that go with it and whatever limitations or restrictions that might have been placed on those rights. (See FIGURE 2-2.) This chapter will explore these limitations, also called encumbrances.

Rights


II. ESTATES IN LAND

An estate in land refers to the quality, quantity, nature and extent of the ownership interest that a person holds in real property, not to the physical quantity of land one may own. Not all interests in property are estates. In order for an interest to be an estate, there must be a present or future right to possess (occupy) the property. An easement, for example, is an interest in the land but not an estate because it is simply a right to use but not possess. A mortgage lien is an interest but not an estate.

If a person has the present right to occupy the property, he/she is said to have a possessory estate. A non-possessory estate is one in which the right to occupy is a future right. It will become possessory when a preceding possessory estate, such as a life estate, is terminated. Therefore, one estate may exist simultaneously with another estate.

Dower

Curtesy

HomesteadProtection

Estates In Land

NonPossessoryPossessory

Freehold

Leasehold

Fee Simple

Absolute

Determinable

ConditionSubsequent

OrdinaryLife Estate

Life EstatePur Autre Vie

Remainder

Reversionary

Legal LifeEstate

ConventionalLife Estate

Estate for Years

Estate fromPeriod-Period

Estate at Will

Estate atSufferance

Figure 2-3 • Estates In Land

A. FREEHOLD ESTATES.

Freehold estates are estates that will last for an indefinite period of time. These include fee estates that have the potential of lasting indefinitely (and therefore are inheritable) and life estates that will last for a lifetime. Fee estates are distinguished by the fact that they can be inherited. The fee estates include:

Rights


1. FEE SIMPLE ABSOLUTE (ALSO CALLED FEE SIMPLE, OR FEE).

A fee simple absolute estate is one in which the owner possesses the entire bundle of rights. It is the most complete ownership of rights in land that one can hold. The owner’s rights to possess, control, enjoy and dispose of the property are limited only by the inherent powers of government and by the rights of other individuals who might have a legal interest in the land. There are no conditions to satisfy in order to retain ownership. This estate is freely inheritable. It can be passed on to the heirs named in a will, or if there is no will, passed on by state law of descent.

2. CONDITIONAL FEE.

There are other types of fee estates that do not represent complete rights of ownership because they have “strings attached.” Ownership is conditioned on the occurrence or on the non-occurrence of a certain event. These conditional fees (also called qualified or defeasible fees) are classified as either fee simple determinable or fee simple on condition subsequent.

a. Fee simple determinable.

The ownership of a fee simple determinable is subject to a certain limitation based on time. Conditional words and phrases such as “for so long as,” “during” or “until” are used in a deed to create this type of estate. For example, Johnson (the grantor) conveys ten acres of land to the city of Atlanta “so long as” the land is used as a park. Should the city use the land for anything else, its ownership is terminated. The estate would automatically go back (revert) to Johnson or to Johnson’s heirs or would go to someone else (the remainderman) if one has been named. This provision in the deed is called a reverter clause and, while the city owns the land, Johnson has a future right called a reversionary interest. Note that Johnson would have had no control over how the land was used if he had conveyed it in fee simple.

b. Fee simple on condition subsequent.

Ownership of a fee simple on condition subsequent is also subject to a condition but there is no automatic reversion when the condition is no longer being met. The estate can only be recovered through legal action. The deed creating a fee simple on condition subsequent might contain conditional phrases such as “provided that” or “on the express condition.” There is no time fuse on these phrases. For example, Smith conveys ten acres to the New Way Church “on the express condition” that the land be used only for church-related purposes. In the event the church uses the land for some other purpose, Smith or his heirs might have a right to terminate the estate by going to court and suing for possession within a reasonable time after the condition is violated or the right might be lost.

Rights


3. LIFE ESTATES.

Life estates are also freehold estates because the duration of a life estate is going to be measured by a person’s lifetime and no one knows exactly how long that might be. We do know, however, that it is not going to last forever and, since it ends when the life ends, the life estate cannot be passed to heirs.

a. Ordinary life estates.

A conventional life estate is one created by a conveyance, usually through the use of a deed, a will or a trust. The person who receives this estate is called the life tenant.

The life tenant, as owner of the estate, is entitled to possess and use the land for the duration of the lifetime. During that possession, the tenant is entitled to all profits, rent and other income that might be derived from the property and may sell, mortgage, lease or give away the estate. What the life tenant can dispose of, however, is not a fee estate. Anyone acquiring an interest from a life tenant should understand that their interest ends when that life ends. Most people would not choose to lend to or buy from a life tenant who might be hit by a truck tomorrow.

