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Real estate > Chapter 4- Encumbrances > Flashcards

Chapter 4- Encumbrances Flashcards

1
Q

Encumbrances

A

Anything that affects or limits the fee simple title to property. A right or interest in a property held by one who is not the legal owner of the property.

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2
Q

Types of encumbrances

A

1) Easements
2) Deed Restrictions (Private control)
3) Encroachments
4) Liens

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3
Q

More names for deed restrictions

A

1) Declaration of restrictions
2) Restrictive Covenants
3) CC&R’s

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4
Q

Easement

A

Nonpossessory property interest right one person has in land owned by someone else.

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5
Q

Encroachment

A

Are buildings, fences or other structures that reach beyond the owners property line.

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6
Q

Types of encroachments

A

1) A trespass-Could be walking on property, tree growing over fence.
2) nuisance- smell or barking dog.

abatement action- lesson the effect- cut back tree or muzzle dog.

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7
Q

Lien

A

Claim or charge of security for a debt or obligation.

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8
Q

Classification of liens

A

1) Specific- Mortgage, car loan

2) General- Applies to everything- IRS

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9
Q

Voluntary Liens

A
  • **All specific
    1) Mortgages
    2) Trust Deed- Deed of trust
    3) Carrybacks- Seller becomes lender.
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10
Q

Involuntary liens

A

1) Property taxes
2) Assessments
3) Attachments
4 Judgments
5) Mechanics liens
6) IRS
7) Decedent Debts

By Property tax first, then IRS, then date of record

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11
Q

Assessments

A

Governmental taxes

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12
Q

Attachments

A

Based on a judgement or seizure.

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13
Q

Judgments (lien)

A

A general lien that becomes specific with attachments.

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14
Q

Mechanics Lien

A

Hired contractor that did not get paid

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15
Q

IRS

A

General

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16
Q

Decedent debts

A

Deceased person is applicable to estate. (General

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17
Q

Types of judgements

A

Domestic-AZ court

Foreign- Outside AZ

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18
Q

How to record a judgement

A

File in public record- with constructive notice- recording date takes priority.

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19
Q

Writ of execution with judgement

A

Have to go back to court to go after.

1) Sheriff
2) Personalty then realty.

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20
Q

Garnishment

A

Get writ of execution to take out of paycheck

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21
Q

Statute of limitations on judgment

A

Judgement good for 5 years

Last 90 days can go and renew to get another 5 years.

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22
Q

Laches with judgement

A

If you did not renew in 5 years the judgement dies.

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23
Q

Priority of judgement

A

Based on recordation date.

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24
Q

Interest rate with judgement

A 
accrues interest (agreed rate or legal rate)
Legal rate: lesser of:  1% or 1% above prime.
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25
Q

Attachment (lien)

A

Judgement

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26
Q

Types of attachments ( judgements )

A

1) Writ of Attachment
2) Garnishment
3) LIS PENDENS- Not a Lien

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27
Q

LIS PENDENS

A

Not a lien

Law suit pending

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28
Q

Order for LIS PENDENS

A

1) Judgement
2) Writ of attachment
3) Writ of execution

29
Q

Mechanics lien

A

1) Written contract with owner
2) beginning of work
3) 20 day preliminary notice
4) record lien- licensed contractor only
5) 120 days to file
6) Priority goes back to the day work began
7) File a lawsuit- Judgement good for 5 years
8) Contractors can sign interest over to someone to take care of

30
Q

level payments

A

An amortized mortgage repaid in equal, periodic payments that include principal, and interest.

31
Q

Installments

A

Based on principal balance. Payment changes as it is paid off.

32
Q

Interest only

A

Term, straight, const. bridge, Interim all mean same thing

Principal payment due as a balloon at the end.

33
Q

writ of execution

A

A court order direction the sheriff to seize and sell as much as the defendants property as necessary to satisfy the debt and expenses of the sale.

