Licenses, although similar to easements, differ greatly from such a scenario, based on function and obtainment. This is because licenses do not grant an interest over a property, but merely a permission to perform a certain action on that property. A license is the allowance of a specific act, or group of acts, on a property belonging to someone else. Licenses can be obtained in many ways, and simply grant authority to an individual over a countering land.
Licenses may be granted either in writing, or verbally by both parties. A verbal agreement from a property owner, to the person that will use it for a specific act, is enough to grant them a license. In this case, the license can exist until the owner wishes, and he or she can withdraw it at anytime. Once the license has been withdrawn by the property verbally, then the person may no longer use the land or can be seen as a trespasser.
If a license is documented in writing, and there has been some sort of compensation by the user to the land owner, then that license is permanent and cannot be revoked. Once a license is created, the terms pertaining to that license are stringent and not flexible in any way. The person that has been given the license, the licensee, cannot try to change any varying factors in the license or its terms.
There is a type of license known as an implied license, given to people in the form of instructions on signs, ads, etc.. For example stores, restaurants, malls, they provide people entering their places a license to enter and view their merchandise as well as to purchase it. Their invitation to such actions in the form of “sale” signs, and objects of that nature serves as an implied license for the shopper. Also, stores that post the “Come on In, We’re Open” signs on the door invite those outside of it to enter and shop or eat at their establishment through an implied license.
Implied licenses may be revoked at any time, and once this has happened, the person that is found to be on the property without a license any longer, is accountable for their actions. They can be charged for trespassing without the right or license to do so, and can be prosecuted under law.
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What is an encumbrance?
An encumbrance is a right or interest in a piece of real estate that belongs to someone other than the property owner. You can think of an encumbrance as a liability on a property. Since someone else holds an interest in the property, that right is a limit or restriction on the owner’s use of the property.
What are some examples of an encumbrance?
Generally, there are two types of encumbrances, as follows:
- An encumbrance that is a financial claim against a property, which is referred to as a lien.
- An encumbrance that is a limitation on the use of a property, including easements, encroachments and deed restrictions.
As you have learned in your real estate pre-licensing course, a lien is a charge or claim that one person (lienor) has on the property of another (lienee) as security for an obligation or debt, such as a mortgage, or unpaid taxes.
An easement is a non-possessory property right to use another’s land for a specific purpose. The right may be to use the land’s airspace or the surface below it.
Encroachments are an unauthorized intrusion into the real property of another. These intrusions could be on the surface, in the air, or the subsurface space of the property.
Got it, but what is a deed restriction?
A deed restriction is a clause in a deed which may be inserted by a seller to limit the use of land. The imposed restriction is to limit the use of land, such as the size or type of improvements to be allowed. Deed restrictions are also known as restrictive covenants.
How would you know if a property has an encumbrance?
Encumbrances should be noted on the deed following the property description. If there are none listed, the seller can assume there are no encumbrances present.
What else can help me prepare to pass my real estate licensing exam on my first attempt?
Other tips to help you pass your real estate licensing exam on your first attempt:
Real Estate Test Taking Tips
How to Pass the Real Estate Exam
Real Estate Exam Math Made Easy
Also, check out our question of the day videos on our YouTube channel:
PassMasters Real Estate Exam Prep YouTube Channel
Check out the related definition in our real estate dictionary:
Related Definitions