When a life estate is created, a future (non-possessory) estate is created at the same time. It must be specified whether, at the end of the lifetime, the estate will go back (revert) to the original grantor or whether it will go to someone else (a remainderman).

EXAMPLE: Aging Sarah Jenkins wants to give her home to her son, Kevin, but would like to remain in the home until she passes away. Sarah (grantor) conveys her home to her son, Kevin (grantee), but reserves a life estate for herself. Sarah, as the life tenant, has a life estate and Kevin has the reversionary interest in the property. When Sarah dies, Kevin receives the property with fee simple interest.

b. Life estate pur autre vie.

When the “lifetime” of a life estate is measured by the life of an individual other than the grantee, the estate is called a life estate pur autre vie.

EXAMPLE: Shane Jackson has a nephew, Bill, who has many problems finding and keeping housing. Shane’s brother asks, as a favor, that Bill be allowed to occupy one of Shane’s many houses. Shane is skeptical, but grants Bill a life estate pur autre vie based on Bill’s father’s life. Bill is able to live in the home until his father passes away. Shane figures that he’s doing his brother a favor, and at the end of the life estate, Bill will have to make his own way.

Rights


4. REMAINDER ESTATES.

A remainder estate is created when the owner of a fee simple estate grants a lesser estate to someone and, at the same time, names a person other than himself/herself (the remainderman) who will receive the fee simple estate when the lesser estate ends. Lesser estates include life estates, fee simple determinable, fee simple on condition subsequent, and leaseholds. In effect the grantor divides the fee simple estate into two parts; the lesser estate, that is possessory, and the remainder estate, that is a future right.

EXAMPLE: Frank has a sister, Jane, who is several years his elder. Frank grants his sister a life estate. Jane is able to live in the home until she passes away. Frank’s wife, Carol, will be the remainderman. If Carol passes away before Jane, the remainderman will become Carol’s heirs.

A contingent remainder estate is created when the grantor makes the “future rights” dependent on both the termination of a lesser estate and on the fulfillment of a condition. The deed might read “To my sister, Jane, for her life, and the remainder to the children of my sister, Jennifer.” If Jennifer has no children when Jane dies, the estate will revert to the grantor or the grantor’s heirs. This estate is also inheritable.

EXAMPLE: Jack (grantor) conveys a property to his sister, Samantha, for her life. The remainder estate is to go to Samantha’s children. If Samantha has no children, the estate reverts back to Jack or his heirs.

5. REVERSIONARY ESTATES.

A reversionary estate is created when a lesser estate is conveyed but the future rights are reserved for the grantor or heirs of the grantor. For example, a landlord or his/her heirs will typically regain possession of a leased property when the lease term ends.

All leasehold estates and any freehold estate, except for a fee simple absolute, may be created with either a remainder or a reversionary interest. When a fee simple determinable ends because the condition is no longer being met, the reversion is automatic. However, with a fee simple on condition subsequent, the grantor will have to take legal action to regain the fee, if the condition is not being met.

If no remainderman is named when creating a lesser estate, the estate is assumed to be reversionary.

Since there are future interests involved, the life tenant is legally bound not to commit waste. This legal duty obligates the tenant to pay the property taxes and mortgage payments and not substantially alter the property from its intended use or allow it to deteriorate in value by failing to make reasonable repairs.

Rights


6. LEGAL LIFE ESTATES.

Legal life estates are created by state law. They are non-possessory and consist of dower and curtesy, which are future rights that only become possessory upon the death of a spouse. Dower and curtsey rights cannot be defeated by will and are intended to provide a means of support for the surviving spouse. These ancient common law rights are now considered to be somewhat irrelevant and have been eliminated or replaced by statute in most states. Georgia no longer recognizes dower or curtesy.

a. Dower.

Dower is typically a wife’s right to a one-third to one-half interest in any property her husband owns, transferable at the time of his death, assuming she doesn’t pre-decease him. While the husband lives, this is a future right called inchoate dower. Once he dies it becomes consummate dower.

Because of this right, if a husband owns property in his own name, he has to have his wife’s signature to sell it to a buyer so her dower interest will be released.

b. Curtesy.

Curtesy is a husband’s right to a one-third life estate in his wife’s property that she owns at the time of her death. In some states, curtesy exists only if there are children and is defeated if the husband deserts his wife.

c. Homestead protection.

Homestead protection is a right that protects a primary residence from a forced sale to satisfy debts and judgments. Nearly every state has laws to protect owner occupants from losing their home to creditors but the amount of protection varies from state to state. Some debts such as a mortgage, taxes, alimony, child support, criminal fines, and awards for fraud, libel and slander would be exempt. Homestead protection may also protect a family residence from a sale to satisfy the debts of a deceased breadwinner.

