1.4 Land-Use Controls, Public & Private Restrictions, and Encumbrances
Key Takeaways
- Public land-use controls (police power) include zoning, building codes, eminent domain, taxation, and escheat — remember PETE plus zoning/codes.
- Private controls include deed restrictions and CC&Rs enforced by the HOA or neighbors, not the government.
- Encumbrances split into liens (money claims, e.g., mortgage, tax, mechanic's, judgment) and non-money encumbrances (easements, encroachments, restrictions).
- An easement appurtenant runs with the land and burdens the servient estate to benefit the dominant estate; an easement in gross benefits a person or company.
- A nonconforming use ('grandfathered') predates a zoning change and may continue, while a variance and special-use permit require approval.
Public Land-Use Controls (Police Power)
Government limits private property use through police power — the authority to regulate for public health, safety, and welfare without compensation. The classic public powers are remembered as PETE:
| Power | What it is |
|---|---|
| Police power | Regulation (zoning, building codes, environmental rules) |
| Eminent domain | Government takes private land for public use, paying just compensation (via condemnation) |
| Taxation | Real estate taxes; nonpayment can lead to a tax lien and sale |
| Escheat | Property reverts to the state when an owner dies with no heirs or will |
Key distinction: Police power requires no compensation (the owner is merely regulated), while eminent domain requires just compensation because the government is taking the property. This contrast is a frequent exam question.
Zoning and Relief Mechanisms
Zoning divides a jurisdiction into districts (residential, commercial, industrial, agricultural) and regulates use, density, height, and setbacks. When an owner needs to deviate, three mechanisms appear on the exam:
- Nonconforming use ("grandfathered"): a use that was legal before the zoning changed and is allowed to continue. Generally cannot be expanded or rebuilt if destroyed.
- Variance: permission to deviate from a zoning rule (e.g., a smaller setback) due to a hardship unique to the parcel. Requires approval from the zoning board.
- Special-use permit (conditional use): allows a use otherwise not permitted but compatible with the zone (a church or daycare in a residential zone), subject to conditions.
Trap: A nonconforming use already exists before the change and needs no approval; a variance is requested after the rule exists. Do not confuse them.
A bakery has operated for 20 years in an area that was just rezoned to residential-only. The bakery is allowed to keep operating but cannot expand the building. What is this status called?
Private Land-Use Controls
Private parties also restrict land use. Deed restrictions (restrictive covenants) and CC&Rs (Covenants, Conditions & Restrictions) are imposed by developers or homeowners' associations to maintain uniformity (e.g., minimum house size, no commercial use, architectural rules).
Enforcement is private, not governmental: a neighbor or the HOA sues to enforce, typically seeking an injunction. When a private deed restriction and a public zoning rule conflict, the more restrictive controls. A covenant cannot, however, violate fair housing law (a racially restrictive covenant is unenforceable).
Encumbrances: Liens vs. Non-Money
An encumbrance is any claim, right, or liability attached to property that may diminish its value or limit its use but does not necessarily prevent transfer. Encumbrances divide into two families.
1. Liens (Money Claims)
A lien is a charge against property as security for a debt. Types:
| Lien | Voluntary? | Specific or General |
|---|---|---|
| Mortgage / deed of trust | Voluntary | Specific |
| Real estate tax lien | Involuntary | Specific |
| Mechanic's lien (unpaid contractor) | Involuntary | Specific |
| Judgment lien | Involuntary | General (all owner's property) |
| IRS / federal tax lien | Involuntary | General |
2. Non-Money Encumbrances
These affect use, not debt: easements, encroachments, licenses, and deed restrictions.
Lien priority trap: Most liens follow "first to record, first in right." But real estate property tax and special assessment liens take priority over all other liens regardless of when recorded.
Easements and Encroachments
Easements
An easement is a right to use another's land for a specific purpose.
- Easement appurtenant: benefits an adjacent parcel. It involves a dominant estate (benefited) and a servient estate (burdened). It runs with the land — it transfers automatically when either parcel sells.
- Easement in gross: benefits a person or company, not a parcel (e.g., a utility company's power-line easement). There is a servient estate but no dominant estate.
- Easement by necessity: created when a landlocked parcel needs access to a public road.
- Easement by prescription: acquired through open, continuous, hostile use for a statutory period (similar to adverse possession but for use, not ownership).
Encroachments
An encroachment is an unauthorized physical intrusion onto a neighbor's land — a fence built three feet over the boundary, eaves overhanging the line. Encroachments are discovered by a survey and can cloud title. If left unchallenged long enough, an encroachment may ripen into a prescriptive easement.
Trap: An easement is a granted right; an encroachment is an unauthorized trespass. They are not the same, though both can reduce value.
Parcel A's owner has a recorded right to cross Parcel B's driveway to reach the road. Parcel A then sells to a new owner. What happens to the crossing right?
Liens Versus Easements Versus Encroachments
All three are encumbrances, but they burden title differently and the exam separates them sharply:
| Encumbrance | Effect on title | Removed by |
|---|---|---|
| Lien (money claim) | Security for a debt; can force a sale | Paying the debt; release/satisfaction |
| Easement (use right) | Another party may use the land | Release, merger, abandonment, expiration |
| Encroachment | A structure unlawfully crosses a boundary | Removal, agreement, or adverse possession over time |
| Deed restriction / CC&R | Private limit on use | Expiration or court action |
Liens fall into general (against all of a person's property, e.g., a judgment) and specific (against one property, e.g., a mortgage or mechanic's lien). Property-tax liens and special-assessment liens take priority over most other liens regardless of recording date - a key exam fact.
Worked Example: Lien Priority at a Forced Sale
A property sells at a tax sale for $220,000. Recorded claims are: property taxes $8,000; a first mortgage $160,000; a mechanic's lien $30,000; a judgment lien $40,000. Property taxes are paid first regardless of date, then remaining liens generally pay in recording order (first in time, first in right).
- Taxes: $8,000 paid -> $212,000 remains.
- First mortgage: $160,000 paid -> $52,000 remains.
- Mechanic's lien: $30,000 paid -> $22,000 remains.
- Judgment lien: receives the remaining $22,000 and is shorted $18,000.
The exam lesson: tax liens jump the line, and junior creditors absorb the shortfall. An agent should always order a title search to surface these priorities before listing.