34
Q

Budget

A

1/12 interest

35
Q

Graduated payments

A

“GPM”
Every year it goes up.
Has a lower payment in beginning
Negative amortization

36
Q

Variable interest rates

A

“ARM”
Adjustable Rate Mortgage
Has a year cap and a lifetime cap

37
Q

Equity participation

A

percentage “SAM”
Shared Appreciation Mortgage
Get part of the appreciation

38
Q

Reverse Mortgage

A

Give you 50% of equity of home
Do lump sum or monthly instalments
Has to be first loan or lots of equity

39
Q

Construction

A

(Interim, Bridge, Swing or Gap) - more names
Interest only

a) Draws- Take money in chunks as needed. Interest starts from draw. Interest only until project complete. Payback immediately. Then do a take out loan.

40
Q

Types of Repayment Plans

A

1) Level Payments
2) Installment (not level)
3) Interest only
4) Budget
5) Flexible Payments
6) Variable interest (VRM)
7) Equity participation
8) Open end mortgage
9) Construction Loan

41
Q

Types of Mortgages and Deeds of Trusts

A

1) Conventional
2) FHA insured
3) VA guaranteed
4) Chattel Mortgage
5) Package
6) Purchase Money
7) Blanket
8) Open End
9Junior or subordinate

42
Q

Open End

A

Revolving line of credit

43
Q

Conventional- Non-governmental insured

A

Banks, Savings and loan, Not FHA

20% down

44
Q

FHA insured

A

Government insured loan

45
Q

VA guaranteed

A

Guaranteed by government. No insurance. Based on benefits.

46
Q

Chattel

A

Personal Property is security

47
Q

Package

A

Collateral real and personal property.

48
Q

Purchase money

A

carrybacks

49
Q

Blanket

A

Loan for builder or developer. Multiple parcels of collateral.
Give partial release of lots.

50
Q

Junior

A

Comes after- go from senior lien to junior lien.

51
Q

Personal Property Liens

A

UCC=Uniform Commercial Code-personal lien-5years

UCC-1 Filed with Secretary of State (government level)

UCC-3 filed to release/terminate- File with secretary of state to release.

52
Q

Title Theory

A

Mortgage transfers title to a property to the mortgagee, who holds it until the mortgage has been paid off. The title then passes to the mortgagor. Bank holds deed until paid off.

53
Q

Lien Theory

A

Buyer has legal title.

54
Q

Hypothecate

A

Pledge property but get to keep.

55
Q

Promissory Note

A

Debt Document ….Promissory IOU

56
Q

Characteristics of Promissory Note

A

1) Evidence of debt
2) Borrower liability
3) Not recorded
4) Negotiable document

57
Q

Collateral

A

Security for a note

58
Q

Lien Document “Claim”

A

1) Recorded
2) Signed by the borrower “Maker”
3) Notarization- Not under duress and verify the person
4) Legal description of the property.

59
Q

Types of lien documents

A

1) Mortgage

2) Trust Deed

60
Q

Mortgagor

A

Borrower

61
Q

Mortgagee

A

Lender

62
Q

Mortgage

A

Legal title and all rights of ownership with mortgagor and owner holds the deed

63
Q

Deed of Trust

A

Don’t have to go to court- Non judicial perspective

Trustor- borrower (All rights of ownership)

64
Q

Who is beneficiary with Deed of Trust

A

lender

65
Q

Who holds title with Deed of Trust

A

Trustee holds bare legal title (No rights of ownership)

Example: Escrow company, Attorney, lender, Broker, Insurance agent

66
Q

Who holds the deed with Deed of Trust?

A

Trustor

67
Q

Duties of trustee

A

Non judicial foreclosure, release and reconvey

68
Q

Duties of borrower

A

1) Pay debt as agreed
2) Pay real estate taxes and assessments.
3) Keep the property insured.
4) Abide by all covenants in the note and collateral.

Real estate (14 decks)

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