Do not confuse this with the “homestead exemption” that is a property tax benefit granted to owners for their principal residence.

B. LEASEHOLD ESTATES.

Unlike freehold estates, a leasehold estate is not an estate of ownership. It consists of a tenant’s (lessee’s) rights, granted by a lease. In a lease, the landlord (lessor) conveys the exclusive right of possession to the tenant for a specified period of time in exchange for a payment called rent. During the term of the lease, the landlord is still the fee simple owner and retains a leased fee estate which is also reversionary. This entitles the owner to

Rights


recover possession when the lease period ends. Leasehold estates, that will be discussed in greater detail in a later chapter, are classified as either an estate for years, an estate from period-to-period, an estate at will or an estate at sufferance.

1. ESTATE FOR YEARS.

An estate for years exists when there is a lease agreement that gives the tenant exclusive possession of a property for a specified period of time. The name is misleading. It suggests that the period be “for years,” but this term applies to any contractual agreement that has a definite end, whether it is for one hundred days, three months, two years, or whatever. When the lease period expires, the landlord automatically recovers possession without the need for notice from either party unless the lease requires notice. The obligations created in an estate for years do not end with the death of the landlord (unless the landlord was a life tenant) or the death of the tenant.

2. ESTATE FROM PERIOD-TO-PERIOD.

In a period-to-period estate, the tenant’s right to occupy the property is for the term covered by the first rent payment and, each time another payment is made, the right is automatically renewed for another period of equal length. It is often called a month-to-month tenancy but can be for any period of time.

In most states notice is required when the tenant wants to end this lease or by the landlord when the landlord seeks to regain possession. The lease will continue for an uncertain time until proper notice is given.

3. ESTATE AT WILL.

A tenancy at will is usually a temporary arrangement in which the tenant can occupy the property for an unspecified period of time as long as the landlord gives permission. This estate is not assignable. It does, in most states, require the necessary notice by either party to terminate the possession. However, this estate ends with the death of either party or with the sale of the property.

4. ESTATE AT SUFFERANCE.

A tenancy at sufferance arises when a tenant, who is legally renting the property, continues to remain in possession after the term of the lease expires. This tenant, also called a holdover tenant, can become a period-to-period tenant if the landlord accepts another rent check. Otherwise, the landlord can take steps to regain possession. The holdover tenant only differs from a trespasser in that the right to occupy was legal at one time.

Rights


III. ENCUMBRANCES

External limitations that restrict an owner’s rights, use of the property or diminish its value are called encumbrances. Encumbrances may be public encumbrances imposed by the government or private encumbrances.

A. GOVERNMENTAL RIGHTS (PUBLIC ENCUMBRANCES).

The governmental powers limiting our property rights, discussed in more detail in a later chapter, include police power, eminent domain, the right of taxation and the right of escheat. (As a memory aid, think of PETE.)

1. POLICE POWER.

Police power is the right of local, state or national governments to enact and enforce laws that regulate the use of private property in order to provide for the safety, health, morals and general well-being of the community. Examples include planning restrictions, zoning, building codes, and environmental protection laws.

An owner who suffers loss of value due to an exercise of police power is not guaranteed compensation, as would be the case in eminent domain. For example, if a zoning change causes land to lose value, the owner cannot expect to be paid the difference. Police power cannot be delegated to anyone else. It can be exercised only by government authority.

2. EMINENT DOMAIN.

Eminent domain is the government’s power to take property, with or without the owner’s consent, when it is needed for a public purpose such as a park, a road or a public school. This process is called condemnation. All levels of government possess this power as do some quasi-public companies that serve the public, such as railroads and public utilities. However, the U.S. Constitution guarantees that privately owned land cannot be taken unless a public purpose is proven and just compensation is paid, usually established by appraisal. Just compensation may include more than the fair market value of the property. The owner may also be entitled to additional damages such as moving expenses.

Rights


Figure 2-4 • Property Rights of Other Person’s Private Encumbrances

Easements

Appurtenant

In-Gross

Covenants

Conditions

JudgmentEncroachments

PrivateRestrictions

Property Rightsof Other Person's

Private EncumbrancesAffecting UseLiens

General Liens

Specific Liens

Estate andInheritance Tax

Decedent'sDebts

Federal & StateIncome Taxes

Attachment

Mechanic's

Mortgage

Property Tax

Vendee's

Vendor's

Recently some local jurisdictions have used this power to condemn residential property for the benefit of commercial users (private entities) and have considered this to be a public benefit because the commercial owner pays higher property taxes.

