Chris Tomlinson Exam 2 - FINC 3250 - Principles of Real Estate Exam 2 questions and answers

Chris Tomlinson Exam 2 - FINC 3250 - Principles of Real Estate Exam 2 Covenants, conditions, and restrictions (also called CC&R’s or simply deed restrictions) a. Rules set forth in the deed (or a document referenced by the deed) that the owner agree to adhere to if you purchase the property i. No work vehicles in the driveway overnight ii. No swimming pool in the backyard iii. Only certain colors allowed on the exterior b. Similar to an HOA c. They are absolutely enforceable i. If you violate the rules and get sued, the suing party will win 2. Liens: an interest in property gained by a creditor to secure a debt of some type i. Kind of like a form of collateral b. Mortgage lien: lien filed by the lender to secure repayment of a loan i. Could be a mortgage loan to buy a property ii. It is this lien that allows foreclosure to take place should the mortgage not be paid iii. Voluntary iv. Specific c. Mechanic’s lien: lien filed by anyone who provides labor or materials for the improvement of a property to secure payment for those services of materials i. Can only be filed against the property where the labor or materials were provided ii. Involuntary iii. Specific d. Judgment lien: lien filed by the winner of a lawsuit, after a lawsuit to secure payment of the lawsuit damages (money) to the winner of the suit i. Involuntary ii. General lOMoARcPSD|14985576 e. Other types: i. Estate tax: lien filed to secure payment of estate taxes ii. Federal income tax: lien filed to secure payment of federal income taxes iii. State income tax: lien filed to secure payment of state income taxes iv. Debts of a deceased person: lien filed to secure payment of debts incurred by a now deceased person from the proceeds of their estate f. Classifications i. Voluntary vs involuntary liens: some liens are entered into voluntary by the debtor and some are not ii. Special (or specific) vs general liens: some liens apply only to one property (special liens) and some apply to more than one property (general liens) 3. Easement: a right to use land/property for a particular purpose; not an ownership interest a. Drainage, government authority to put up power lines, anything for access b. Creating a driveway on someone else’s property in order to access the road i. Has to be filed in public records in order to be effective c. Created in one of five ways i. Grant: given by the owner of the land to another party receiving the right to use that property ii. Reserve: an owner of property sells that property but retains an easement to use that property for a particular purpose 1. Kept by the seller of land when it is sold iii. Necessity: awarded by a court if the easement is required for access to a property 1. Where it will go 2. How much they have to pay the property for that easement iv. Prescription: awarded by a court if the nonownership party has been using the land as if they had an easement for long enough (how long varies by state, but can run anywhere from 3-30 years) lOMoARcPSD|14985576 1. Several further conditions must be met; specifically the use must be: a. Actual: meaning the party seeking the easement actually makes use of the property b. Visible: meaning the use could be seen by anyone viewing the property c. Continuous: meaning the use has continued for the entire time period i. I can’t use the property once, then show up again 20 years later and use it again, and then claim the easement d. Hostile: the use is without the owner’s permission i. Owner never told me whether I can or cannot do something e. Exclusive: the person seeking the easement takes steps to prevent use by others, including the rightful owner f. Notorious: the person seeking the easement acts as if they were the rightful owner, even in the presence of the actual rightful owner d. Several types of easements: 1. Dominant property property that is receiving a benefit → 2. Servient property that is providing a benefit → ii. Easement appurtenant: dominant and servient property iii. Easement in gross: only servient property, no dominant property 1. Sewer lines, power lines, storm drains, etc. a. Power company has to have an easement to use your property to put power lines on it 2. For the benefit of others, not just a single property iv. Party wall easement: exists when two buildings are built right up to the property line such that they share a single wall between them 1. Think large cities where buildings connect to each other 2. In this case, property owner A owns his/her half of the wall and an easement in the other half of the wall and property owner B owns his/her half of the wall and an easement in the other half of the wall 3. The easement exists to make sure that neither property owner can tear down the wall without making arrangement with the other property owner (since half a wall might not support the neighboring building property) 4. Each property owns their half of the wall, and has an easement on the other half of the wall