Chapter 6 - Liens and Easements

I. Encumbrances and Liens

An encumbrance is any claim, lien, charge, or liability attached to and binding real property that may lessen its value but does not necessarily prevent transfer of title. Liens are financial encumbrances.

Categories of Liens:

• Voluntary Liens: Created by the property owner's action (e.g., a Mortgage).

• Involuntary Liens: Created by law without the owner’s consent (e.g., Tax Liens).

General vs. Specific Liens:

• General Liens: Affect all real and personal property of a debtor.

• Judgments: Court-ordered sums. A Lis Pendens (notice of pendency) is a filed notice that a lawsuit is pending that could affect the title to the property. It "clouds" the title for 3 years but can be renewed.

• IRS Income Taxes: Federal government claims for unpaid taxes.

• Estate/Inheritance Taxes: Claims against a deceased person's assets.

• Corporation Franchise Tax: NY State tax on corporations for the privilege of doing business.

• Specific Liens: Affect only one specific parcel of real estate.

• Real Estate Tax Lien: For unpaid property taxes. (Always takes first priority).

• Mortgage Lien: A pledge of the property as security for a loan.

• Mechanic’s Lien: Filed by contractors or suppliers for unpaid labor or materials.

• Timeframe: For residential property, must be filed within 4 months of the last work performed. For commercial, it is 8 months.

• Duration: Valid for 1 year in NY, but can be renewed.

II. Priority of Liens

The "order of payment" in a foreclosure is critical.

1. Real Estate Taxes and Special Assessments: These "jump" to the front of the line regardless of when they were filed.

2. First-in-Time, First-in-Right: Generally, other liens are paid based on the date and time they were recorded at the County Clerk's office.

• Subordination Agreement: A written agreement where a lienholder (like a bank) voluntarily accepts a lower priority position to allow another lien (like a new mortgage) to take priority.

III. Easements

An easement is the right to use the land of another for a specific purpose. It is a "non-possessory" interest.

• Easement Appurtenant: Involves two adjacent parcels. The Dominant Tenement is the one that benefits; the Servient Tenement is the one burdened by the easement. This easement "runs with the land" and transfers with the deed.

• Easement in Gross: A personal right to use land, often held by utility companies (e.g., electric lines). There is no dominant tenement.

• Easement by Necessity: Created by a court when a property is "landlocked" (has no legal access to a public road).

• Easement by Prescription: Acquired through "adverse" use. In NY, the use must be Open, Notorious, Hostile, and Continuous for 10 years.

• Party Wall: A shared wall on the boundary line between two properties (like in a townhouse). Each owner has an easement in the other half of the wall for support.

Creation and Termination:

• Created by: Grant (deed), Necessity, Prescription, or Implication.

• Terminated by: Release by the dominant owner, Merger (one person buys both lots), Abandonment, or the end of the Purpose for which it was created.

⚠️ EXAM ALERT: QUICK FACTS

• The "Super Priority" Trap: If a question asks which lien is paid first, the answer is always Real Estate Taxes, even if a mortgage was recorded years earlier.

• Mechanic's Lien Filing: Remember the "4-month rule" for houses. If a contractor waits 5 months to file a lien against a single-family home after finishing the deck, the lien is invalid.

• Easement vs. License: An easement is a permanent right that runs with the land; a license is a temporary, revocable permission (like a ticket to a baseball game or permission to hunt on someone's land).

• Lis Pendens: This is not a lien itself, but a "warning" to the public that a lien or title change may be coming. It effectively stops a seller from selling the home until the lawsuit is resolved.

KEY TERMS

Appurtenances: Rights, privileges, or improvements that belong to and pass with the transfer of property, such as easements or rights-of-way, but are not necessarily a physical part of the land.

Dominant Tenement: The estate or parcel of land that benefits from an easement appurtenant.

Easement: A non-possessory right to use the land of another for a specific, limited purpose.

Easement Appurtenant: An easement that is attached to the land and passes with the title to the property; it involves two adjacent parcels owned by different parties (the dominant and servient tenements).

Easement by Condemnation: An easement created through the government's power of eminent domain for a public purpose, with just compensation paid to the landowner.

Easement by Grant: An easement created by a specific written agreement between the parties, often within a deed.

Easement by Implication: An easement that arises when a landowner sells a portion of their land and the circumstances strongly suggest that an easement was intended, even if not explicitly stated in writing.

Easement by Necessity: A court-ordered easement allowed by law as necessary for the full enjoyment of a parcel of land, most commonly to provide access to a landlocked parcel.

Easement by Prescription: An easement acquired through the open, notorious, hostile, and continuous use of another's land for a statutory period (10 years in New York).

Easement for Light and Air: An easement that prevents an adjoining landowner from constructing a building that would obstruct the light or air reaching the dominant tenement.

Easement in Gross: An easement that benefits an individual or a legal entity (such as a utility company) rather than a specific parcel of land; it does not "run with the land".

Encroachment: A physical object, such as a fence, driveway, or roof overhang, that illegally extends beyond the boundaries of the owner's land and onto the land of an adjoining owner.

Encumbrance: Any right to or interest in land that affects or limits the title to the property, such as a lien, easement, or encroachment.

General Lien / Specific Lien: A General Lien affects all the property (both real and personal) of a debtor, such as an income tax lien. A Specific Lien is secured by one particular parcel of real property, such as a mortgage or mechanic's lien.

Involuntary / Voluntary Lien: A Voluntary Lien is created intentionally by the property owner's action, such as a mortgage. An Involuntary Lien is created by law without the owner's consent, such as a tax lien or judgment.

License: A personal, revocable, and non-assignable privilege to enter the land of another for a specific purpose; unlike an easement, it does not create an interest in the land.

Lis Pendens: A recorded legal document giving constructive notice that a court action affecting the title to a particular property is pending.

Mechanic's Lien: A specific, involuntary lien placed on real property by someone who has furnished labor or materials for the improvement of that property and has not been paid.

Mortgage: A specific, voluntary lien on real estate given by a borrower to a lender as security for a loan.

Party Wall: A wall located on or at the boundary line between two adjoining parcels that is used by both owners for their respective buildings.

Possessory / Non-Possessory: Possessory refers to the right to occupy the land (ownership or leasehold). Non-Possessory refers to a right to use the land without owning or occupying it (such as an easement).

Right of Way: The legal right, established by usage or grant, to pass along a specific route through grounds belonging to another.

Servient Tenement: The estate or parcel of land over which an easement runs; it is the parcel "burdened" by the easement.

Subordination Agreement: A written agreement between lienholders to change the priority of mortgage, judgment, and other liens under certain circumstances.

Tax Lien: A lien imposed by law upon a property to secure the payment of taxes.