Sometimes owners enter an inverse condemnation suit in court, seeking to force the government to take the property and pay for it. This could happen, for example, if the owner’s use and enjoyment of the property is severely restricted when the Highway Department announces that this land will be part of a future right-of-way.

3. TAXATION.

The right of taxation gives local governments, and in some cases state governments, the right to levy taxes on real property according to its value (ad valorem). These taxes generate revenue needed for services such as schools, parks, hospitals, and police and fire protection. Unpaid property taxes create a lien against the property and the government has the right to foreclose on this lien to recover the money owed.

Rights


4. ESCHEAT.

The right of escheat exists because property ownership is both a privilege and an obligation so all property must have an identifiable owner. The state government has the right to take over the property when it is abandoned or when an owner dies without a will and without heirs.

B. PRIVATE ENCUMBRANCES WHICH CREATE A LIEN.

Private encumbrances are another person’s rights which either grant that person an interest in the property as security for a debt (lien) or affect the use of the property. While a private encumbrance may grant someone else a claim or right in the owner’s property, it should be noted that it does not usually prevent the transfer of ownership.

(See FIGURE 2-4.)

A lien is a monetary claim a creditor has on the property of a debtor and the debtor’s property is security for payment of the debt. This legal right may allow the creditor to force the sale of the property to satisfy the debt if it is not repaid. For this right to be enforceable, the instrument that creates the lien must be properly recorded in the county records. When a foreclosure occurs, priority of most liens is established by date of recording. Exceptions are property taxes that always have first priority, mechanic’s liens that are often prioritized by a date of performance, and the inclusion of a subordination clause.

EXAMPLE: Suppose a property has a $30,000 mortgage, recorded February 23rd, and a $10,000 mortgage, recorded July 8th in the same year. Later the property sells at foreclosure for only $39,000. The first mortgage (the one that was recorded first) is paid in full and the second mortgage lender gets the balance of $9,000.

Liens are categorized in several ways:

• They are voluntary or involuntary, depending on whether they are recorded with the owner’s consent (as in a mortgage lien) or without it (as in a tax lien).

• They are statutory or equitable, depending on whether the right exists because of an act of the legislature (as in a mechanic’s lien) or whether it arises out of justice and fair play (as in a vendee’s lien). Statutory liens are usually involuntary and equitable liens are usually voluntary.

• They are specific or general, depending on whether they are attached to just one parcel of property (as in a property tax lien) or to any property the debtor has, real or personal (as in a judgment lien).

1. SPECIFIC LIENS.

A specific lien is enforceable against only one parcel of property, regardless of how many other parcels a debtor might own. Examples

Rights


include property tax liens, mortgages, vendor’s liens, vendee’s liens, mechanic’s liens and attachment liens.

a. Property tax liens.

The services that local governments provide are supported mainly by two types of taxes on real property. The ad valorem tax is so-called because it is levied against each property owner according to the value of the property.

Some owners might also find on their tax bill a special assessment for a local improvement such as a new sidewalk or street lighting. Since only certain properties will benefit from a neighborhood improvement, those owners are expected to pay the cost.

If tax bills are not paid within the time allowed, liens can be foreclosed and the properties sold to collect the owed taxes. Since recorded tax liens have priority over all other liens, the mortgage lender often requires an owner to establish an escrow account for the monthly payment (called impounds) of property taxes. The lender can then pay the bill when it becomes due. Tax liens are involuntary, specific liens.

b. Mortgage liens.

The mortgage lien exists when an owner pledges one specific property to the lender as security for a loan. If the loan is not repaid according to the terms set forth in a promissory note the owner signs, the lender can force the sale of the property.

In a purchase money mortgage, the seller is the lender. The loan can be either a first or a second mortgage loan, with the property pledged as security for repayment. In this case the seller has a vendor’s lien. Mortgage liens are voluntary, specific liens.

c. Mechanic’s liens.

Mechanic’s liens are statutory in nature, a right defined by state legislatures and procedures differ somewhat from state to state. The laws allow contractors, subcontractors, workmen and suppliers of building materials to place a lien against a property, if they are not paid in full for improving it. This applies to both new construction and remodeling. The theory is, since the workers enhanced the value of the owner’s property, they are entitled to collect from it what they are owed. Of course, the work or materials must have been provided with the owner’s consent, expressed or implied. Consent can be implied unless the owner objects to the work or refuses to accept the materials, even though ordered by someone else.

In general, the procedure begins with a notice of completion filed with the county clerk (and notice given to the owner) when the

Rights


building inspector certifies that the job is done. This triggers a defined time period (usually 60 or 90 days) within which lien rights can be filed by those who are still owed money. In many states this lien, once recorded, has a degree of priority over other liens. It might, for example, “relate back” as if filed when the work began or the supplies were delivered.

