1.4 Land-Use Controls, Public & Private Restrictions, and Encumbrances

Land-Use Controls and Encumbrances

Ownership is never absolute. Government and private parties both limit how land is used. The exam organizes these into public controls, private controls, and encumbrances.

Public (Government) Controls

Most public land-use control flows from police power - the government's authority to regulate for public health, safety, and welfare without compensation. Police-power tools include:

• Zoning ordinances - separate residential, commercial, industrial uses; set setbacks, density, height.
• Building codes and certificates of occupancy - construction safety standards.
• Subdivision regulations and the master (comprehensive) plan - long-range community design.

Two other government powers are not police power and must be distinguished:

• Eminent domain - the power to take private property for public use, with just compensation (the taking process is called condemnation).
• Escheat - property reverts to the state when an owner dies with no heirs and no will.
• Taxation - the power to levy real-estate taxes (creates a tax lien).

Remember the four government powers as PETE: Police power, Eminent domain, Taxation, Escheat.

Zoning Exceptions

Private Controls

Deed restrictions and CC&Rs (covenants, conditions & restrictions) are private limits imposed by a developer or prior owner - minimum house size, architectural style, no commercial use. Rule: where a private restriction and a public zoning rule conflict, the more restrictive of the two controls. So if zoning allows duplexes but the CC&Rs require single-family only, single-family wins.

Encumbrances

An encumbrance is any claim, charge, or right that affects title. Two families:

• Liens (money claims): mortgage, mechanic's lien, tax lien, judgment lien. A lien does not prevent transfer but the claim follows the property.
• Non-money encumbrances: easements, encroachments, deed restrictions, licenses.

Easements: an appurtenant easement runs with the land and benefits an adjacent dominant tenement (burdening the servient tenement); it transfers automatically with the dominant parcel. An easement in gross benefits a person or utility company, not a parcel. An encroachment is an unauthorized physical intrusion (a fence over the line) and is discovered by a survey. A license is mere revocable permission - not an interest in land. Worked trap: a recorded utility easement burdens the servient parcel even after sale, because non-money encumbrances run with the land and the buyer takes title subject to them.

How Easements Are Created and Ended, and Lien Priority

Easements and liens generate a disproportionate share of exam questions because they survive a sale and can derail a closing. Know how each is created and extinguished.

Creating and Terminating Easements

• Express grant or reservation — written into a deed; the cleanest form.
• Easement by necessity — created when a parcel is landlocked; the law implies a right of access so the land is usable.
• Easement by prescription — acquired by open, notorious, continuous, hostile use for the statutory period (five years in California under Civil Code 1007, plus payment of taxes in some cases). It mirrors adverse possession but grants use, not title.
• Termination — by merger (one owner buys both parcels), release, abandonment, or expiration of purpose.

An easement by prescription gains a right to use; adverse possession gains ownership. In California adverse possession also requires five years of possession and payment of property taxes — a favorite distractor leaves out the tax-payment element.

Lien Types and Priority

Liens are specific (attached to one property: mortgage, mechanic's, property-tax lien) or general (against all of a debtor's property: judgment lien, IRS lien). Priority generally follows "first in time, first in right" by recording date — with one major exception.

A Worked Priority Problem

A lender records a first deed of trust in January. A contractor begins a remodel in March and records a mechanic's lien in June. The county records an unpaid property-tax lien in July. Who is paid first at a foreclosure sale? The property-tax lien is paid first despite being recorded last, because tax liens are statutorily superior. The mechanic's lien may then outrank the deed of trust if state law relates it back to the March start of work — illustrating why "latest recorded" is not automatically "lowest priority."

Trap: An encroachment is revealed by a survey, not by a title search; a recorded easement is revealed by a title search, not a walk-through. Match the discovery method to the encumbrance type.