Encumbrances - An encumbrance encumbers the owner's bundle of rights. It removes one of the powers enjoyed by a normal owner who has a fee simple absolute estate. The encumbrance on real property can restrict the present use of the real property or the physical rights of the real property.
Restrict Use Examples - If a neighbor has an easement across the owner's real property, the owner cannot use the entire property as they wish. If a person holds a lease on the real property, the lease disallows the owner's right of use and possession of the property.
Restrict Physical Rights - If the City prevents the owner from building a commercial building due to zoning, this police power has encumbered the owner's rights regarding the physical development of the property for commercial purposes.
Encumbrances - An encumbrance can encumber (burden) the owner's real property. It could be caused by a variety of different entities:
Encumbrances /Present Interest/Physical Rights - An owner can face multiple encumbrances that would affect the owner's physical rights to use and possession of their real property. The following could also reduce the value of their real property. Some of these situations would include:
Encumbrances - A lien placed against the owner's real property is an encumbrance against the property. These do not affect the use and possession of the property. They do restrict the financial ability of the owner and/or could lead to foreclosure on the property.
Liens Classification - Liens are separated into two different forms. They are specific liensand general liens.
Specific Lien - These are monetary encumbrances (liens) that only apply against one specific (specified) piece of real property. It does not apply to any other piece of real property that the owner holds title too; hence specific lien. Specific liens do not apply to personal property such as an auto, furniture, cash, stocks, bonds, etc. Some of the specific involuntary liens include:
INVOLUNTARY LIENS- The following liens are also known as involuntary liens in that the owner did not request them.
Encumbrance / General Liens - A general lien is a lien placed on ALL real property and personal property of the owner. With these forms of liens, the lien holder can foreclose on all property owned by the debtor/owner. All the following are Category III liens and can encumber all the personal and real property of the owner as a general lien:
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Which of the following statements concerning encumbrances is FALSE?
A) All encumbrances are liens
B) All liens are encumbrances
C) Deed restrictions are a form of encumbrances
D) Secured debts
Select from the following the answer that is not an encumbrance against real property:
A) A construction lien
B) A judgment
C) An attached mortgage
D) A bill of sale
Which of the following is not an encumbrance on real property?
A) A tax lien
B) A deed
C) A judgment
D) A mortgage
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