Once the lien is filed, the creditor must take action to sue for the money owed or the lien will expire within a stated time, usually one or two years. If a suit is begun to enforce the lien, there may be a long delay before a judgment is rendered. The creditor might then file and record a lis pendens, giving notice a suit is pending. Anyone searching the title on behalf of a prospective buyer would be aware of this legal action. Purchasers considering a property with new construction should be aware of their potential liability for the debt.

Owners should be aware that a lien can be filed against the property by a subcontractor, hired by the general contractor, even though the owner has paid the general contractor in full. One way to avoid this risk is to deal only with contractors who provide a performance bond, insurance that the job will be completed according to contract. Other methods include making payments directly to suppliers and subcontractors; withholding payments to the general contractor until provided with signed releases or waivers of lien rights from the suppliers and subcontractors; or making checks payable to both contractor and subcontractor.

Mechanic’s liens can only be filed for labor and construction materials, never for things like travel, telephone costs, profit or overhead. Mechanic’s liens are involuntary, specific liens.

d. Vendee’s liens.

In residential real estate, the sales contract between a buyer and seller is usually not recorded. However, a purchaser, making a large earnest money deposit and incurring additional costs in searching the title, might want protection in the event the seller refuses or is unable to complete the transaction. If the contract is recorded, the buyer has a vendee’s lien for the amount of the deposit and related expenses in the event of a default. This is a voluntary, specific lien.

e. Attachment liens.

An attachment lien grants the court custody of a specific property to prevent the owner from transferring ownership while a suit for damages is being decided. This assures the person taking the legal action (the plaintiff) that the property will be available to satisfy a judgment awarded by the court. Before filing for the attachment, however, the plaintiff must post a bond to cover any loss suffered by the property owner in case no judgment is awarded.

Rights


This is the only lien that absolutely prevents a sale or any other conveyance of a property. It is an involuntary, specific lien.

2. GENERAL LIENS.

A general lien is one that encumbers all real and personal property owned by a debtor, including properties owned before the lien was recorded or properties acquired after. To be effective the lien must be recorded in all counties where the debtor owns property. General liens result from judgments, federal or state income taxes, and a decedent’s debts. They are all involuntary.

a. Judgment liens.

A judgment lien arises out of a lawsuit. When one person (the plaintiff) sues another person (the defendant) for damages and the plaintiff wins the suit, the court awards a judgment in a specific dollar amount to establish the indebtedness. The judgment, when recorded in the county records, becomes a general lien against any real or personal property owned by the defendant in that county.

A lis pendens may have been filed to alert title searchers that a suit is pending. It is also possible that an attachment lien has been granted to prevent the defendant from disposing of a property that might be included in the final decree.

Once the judgment is rendered, if the debtor does not pay the amount due, the creditor may ask the court for a writ of execution authorizing the sheriff to seize and sell enough property to pay the debt and costs of the sale. When the debt is satisfied, the debtor should receive and record a satisfaction piece as evidence. Recording this will then clear the title.

b. Federal and state income taxes.

Any unpaid federal or state income taxes become general liens against the taxpayer’s real or personal property. The lien will be filed against the taxpayer in the county where the taxpayer resides without court intervention.

c. Federal and state inheritance taxes.

Property owned by a decedent is subject to federal estate taxes after certain exemptions are allowed. If this tax is not paid, all property in the estate is encumbered by a general lien. Some states also assess inheritance taxes and the same rule applies.

d. Decedent’s debts.

When someone dies, existing liens on the decedent’s property must be satisfied before the property passes to the heirs. Outstanding debts that cannot be paid out of the decedent’s personal property

Rights


create a lien against real property and the real property can be sold to satisfy the remaining debts.

C. PRIVATE ENCUMBRANCES WHICH AFFECT THE USE OF THE PROPERTY

The use of privately owned real estate may be limited or restricted by the rights of other people. Private encumbrances which affect the use of property may be easements, deed restrictions, or encroachments.

1. EASEMENTS.

An easement is a non-possessory, intangible (incorporeal) right one person has to use another person’s land in a specified manner and for a specified purpose. The holder of the easement does not own or possess the land but has only an interest, a right of use. Because an easement is an actual interest in the land, the statue of frauds applies and an easement which is freely given must be in writing. The easement is irrevocable and an encumbrance on the grantor of that right. Easements are either appurtenant or in gross.

a. Easement appurtenant.

To create an appurtenant easement, there must be two separate properties usually, but not necessarily, adjacent to one another. They must have different owners. The owner granting the easement, and therefore burdened by it, is known as the servient estate. The owner that benefits from receiving this right is the dominant estate.

