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

Ownership is never absolute. Government and private parties both impose limits on how land may be used. The exam splits these into public controls (imposed by government) and private controls (imposed by prior owners or associations), then layers on the concept of encumbrances — claims that burden the title itself.

Public Controls: The PETE Powers

Government retains four powers over all privately held land, remembered as PETE:

• Police power — Regulation for public health, safety, and welfare, including zoning and building codes. No compensation is owed.
• Eminent domain — The power to take private property for public use through condemnation, with just compensation required.
• Taxation — The power to levy property taxes; unpaid taxes create a lien.
• Escheat — When an owner dies with no heirs and no will, the property reverts to the state.

Zoning, Codes, and Private Restrictions

Zoning divides a jurisdiction into use districts (residential, commercial, industrial, agricultural). A nonconforming use that legally predates a zoning change may continue as a grandfathered use. Relief from zoning comes through a variance (permission to deviate) or a special use permit.

Private controls are imposed by deed or by a subdivision's CC&Rs (Covenants, Conditions & Restrictions), typically enforced by a homeowners' association.

Key rule: When a public rule and a private rule both apply, the more restrictive one governs. If zoning allows a 35-foot fence but the HOA caps fences at 6 feet, the owner is held to 6 feet.

Encumbrances: Financial vs. Non-Financial

An encumbrance is any claim, right, or limitation that another party holds against an owner's title. It does not prevent transfer, but it affects value or use. Encumbrances split into two families.

A lien is a charge against property to secure a debt. A general lien (judgment, IRS) attaches to all of a debtor's property; a specific lien (mortgage, mechanic's lien, property tax) attaches only to the identified parcel.

Easements, Encroachments, and Licenses

An easement is the right to use another's land for a stated purpose. The two tested types:

• Easement appurtenant — Benefits an adjacent parcel and runs with the land. The benefited parcel is the dominant estate; the burdened parcel is the servient estate. It passes automatically to new owners.
• Easement in gross — Benefits a person or company, not a parcel. Utility easements for power lines are the classic example; there is a servient estate but no dominant estate.

An easement may also arise by prescription (open, continuous, hostile use for the statutory period) or by necessity (a landlocked parcel needing access).

An encroachment is an unauthorized physical intrusion — a fence or roof overhang crossing the boundary line — usually revealed by a survey. A license is mere temporary permission to use land (a ticket to park); unlike an easement, it is revocable and does not run with the land.

Lien Priority and a Worked Foreclosure Distribution

When a property is sold to satisfy debts, liens are paid in priority order. The general rule is first to record, first in right — except that property-tax and special-assessment liens take priority over all other liens regardless of when they were recorded.

Worked example. A foreclosure sale nets $300,000. Outstanding claims are: property taxes $8,000; a first mortgage recorded 2019 of $240,000; a mechanic's lien recorded 2022 of $30,000; a judgment lien recorded 2023 of $50,000.

• Taxes paid first: $8,000 (remaining $292,000)
• First mortgage: $240,000 (remaining $52,000)
• Mechanic's lien: $30,000 (remaining $22,000)
• Judgment lien: receives only $22,000 of its $50,000 — a $28,000 shortfall

The junior lienholder absorbs the loss, which is why recording date and lien type matter on the exam.

Subordination, Estoppel, and Deed Restrictions vs. Easements

A subordination agreement voluntarily moves a lien to a lower priority — common when an existing lender agrees to let a new construction loan take first position. A lis pendens is a recorded notice of pending litigation that warns buyers a title dispute is underway.

Distinguish two private controls: a deed restriction (restrictive covenant) limits how an owner may use the land (no fences over six feet), while an easement grants someone else a right to use the land. Violating a covenant lets a neighbor or HOA sue for an injunction; it does not transfer any use right to another party.

Eminent Domain, Inverse Condemnation, and Police-Power Limits

Eminent domain is the government's power to take private land for public use; the process of taking is condemnation, and the Constitution requires just compensation (fair market value). When government action so restricts a property that it effectively takes its value without a formal proceeding, the owner may sue for inverse condemnation to force payment. Distinguish this from police power (zoning, codes), which regulates use without compensation because no property is taken — only restricted for public welfare. A regulation that goes too far, leaving no economic use, can cross the line into a compensable taking.

Easement Creation and Termination, with a Prescription Numeric

Easements arise by express grant or reservation, by necessity (a landlocked parcel must have access), by implication, or by prescription (open, notorious, continuous, hostile use for the statutory period). They terminate by merger (one owner acquires both dominant and servient estates), release, abandonment, or expiration of purpose.

Prescription example. Assume a state sets a 10-year prescriptive period. A neighbor openly drives across the corner of an adjoining lot every day, without permission, beginning in 2012. By 2022 the continuous, hostile use has ripened into a prescriptive easement, and the servient owner can no longer block the path. Had the owner granted written permission at any point, the use would be permissive — defeating the "hostile" element and stopping the clock.