2.3 Encumbrances, Liens, and Easements
Key Takeaways
- An encumbrance is any claim or interest a third party holds against a property; the main types are liens, easements, deed restrictions, and encroachments.
- An easement appurtenant burdens a servient tenement to benefit an adjoining dominant tenement and runs with the land; an easement in gross benefits a person or company, not a parcel.
- A license is a temporary, revocable, personal permission to use land; unlike an easement it does not run with the land and is not an interest in real property.
- Liens are voluntary or involuntary and general or specific; property tax and special assessment liens take priority over all others regardless of recording date.
- Lien priority generally follows the order of recording (first to record, first in right), but a subordination agreement lets a senior lienholder voluntarily yield priority to a junior lien.
What Is an Encumbrance?
An encumbrance is any right, claim, or interest that a party other than the owner holds against a parcel of real estate. An encumbrance limits the owner's use or value but does not prevent transfer of title. Exam outlines group encumbrances into four families:
| Encumbrance | Effect on the property |
|---|---|
| Lien | A monetary claim used as security for a debt |
| Easement | A right to use another's land for a stated purpose |
| Deed restriction / CC&Rs | A private limit on how the land may be used |
| Encroachment | A physical intrusion of an improvement onto adjoining land |
Liens are financial encumbrances; easements, deed restrictions, and encroachments are non-financial (they affect use rather than acting as security for a debt).
Easements
An easement is a non-possessory right to use another person's land for a specific purpose. The two principal classes are:
- Easement appurtenant: Involves two adjoining parcels owned by different people. The dominant tenement enjoys the benefit (for example, a driveway across the neighbor's lot); the servient tenement bears the burden. An appurtenant easement runs with the land, so it transfers automatically when either parcel is sold.
- Easement in gross: Benefits a person or company, not a neighboring parcel. There is a servient tenement but no dominant tenement. Commercial utility easements (power lines, pipelines) are the classic example and are transferable; personal easements in gross usually are not.
How Easements Are Created and Terminated
Easements arise by express grant or reservation (written into a deed), by necessity (when a court grants access to a landlocked parcel), by prescription (open, notorious, continuous, hostile use for the statutory period), or by implication. They terminate by merger (one party acquires both parcels), release, abandonment, expiration of purpose (an easement by necessity ends when access is no longer needed), or destruction of the servient land.
License vs. Easement
A license is mere personal, revocable permission to use land — for example, a ticket to park in a lot. Unlike an easement, a license does not run with the land, creates no interest in real property, and is generally revocable at will. This contrast is a frequent exam trap: an easement is a property interest; a license is not.
Liens
A lien is a charge or claim against property used as security for a debt. If the debt is unpaid, the creditor may force a sale to satisfy it. Liens are classified along two axes:
- Voluntary vs. involuntary: A voluntary lien is created by the owner's agreement (a mortgage). An involuntary lien arises by operation of law without consent (a tax lien, judgment lien, or mechanic's lien). A statutory lien is created by statute (property taxes); an equitable lien arises from fairness.
- General vs. specific: A general lien attaches to all of a debtor's property (judgment liens, federal income-tax liens, estate-tax liens). A specific lien attaches to one identified property (mortgage liens, property-tax liens, mechanic's liens, vendor's liens).
A mechanic's lien secures payment for those who supply labor or materials to improve a property — contractors, subcontractors, and suppliers. If they are not paid, they may file a specific lien against the improved parcel and, ultimately, force its sale.
Lien Priority and Subordination
Priority decides which lienholder gets paid first from sale proceeds. The general rule is "first to record, first in right" — liens are paid in the order they were recorded, with earlier (senior) liens paid before later (junior) liens. Two major exceptions exist:
- Property-tax and special-assessment liens take first priority, ahead of all other liens, regardless of when they were recorded. Unpaid real-estate taxes are senior to even a previously recorded first mortgage.
- A subordination agreement lets a senior lienholder voluntarily agree to move to a lower priority, allowing a later lien (such as a new construction loan) to take precedence. Priority is contractual here, not chronological.
Encroachments and Deed Restrictions
An encroachment is an unauthorized physical intrusion of a building, fence, driveway, or overhanging tree limb onto a neighbor's land. Encroachments are usually revealed by a survey and, if left unchallenged for the statutory period, can ripen into a prescriptive easement.
Deed restrictions, also called covenants, conditions, and restrictions (CC&Rs), are private limits placed on land by a developer or prior owner — minimum lot sizes, architectural styles, or bans on commercial use. They are enforced by other owners (or the HOA) through court injunction, not by the government. When a private deed restriction and a public zoning law conflict, the more restrictive of the two controls.
Distinguishing the Encumbrances
The exam frequently asks you to sort a fact pattern into the right category, so keep these contrasts sharp. A lien is a financial claim that can force a sale; an easement is a use right held by another. A deed restriction is a private limit enforced by neighbors or the HOA, whereas zoning is a public limit enforced by the government under its police power. An encroachment is a physical trespass by an improvement, discovered by survey, not by examining the title record.
Note also that every easement and lien is an encumbrance, but not every encumbrance prevents a clear conveyance — encumbrances cloud title and reduce value without blocking the transfer itself, which is why a title commitment lists them as exceptions to coverage. A buyer should always insist that monetary liens be paid and released at closing so the deed conveys marketable title.
A homeowner gives a neighbor written permission to cross his backyard to reach a fishing pond. The right is recorded, benefits the neighbor's adjoining lot, and is intended to pass to future owners of that lot. This is best classified as:
A property is sold at foreclosure. Unpaid real-estate taxes, a first mortgage recorded in 2019, and a judgment lien recorded in 2021 all exist. Which claim is paid first from the sale proceeds?
What is the key difference between an easement and a license?
A subdivision's recorded CC&Rs limit homes to single-family residential use, while local zoning would permit a duplex. A buyer wants to build a duplex. Which controls?