The appurtenant easement is said to “run with the land.” In other words it is not just a contract between two owners but a relationship between the two parcels of land. When ownership of either parcel is transferred the easement automatically goes with it, whether or not mentioned in the deed.

Examples of this type of easement include common driveways (See FIGURE 2-5.), a right to use another person’s land for ingress or egress, a right to use water from another landowner’s well, or a party wall. A party wall, often found both in commercial buildings and in townhouses, is a wall that straddles the boundary line between two adjoining properties and is a part of the improvement on both lots. Typically, each owner owns the half of the wall that is on his/her side of the line and has an easement right to the other half. Neither can tear the party wall down.

Rights


Servient Estate

Dominant Estate

Figure 2-5 • Servient & Dominant Estates of Easement

An appurtenant easement can also be created to benefit the dominant property by requiring the servient landowner to avoid doing certain things on the property. For example, a view easement will preserve a dominant owner’s panoramic view by prohibiting the servient landowner from building improvements or fences above a certain height on certain parts of the lot.

Easements are generally bought and paid for because they have value. The existence of the easement increases the value of the dominant parcel and also decreases the value of the servient parcel. An appraisal can be used to estimate the values involved.

b. Easements in gross.

An easement in gross involves only one tract of land, the servient estate. It benefits a person rather than another parcel of land. It is a personal right to use the land of another and does not necessarily run with the land.

When the easement is granted to an individual, it’s a personal easement in gross. A personal easement in gross is irrevocable during the lifetime of the person to whom the easement was granted. It is not transferable and will terminate with the death of the person to whom the easement is granted or upon the transfer of title to the property. An example of this is the right to use someone’s lake for fishing.

Commercial easements in gross, such as utility easements, railroad rights-of-way and rights to erect billboards, are more valuable interests and are freely transferable and inheritable. (See FIGURE 2-6.)

Rights


Figure 2-6 • Commercial Easements

c. Creation of easements.

An easement is created in any of the following ways:

i. Grant.

Easements may be created by a deed in which an owner grants a specific right for another person to use the grantor’s land.

ii. Reservation.

An owner might sell some land but reserve an easement in the deed. For example, the owner of 100 acres sells 75 acres but reserves the right to use a driveway to get to the remaining 25 acres.

iii. Agreement.

The parties may express their intent to create an easement in a written contract. For instance, certain water rights or a common driveway might be created by agreement.

iv. Necessity.

An easement arises out of necessity when an owner sells land in such a way that deprives the buyer of reasonable access. No written document is required. The buyer has a right of ingress and egress to the landlocked property.

v. Prescription.

An easement by prescription is acquired through continuous use of another person’s property for a period of time prescribed by state law, usually ten to twenty years. The use must be open, visible and notorious, and without permission from the owner. For example, a person using a corner of a neighbor’s lot as a shortcut to the highway for the statutory period of time might be able to acquire an easement by prescription.

Rights


vi. Implication.

An implied easement is one created by operation of law. For example, if mineral rights are sold without granting the purchaser the right to enter the property and extract the substances, the law would assume an implied easement of reasonable access for the purpose of extraction.

vii. Condemnation.

Under its right of eminent domain, the government can acquire an easement over privately owned land for a public purpose through condemnation. The right can also be delegated to quasi-public corporations such as utility companies and railroads. Since easements do have value, the landowner must be paid just compensation.

d. Termination of easements.

An easement can be terminated in any one of the following ways:

i. Release.

An easement can be terminated by a written release from the owner of the dominant estate to the owner of the servient estate.

ii. Merger.

If both properties come under one ownership, the easement no longer exists.

iii. Expiration of purpose.

If an easement was granted for a specific purpose and the purpose no longer exists, the easement ends. For example, an easement granted for access to a construction site might end when the work is complete.

iv. Abandonment.

An easement can end when it has been abandoned but non-use is not necessarily abandonment. There must be a positive action that shows the holder of the easement no longer intends to use it.

v. Prescription.

A prescriptive easement is terminated when the holder of the servient estate openly and continuously prevents the easement holder from using it for the statutory period of time, usually the same time period as is required to create the easement.

Rights


vi. Necessity.

An easement created by necessity will last only as long as the necessity lasts. For instance, if a landlocked owner acquires access to the property by buying an adjoining tract, the easement is no longer needed.

e. License.

