Encumbrance - A burden or hindrance that may diminish the value of a real property. Ex: Easements, encroachments, restrictive/protective covenants, deed restrictions, and liens., Easement - Right or privilege to use the property of another that does not create ownership interest., Appurtenant Easement - Creates a dominant and servient estate. Dominant gets the benefit, and Servient gets the burden., Personal Easement - Typically for hunting, fishing, or crossing the property of another granted to a person for his/her lifetime. It cannot be transferred (willed or sold). Terminates upon the death of the party granted the right, so it is an encumbrance until death., Commercial Easement in Gross - Often for utilities, billboards, cell towers, etc., which may be willed, sold, or transferred. Remains an encumbrance even if the grantee declares bankruptcy., License - A revocable right to use the property of another. Not an encumbrance as it can be terminated. Automatically terminates upon death., Encroachment - Improvement crosses the property boundary that is discovered by a survey., Lis Pendens - Notice of pending litigation. When a property is sold subject to lis pendens, the new owner risks the loss of the property., Sheriff Sale - Writ of Attachment - court freezes assets to prevent sale. Writ of Execution - court orders the sale of assets to cover the judgment.., Restrictive / Protective Covenants - Private use restrictions continue when a property is sold. Limited paint colors, minimum square footage, type of mailbox, etc. Enforced by HOA or through the courts (Injunction). May be referred to as CC&R's - covenants, conditions, and restrictions. , Lien - The right to force the sale of a property to recover some or all of the money lent. General liens are against all property of the debtor. Specific liens are against one property., Real property Taxes - The Machinery Act permits cities and counties to charge property taxes on an ad valorem basis (assessed value). Assessed value may change every year, but must change every 8-years (octennial reappraisal). Highest priority lien., Calculating Taxes - North Carolina - Assessed Value ÷ 100 X Tax Rate. Property taxes are based upon the assessed value. Assessed value only changes in reassessment years., Calculating Taxes - National - Assessed Value ÷ 1,000 X Mills Rate. Property taxes are based upon the assessed value. Assessed value only changes in reassessment years., Mechanics Lien - Special treatment for tradesman liens - labor or materials. The lien must be filed within 120 days and a suit to enforce the lien filed within 180 days from the last day labor or materials were provided. The lien jumps back to the first day labor or materials were provided. In N.C., a lien agent must be appointed when the project exceeds $30,000., Lien priority - Real property taxes and public special assessments ALWAYS have the highest priority. The liens in order of recordation, except mechanics liens which may jump. Mechanics liens are not paid before property taxes and public special assessments., Conflict between laws or rules - The most restrictive will apply, File a complaint with the HOA - Neighbor parked a camper in the front yard, File a complaint with zoning/planning - Neighbor built something that doesn't comply with pubic rules, Subdivision Ordinance - Public land use control that protects taxpayers from unplanned growth,

Unit #2: Real Estate Basics Encumbrances

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