Real Estate Principles, 10 th Edition

1. Real Estate Principles, 10th Edition By Charles F. Floyd and Marcus T. Allen

2. Chapter 3 Private Restrictions on Ownership © 2011 Kaplan, Inc.

3. Private versus Public Restrictions Private restrictions are non-governmental limitations on the owner’s ability to use a property. Public restrictions are governmental limitations on the owner’s ability to use a property Collectively, such restrictions are called “encumbrances” This chapter focuses on private restrictions. The next chapter focuses on public restrictions. © 2011 Kaplan, Inc.

4. Covenants, Conditions, and Restrictions (CC&Rs) Private encumbrances that limit the way a property owner can use a property Recorded in public record Enforceable by parties who benefit from the limitations Generally “run with the land” © 2011 Kaplan, Inc.

5. Close-Ups & Legal Highlights © 2011 Kaplan, Inc. “Meadow Brook Ranch Use Covenants” “Validity of Restrictive Covenants” “Restrictive Covenant Disputes”

6. Liens A legal claim held by a lienor against a property owner’s property as security for a debt General lien – a lien against all property owned by lienee Specific lien – lien against a specific property item (a mortgage on a shopping center, for example) © 2011 Kaplan, Inc.

7. Mortgage Lien Mortgage – a pledge of real property as collateral for a debt or other obligation A specific lien, usually voluntarily given by property owner Mortgagor is the borrower Mortgagee is the lender Foreclosure is the process used to enforce the pledge if the mortgagor defaults © 2011 Kaplan, Inc.

8. Mechanics’ Liens © 2011 Kaplan, Inc. • Mechanic’s lien • Security interest held by someone who supplies materials or labor for work of improvement and is not paid by the property owner for the materials or labor as agreed • May lead to foreclosure if debt is not paid • See Legal Highlight “A Cautionary Tale on Mechanics’ Liens”

9. Easement Right to use someone else’s property in a specified manner. Types of Easements Easement Appurtenant Dominant estate Servient estate See Figure 3.1 Easement Appurtenant Created by Joint Driveway Easement in gross © 2011 Kaplan, Inc.

10. Creation of Easements © 2011 Kaplan, Inc. • Creation of Easements by: • Express grant or reservation • See Figure 3.2 Easement Created by Express Grant • See Figure 3.3 Easement Appurtenant Created by Implied Reservation • Implication • Prescription • See Legal Highlight “Prescriptive Easement” • See Legal Highlight “The Case of the Landlocked Parcel”

11. Nature of Easements © 2011 Kaplan, Inc. • Permanent in nature – easements “run with the land” • When dominant parcel is sold the new owner benefits from the easement • When servient tenement is sold the new owner’s property is encumbered by the easement • License – a revocable personal privilege to use land for a particular purpose

12. Termination of Easements © 2011 Kaplan, Inc. Agreement Merger Abandonment

13. A Relatively New Type of Easement: The Conservation Easement A “negative” easement that prevents rather than provides a right to use a property in a specified manner Increasingly used for historical preservation or environmental protection See Close-Up “Use of Conservation Easements” © 2011 Kaplan, Inc.

14. Profits & Encroachments Profit - profit a prende – a non-possessory interest that permits the holder to remove specified resources from the land Encroachment – an unauthorized invasion or intrusion of a fixture, building, or other improvement onto another owner’s property. May negatively impact value Best detected by boundary survey © 2011 Kaplan, Inc.

15. Adverse Possession Process by which title to land is transferred from its legal owner to someone who openly possesses the land for a statutory time period without the permission of the owner. Requirements to obtain title by adverse possession Actual and exclusive Open and notorious Hostile Continuous Under a claim of right Statutory period See Legal Highlight “Adverse Possession” © 2011 Kaplan, Inc.