A license grants personal permission to use the land of another without creating an estate for the user. It is not a right but a personal privilege and does not encumber the ownership of the land being used. It is usually a short-term privilege and is not transferable or inheritable. Unlike an easement, a license can be terminated by the land owner at any time and may be granted either orally or in writing. A license will automatically terminate upon the death of either party or on conveyance of the property. Typical examples of a license include permission to park in a public parking lot, permission to enter a public park or permission to attend a football game.

2. PRIVATE RESTRICTIONS.

Private restrictions are limitations on the use of one’s property in order to protect the rights of others. An owner can specify how a property can or cannot be used, either through contractual covenants or through conditions in a deed. However, restrictions that violate public policy, such as restrictions that promote illegal discrimination, are unlawful. It is generally felt that any restrictions on an owner’s right to sell or otherwise convey the property are also unenforceable.

Sometimes private restrictions conflict with zoning laws. For example, zoning might specify 50-foot setbacks and the private covenant specify 100 foot setbacks. In this case the stricter requirement always prevails and the structure would have to be built 100 feet from the street.

a. Covenants.

A covenant is a promise made in a sales contract, lease or deed that specifies the property will or will not be used in a certain manner. The purpose is to preserve property values by establishing standards with which each owner must comply.

The declaration of restrictions that is recorded with the plat of a new subdivision provides a good example. Typical subdivision restrictions involve architectural approval, type of construction, style of architecture, number of structures on each lot, set-back lines, square footage minimums, mobile home usage, building heights, signs usage, fences, antennae and lawn maintenance.

Subdivision restrictions usually have an effective time limit and details outlining how the restrictions can be removed, altered or

Rights


extended. As a rule, any changes require unanimous agreement of all those having an interest in the property.

Court action is required to enforce a restrictive covenant. Either the grantor or other parties to the covenant must promptly seek an injunction to stop the prohibited use or must sue for damages. The court might not act if the agreed upon time limit for the restriction has expired or if neighbors have obviously disregarded the restriction. Loss can also occur because of undue delay in taking proper legal action, a principle of law called laches. This is based on the principle that, if one has a right, it should be exercised. Waiting too long might cause loss of the right.

b. Conditions.

Conditions are found in deeds. For example, the grantor might specify in a deed that the property is to be used only for a hospital or that it may not be used for a chicken farm. Conditions differ from covenants because they usually do not have any time limits but “run with the land” indefinitely, unless removed by a court.

A deed containing a condition might also specify what is to happen if the condition is not being met. Unlike the covenant, this is not limited to an injunction or a suit for damages. It could result in the ownership reverting to the original grantor, or provide a basis for that grantor’s heirs to sue for possession.

3. ENCROACHMENTS.

An encroachment arises when an improvement, building, or other attachment illegally extends beyond the boundaries of its owner’s land, onto adjoining land or into adjoining air space. (See FIGURE 2-7.) Most encroachments are unintentional, but can be an encumbrance on the property encroached upon. They do not show up in a title search and although they may be observable they are usually revealed by a professional survey.

Property Line

Figure 2-7 • Encroachments

Rights


The fence or building that extends onto a neighbor’s land is basically trespassing. A tree that overhangs the neighbor’s yard is a nuisance. In either case the neighbor can seek court action to either remove the encroachment or collect damages. Known encroachments should be acknowledged and accepted in a sales contract.

Failure to have an encroachment removed could, in due time, result in a prescriptive easement. The best solution for most encroachments is for the two owners to agree to legalize the encroachment either by a license or a formal easement agreement. This might involve payment for the easement.

Rights


RIGHTS - QUIZ

1. The government’s right to make laws and regulations for the general welfare is known as:

A. eminent domain.

B. police power.

C. escheat.

D. the bundle of rights.

2. The City of Atlanta has condemned Nelson’s land in order to extend its rapid transit services. This procedure is made possible because of the city’s right of:

A. entry.

B. escheat.

C. eminent domain.

D. police power.

3. A private landowner has the right to:

A. reject a claim for taxes.

B. repudiate a zoning ordinance.

C. disinherit heirs.

D. refuse to sell the property or otherwise prevent the city from taking it for use as a street.

4. In order to be effective, a lien should be:

A. recorded.

B. published.

C. renewed.

D. delivered.

5. The total collection of rights that may be claimed by private ownership is best described as:

A. the fee simple system.

B. an estate.

C. freehold.

D. the bundle of rights.

Rights


6. In real estate law, the word fee is closest in meaning to:

A. possession.

B. an estate of inheritance.

C. a tax or assessment on land.

D. a real estate commission.

7. Which of the following is correct about an estate?

A. It can exist simultaneously with another estate in the same property.

B. Upon the death of the owner, it either goes to the owner’s heirs or to the state by escheat.

C. The owner is always assured of possession.

D. Its duration is either forever or for a lifetime.

8. Bob gives an estate to Jim for the life of Sue. Which of the following is true?

A. Jim has an estate pur autre vie.

B. Bob has a possessory estate.

C. Sue is the person in remainder.

D. Sue has a reversionary interest.

9. A right or claim of a creditor to have a debt satisfied from the proceeds of the sale of the debtor’s property in the event of default is:

