Encumbrances

Encumbrances — Property Characteristics & Law Encumbrances appear consistently in the Property Ownership category, which accounts for roughly 8% of the national exam, making it a reliable source of 3–6 questions you can lock in with solid conceptual understanding. --- ## What Is an Encumbrance? An encumbrance is any claim, lien, charge, or liability attached to real property that affects its title or use — but does not prevent ownership from being transferred. Think of encumbrances as baggage that travels with the land. Encumbrances fall into two broad categories: | Category | Affects | Examples | |---|---|---| | Financial encumbrances (liens) | Title / money | Mortgages, tax liens, mechanic's liens, judgment liens | | Non-financial encumbrances | Use / enjoyment | Easements, deed restrictions, CC&Rs, encroachments | --- ## Liens — Financial Encumbrances A lien is a creditor's legal claim against property as security for a debt. Liens do not give the creditor ownership, but they can force a sale to satisfy the debt. ### Voluntary vs. Involuntary - Voluntary lien: The owner willingly creates it. *Example: a mortgage or deed of trust signed at closing.* - Involuntary lien: Imposed by law without the owner's consent. *Example: a tax lien or judgment lien.* ### Specific vs. General - Specific lien: Attached to one identified property. *Example: a mortgage on 123 Main St.* - General lien: Attached to all property owned by the debtor. *Example: a judgment lien or IRS tax lien.* ### Lien Priority When multiple liens exist, priority determines who gets paid first in a foreclosure sale. The general hierarchy: 1. Property tax and special assessment liens — super-priority; always paid first regardless of recording date 2.…