Encumbrance - Encumbrances can be a lien or monetary encumbrance such as a mortgage, a private restriction (such as deed restrictions and easements), or government restrictions (police powers such as zoning, building codes, etc.). The absolute worst encumbrance would be eminent domain when the government seizes the property for "public good".
Value - Encumbrances may either increase or decrease value and cost.
Ownership Rights - Encumbrances affect the title or rights of ownership. These encumbrances will be conveyed to a new owner when title is transferred.
Sale of Property - Encumbrances do not stop sale of property.
Government Rules - If a private encumbrance and a governmental encumbrance are totally in conflict with each other, the governmental restriction will prevail.
Clear Title - "Title without clouds."
Current Owner Requirement - The current owner is stating that the property is "free of all encumbrances other than those I don't know about and am willing to accept." This is virtually impossible for the current owner. This is why the real estate industry never promise to clear title.
Marketable Title - "Title with minor clouds." We promise that title is free of major defects. Title is good enough that a court would compel the buyer to accept the property.
Unmarketable Title - "Title with major clouds."
Title Defects - This is when there are major defects to the title. The real property can be sold but buyer has grounds to rescind contract if major cloud causes problem and buyer is injured.
Still Binding - The contract of sale will be binding if a "cloud" never appears to enforce it's legal right.
Encumbrance - A real estate encumbrance hinders the real property real estate of an owner. Governments hinder the use of real property with encumbrances.
Police Powers - Governments are granted the use of police powers in the use of real property for the public good. These encumbrances & restrictions protect the public's interest regarding safety, health, morals, and welfare of the community as a whole.
These police powers of government have an impact on the values of real property within its jurisdiction. They can increase or decrease the owner's property value. They can restrict the estate, possession, and use of the property.
Police Power Encumbrances - The government encumbrances discussed in this section include:
Use of Property
Use - The most encumbrances on privately owned property is the actual use of property within a government's jurisdiction. The zoning categories are:
Residential - An area zoned for residential use prevents commercial businesses from moving into an area. This control tends to benefit homeowners in that commercial buildings tend to deflate values of residential homes.
Single Family Homes - Zoning can extend residential restrictions to the building of single-family homes only. Some governments may extend this restriction to duplexes.
Apartment Living - Zoning in a residential area for apartment or condominium construction is controlled by local government as well. This is why you will see an area or street with many apartment buildings lumped together.
Commercial - An area zoned for commercial use will allow businesses to locate within this prescribed area. Commercial use categories are further controlled by local government to prescribed areas.
Retail - Construction of retail facilities are controlled for the needs of the zoned area. Retail locations can be regulated to specific areas or specific streets where retail businesses can conduct business.
Service Industries - Commercial businesses, other than industrial, such as office complexes, medical complexes, government services, etc., will be able to conduct business in prescribed zoned areas.
Industrial - Commercial businesses that pursue industrial production will be given a specific zoned area to conduct business. If an industrial firm combines its office services with industrial production, it would usually have to locate in the industrial zoned area.
Use Encumbrances By Local Government
Comprehensive Plans - Most states require local governments (municipals and counties) to conform to a state Comprehensive Plan drawn up by the state. Each local government is to draw up its own comprehensive plan in meeting the state standards. These local comprehensive plans are usually subject to state interpretation.
One of the main areas of conformity to the state plan is the use of zoning ordinances by the local governments. These zoning ordinance restrict/encumber the use of privately held property within its jurisdiction.
Local Zoning Ordinances - Zoning ordinances are strictly a function of local government. Counties and municipal governments establish and police zoning restrictions under the direction of its comprehensive plan. The state has public use jurisdiction only established on the property that it owns. It has little control on the use of privately held property. The state only regulates/requires its approval of the comprehensive plans that local governments establish.
No Compensation To Owners - When a government changes zoning ordinances, some property owners will lose property values. There is no compensation paid to owners for the loss of value to their property.
Buffers - Local government will try to establish buffer zones between residential and commercially zoned areas of its jurisdiction. Buffer areas are designed to cushion the effect of property use from one area to another. It would be harsh to have an industrial area right next door to a residential single-family zoned area. The homes on the border would suffer lower valuation and a lower quality of life.
Local government will try to separate such areas with buffers in between them.
Buffer Examples - Examples of buffers would include the following:
Zoning in an area required that there be 10 feet from the edge of a building to the lot line. If approval were given to build up to 7 feet from the lot line, it would be called a:
A) Non-conforming use
B) Spot zone
D) Lineage chart
Charlie wants to extend the side of his house beyond the setback boundary. What must Charlie obtain?
A) A non-conforming use
B) An amendment
C) A subordination agreement
D) A variance
Zoning is done by the authority of:
A) The law of eminent domain
B) The mayor
D) Police power
A land use that predates present zoning changes and is allowed to remain is called:
A) A variance
B) Non-conforming use
C) A covenant
D) None of these
If there is a difference to the degree of restrictive property use between zoning restrictions and deed restrictions, which has priority?
A) Deed restrictions
B) Zoning restrictions
C) Whichever is more restrictive
D) Neither has priority
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The study of system of rules which a particular country or community recognizes as regulating the actions of its members and which it may enforce by the imposition of penalties.