An encumbrance is the term used to describe an interest in and right to real property that limits the legal owner's freehold interest. An encumbrance is another's right to use or take possession of a legal owner's property, or to prevent the legal owner from enjoying the full bundle of rights in the estate.

Easements and liens are the most common types of encumbrance.

An easement is a nonfinancial encumbrance that restricts the use of the property itself. Other examples of nonfinancial encumbrances are profits, encroachments, deed restrictions, licenses, and nuisances. 

A lien is a financial encumbrance and monetary charge that represents a claim to real or personal property as a result of debt. The property is the security for the payment of a debt or judgment.

A recorded lien restricts the owner's bundle of rights and effectively reduces the owner's equity in the property to the extent of the lien amount. 

The creditor who places a lien on a property is called the lienor, and the debtor who owns the property is the lienee.

Legal features of liens:

• A lien does not convey ownership, with the exemption of a mortgage lien on a property in a title-theory state.
• A lien attaches to the property.
• A property may be subject to multiple liens.
• A lien terminates on payment of the debt and recording ofdocuments

Lien types include voluntary and involuntary; general and specific; superior and junior.

A property owner may create a voluntary, contractual lien. Mortgages and trust deeds are the most common types of voluntary liens.

An involuntary lien is one that a legal process places against a property which the property owner did not agree or consent to. Involuntary liens are due to the action or inaction by the property owner that results in a third party placing a lien on the property to secure money owed to the third party by the property owner.

A general lien is one placed against any and all real and personal property owned by a particular debtor.

A specific lien attaches to asingle item of real or personal property, and does not affect other property owned by the debtor.

The category of superior, or senior, liens ranks above the category of inferior, or junior, liens, meaning that superior liens receive first payment from the proceeds of a foreclosure.

Lien priority is the rank ordering of claims established by lien classification (superior or junior) and date of recording. Priority determines who gets paid first if a lienee defaults.

Superior liens rank over junior liens. They are not ranked by recording date. They include liens on real estate tax, special assessments, and inheritance taxes.

Junior liens rank by recording date and include judgment, mechanic, and other tax liens. Mechanic's lien priority "dates back" to when work ended. 

A judgment lien is an involuntary, general lien that attaches to real and personal property as a result of a money judgment issued by a court in favor of a creditor.

Once the court has made a judgment, recording the certified abstract of judgment from the court creates the general lien on all property the debtor owns in that county.

Judgment liens last ten years from the date of the judgment, but they can be extended for an additional 10 years by re-recording the abstract of judgment.

A writ of execution is an order to force the sale of property and collect the debt. This is a separate lien on the property for one year that takes priority over other judgment liens.

A judgment lien can terminate in the following ways:

• Lien Payment
• Lien Expiration
• Discharge in Bankruptcy
• Discharge by Creditor

The homestead exemption requires a certain amount of a person’s homestead equity be exempt from judgment creditors.

The homestead exemption does NOT apply when judgment liens arise from child support or spousal maintenance.

Attachment is the legal process of real or personal property being held by the courts to ensure a defendant in a lawsuit does not sell the property before a judgment has been issued.

A mechanic’s lien, also known as a construction lien, is an involuntary, specific, and statutory lien that secures the costs of labor, materials, and supplies incurred in the repair or construction of real property improvements.

A lien claimant who has no direct contract with a homeowner is required to provide a preliminary notice of the right to claim a lien within 20 days of providing labor, material, or services.

A notice of responsibly protects a property owner for being responsible for a mechanic’s lien arising from unpaid work a tenant authorized without consent.

The most important consideration for filing a mechanic’s lien in California is when the completion of a work improvement occurred.

The owner may elect to record a notice of completion within 15 days after the date of completion or a notice of cessation if work has stopped for a continuous 30 days.

A direct contractor has 60 days from the recording of the completion or cessation notice to file a claim against the homeowner. A subcontractor only has 30 days to file a lien.

If a notice of completion or cessation is NOT filed, all contractors have 90 days from the actual completion of the project to file a mechanic’s lien. 

A lienor must file a court action for foreclosure within 90 days of the lien recording. If no action is filed, the lien is automatically extinguished.

A lien claimant may file a stop notice with a lender to put a lien on the balance of funds from a sale.

Once a mechanic’s lien has been paid, a lien release must be recorded to show the lien has been discharged and satisfied.

Property tax liens are involuntary and specific liens. Property owners who do not pay their property taxes incur a superior lien on the property.

Special assessments are involuntary, specific liens against real property by a local government entity.

Federal income tax liens are involuntary, general liens against all real and personal property.

Homestead laws generally provide that:

• All or portions of one's homestead are exempt from a forced sale executed for the collection of general debts (judgment liens).
• Tax debts, seller financing debt, debts for home improvement, and mortgage debt are not exempt.
• The family must occupy the homestead.
• The homestead interest cannot be conveyed by one spouse.
• The homestead exemption and restrictions endure over the life of the head of the household, and pass on to children under legal age.
• Homestead interests in a property are extinguished if the property is sold or abandoned.
• In some states the exemption is automatic; in others, homeowners must file for the exemption. California has both an automatic exemption and a declared exemption.

Automatic exemptions protect homeowners from involuntary sales and declared exemptions include protection from voluntary sales.

Liens not subject to the homestead exemption include:

• Purchase money on the homestead
• Taxes on the homestead
• Mechanic's liens for work or services completed on the homestead
• Home Equity Loans
• Debts owed to the federal government
• Encumbrance that existed on the property prior to becoming a homestead
• Divorce and child support claims
• Refinancing a lien against the homestead