Chapter 5_updated

Chapter 5_updated - Chapter 5: Encumbrances Hua Sun...

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Unformatted text preview: Chapter 5: Encumbrances Hua Sun Department of Accounting and Finance California State University, San Bernardino Jan 29, 2009 Hua Sun (CSUSB) Encumbrances Jan 29, 2009 1 / 39 Encumbrances to Real Estate An encumbrance to real estate is anything that affects or limits fee simple title or property condition or use affecting marketable title. Encumbrance may not necessarily decrease property value. Cloud on title: the owners interest is less than perfect. I Liens I Judgments I Easements I Deed restrictions I Encroachments Hua Sun (CSUSB) Encumbrances Jan 29, 2009 2 / 39 Liens A lien is an encumbrance that makes property security for the payment of a debt or discharge of an obligation. Voluntary: mortgage or deed of trust Involuntary: tax lien, mechanics lien General: applies to all property Specific: applies only to the described property Purpose of lien: to make land and improvements securitable give lenders and builders guarantee of payments. Hua Sun (CSUSB) Encumbrances Jan 29, 2009 3 / 39 Liens Judgment of court I General lien, involuntary Trust deed I Specific lien, voluntary Mechanic lien I Specific lien, involuntary Hua Sun (CSUSB) Encumbrances Jan 29, 2009 4 / 39 Mechanics Lien A mechanics lien is an encumbrance against real property in favor of someone who has contributed to a property improvement. I Preliminary notice of the lien right is required. F Within 20 days of first work, aims to establish priority over any other lien filed after date performance began. F A direct contract with property owner satisfies; otherwise F Notice should be mailed or hand-delivered to owner, general contractor and lender. I Starting time is the date the work begins. Hua Sun (CSUSB) Encumbrances Jan 29, 2009 5 / 39 Mechanics Lien Completion time: it occurs when I Work stops and owner or owners agent occupies or uses the improvement, or I Owner or owners agent accepts the work, or I Work has been stopped for 60 continuous days, or I Owner has filed notice of cessation and work has been stopped for 30 continuous days Owner should file the notice of completion to the county recorder within 10 days after completion time. Hua Sun (CSUSB) Encumbrances Jan 29, 2009 6 / 39 Mechanics Lien Filing time of a mechanics lien: I If the owner filed notice of completion or cessation: F Contractor (all or part of job) must file within 60 days after filing date of notice of completion(cessation) F For any other claimant, within 30 days after the filing date of the notice of completion(cessation) I If the owner didnt file notice of completion or cessation: F All claimants have 90 days to file the mech lien after completion time. I Simple rule: 60-30 notice; 90-90 no notice....
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Chapter 5_updated - Chapter 5: Encumbrances Hua Sun...

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