A. an attachment.

B. a judgment.

C. a writ of execution.

D. a lien.

10. Except for property tax liens and in some cases mechanic’s liens, priority of liens is determined by the:

A. amount of the debt.

B. date of default.

C. date of recording.

D. court at the time of foreclosure.

Rights


11. Jones, a life tenant, grants Smith an easement across Jones’s land. Later Jones dies. The easement will:

A. go to Jones’s heirs.

B. terminate.

C. remain Smith’s.

D. not be enforceable because a life tenant cannot grant an easement without committing waste.

12. The Joneses have purchased an acre of land in Elite Acres subdivision and are aware of the fact that covenants might limit the ways in which they use their property. Which is true of private restrictions?

A. The covenants cannot restrict the type of architecture they choose for their home.

B. There could be a restriction on selling the home within the first three years after it is constructed.

C. If a covenant specifies one acre of land per dwelling but local zoning permits two houses per acre, they can build two.

D. Covenants can be based on aesthetic considerations.

13. Unauthorized intrusion of a building, improvement, or other attachment onto a neighboring land is:

A. an easement.

B. an encroachment.

C. a lien.

D. an estate.

14. Smith signs an agreement with Jones to use and possess Jones’s land until May 1st. Their agreement creates:

A. a less-than-freehold estate for Jones.

B. a periodic tenancy.

C. an estate for years.

D. a reversionary estate for Smith.

15. All of the following can be characteristics of an easement EXCEPT:

A. an easement creates an interest that may be protected from third party interference.

B. an easement can be created by conveyance.

C. an easement is an incorporeal right in the land of another.

D. an easement may be revoked at will by the servient landowner.

Rights


16. Telephone lines are examples of:

A. an easement in gross.

B. a legally valid encroachment.

C. an easement appurtenant.

D. a non-revocable license.

17. The law allows a person furnishing labor or materials for the improvement of real property to file a mechanic’s lien against the property if he/she is not paid. Which of the following is correct concerning such liens?

A. A mechanic’s lien takes priority over all other liens.

B. A mechanic’s lien is a general lien.

C. A mechanic’s lien filed by a subcontractor is ineffective against a property owner who has proof of having paid the general contractor.

D. A mechanic’s lien will expire if the claimant does not take the necessary steps to enforce it.

18. All of the following can be acceptable methods of terminating an easement EXCEPT:

A. abandonment of the easement by the owner of the dominant estate.

B. the owner of the servient estate openly and continuously prevents the easement owner from exercising his/her right of use for a statutory period of time.

C. express release to the owner of the servient estate by the owner of the dominant estate.

D. revocation of the easement by the owner of the servient estate.

19. Farmer Brown is tired of hard work. He is deeding 165 acres of his farm to his son and keeping only 5 acres and a house for his own use. He will need an easement across his son’s land so that he can get to his own. How is the easement created?

A. Through a reservation in the deed

B. By having the son sign a lease

C. By recording a new plat map and survey

D. Through an exception in the deed

20. Which of the following is INCORRECT concerning a conventional life estate?

A. The owner is called the life tenant.B. The owner does not have to die for the estate to end.C. Life estates always pass to the remainderman.D. A life estate may be sold, leased, or mortgaged.

Rights


21. A “freehold estate” is defined as one that:

A. has a condition attached to it.B. includes an estate for years.C. is similar to a leasehold.D. will last indefinitely.

22. A “homestead” might be defined as a family home. Some states have Homestead Laws which afford some protection for the home from seizure to pay debts of a deceased owner/breadwinner. These laws are designed to protect:

A. the mortgage lender.B. the community.C. the breadwinner.D. the bereaved family.

23. Revocable permission granted to hunt on another’s land is an example of:

A. an incorporeal easement.B. a license.C. an easement by prescription.D. an easement appurtenant.

24. What do dower and curtesy rights have in common?

A. Legal life estate.B. Possessory estate.C. Leasehold estate.D. Remainder estate.

25. Which of the following phrases would be most typical of a fee simple determinable estate?

A. “provided that”B. “on the expressed condition”C. “with the intention of”D. “for so long as”

Documents

I. OWNERSHIP - learnanytime.net · I. OWNERSHIP In olden times all land was owned by the king or emperor. Individuals who ... The right of enjoyment assures against interference from