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

Public Controls: The Four Government Powers (PETE)

Government limits private land use through four powers, memorized as PETE:

• P — Police power: The state's authority to regulate for public health, safety, and welfare. This is the source of zoning, building codes, subdivision regulations, and the comprehensive (master) plan. No compensation is owed for proper regulation.
• E — Eminent domain: The power to take private property for public use, exercised through condemnation, but only with just compensation (Fifth Amendment).
• T — Taxation: Real property taxes; nonpayment creates a tax lien.
• E — Escheat: Property reverts to the state when an owner dies with no heirs and no will.

Zoning Relief Vocabulary

Three terms are routinely confused on the exam:

Trap: a nonconforming use is not a permission the owner applies for, it exists because the property predates the rule. A variance and a special-use permit are both applied for and granted going forward.

Private Controls and the "More Restrictive" Rule

Private land-use limits come from deed restrictions and CC&Rs (Covenants, Conditions & Restrictions), typically imposed by a developer or HOA. They can be stricter than zoning, for example, a subdivision may bar fences even where zoning allows them.

Conflict rule (tested every exam): when public zoning and a private restriction disagree, the more restrictive provision controls. If zoning permits a 35-foot building but the CC&Rs cap height at 25 feet, the owner is limited to 25 feet. Restrictions are enforced privately by injunction, not by the government.

Encumbrances: Money vs. Non-Money

An encumbrance is any claim, charge, or limitation that affects title or use but does not necessarily bar transfer.

• Money encumbrances (liens): mortgage liens, tax liens, judgment liens, mechanic's liens. A lien attaches to the property as security for a debt.
• Non-money encumbrances: easements, encroachments, and deed restrictions, they limit use rather than secure a debt.

Easement types:

• An easement appurtenant involves two parcels: the dominant tenement (benefited) and the servient tenement (burdened). It runs with the land, transferring automatically with title.
• An easement in gross benefits a person or company (a utility line), not a parcel, and has no dominant tenement.

An encroachment is an unauthorized physical intrusion (a neighbor's fence over the line), discovered by a survey and a potential title problem.

How Easements Are Created and Terminated

The exam tests both ends of an easement's life. Creation methods include:

• Express grant or reservation in a deed (the most common and cleanest).
• Easement by necessity, granted when a parcel is landlocked and needs access to a public road, the law will not strand a parcel.
• Easement by prescription, acquired by open, notorious, continuous, and hostile use for the statutory period, similar in spirit to adverse possession but conveying a use right rather than title.
• Easement by implication, inferred from prior apparent use when a tract is divided.

Termination occurs by merger (one owner acquires both the dominant and servient parcels, so the easement dissolves into a single title), by release from the benefited party, by abandonment shown through action plus intent, or by the end of the necessity that created an easement by necessity. A party-wall agreement and a license differ from easements: a license is mere permission, revocable at will, and does not run with the land.

Lien Priority and a Worked Payoff

Liens are ranked, and the exam rewards knowing the order. Most liens follow "first in time, first in right" by recording date, but two override that order: property-tax and special-assessment liens take priority over all other liens, and a properly recorded mechanic's lien may relate back to the date work began. Distinguish a general lien (attaches to all of a debtor's property, such as a judgment or IRS lien) from a specific lien (attaches to one identified parcel, such as a mortgage, property-tax, or mechanic's lien).

Worked payoff at foreclosure sale netting $250,000:

• Property taxes owed: $8,000 (paid first).
• First mortgage recorded 2019: $190,000 (paid second).
• Judgment lien recorded 2022: $40,000 (paid third).
• Distribution: $8,000 + $190,000 + $40,000 = $238,000, leaving $12,000 to the former owner.

If the sale had netted only $230,000, the judgment creditor would receive just $230,000 − $8,000 − $190,000 = $32,000, an $8,000 shortfall, illustrating why junior lienholders bear the loss.

Taking vs. Regulation: Inverse Condemnation

The line between police power and eminent domain is a favorite exam theme. A valid regulation under police power (a zoning change, a setback rule) requires no compensation, even if it reduces value, so long as it leaves the owner some economically viable use. A taking under eminent domain requires just compensation. When a regulation goes so far that it destroys essentially all economic use of a parcel, the owner may sue for inverse condemnation, arguing a regulatory taking occurred and demanding payment.

For the exam, classify by the effect: a downzoning that merely lowers value is regulation (no pay); a rule or physical intrusion that wipes out all use, or an actual public seizure for a road, is a taking (pay). Escheat and taxation round out the four powers, escheat returns heirless property to the state, and unpaid property taxes create a superior lien that can lead to a tax sale.