In real estate law, a license is a verbal or written agreement with a property owner that grants a person permission to access the property owner’s land. Licenses differ from easements in that licenses can be canceled at any time. In addition, licenses expire or become null and void at the moment the land is sold or when the grantor of the licensee dies. For instance, if a property owner allows his friend to store his recreational vehicles on his property, he has given his friend license to do so. With this license, the property owner can cancel the license at any time. A common license situation involves a patron to a restaurant or a golf course where permission is given by the owners to a patron. And under the same conditions, if the patron behaves unruly or recklessly while on these publicly accommodating premises, the owners have the right to cancel the license immediately and expel the patron.
Risks of Non-owner Property Use
Some real estate professionals highly recommend that a formal license is established whenever a property is being shared with a non-owner. Important instances have occurred where property owners have informally or even unknowingly allowed access to their properties, only to lose ownership of their property. Drug confiscation laws, for example, can cause innocent property owners problems if the license holder is engaged in an illegal activity.
Adverse Possession and Squatters’ Rights
Adverse possession is a principle of real estate law through which somebody who occupies or possesses the land of another for an extended period of time may be able to claim legal title to that land. Adverse possession is an important concept when discussing squatters’ rights. In contrast to licensing, where permission to use a property is granted, Squatting is the act of occupying an abandoned or unused property without the owner’s consent. Squatting occurs in every state but is especially common in poorer areas where many abandoned buildings or vacant parcels may exist.
Because of the principle of adverse possession, an individual squatting on land may gain title to the property without any direct compensation to the owner. States still have laws that give squatters the ability to gain possession of the property after using it without challenge by owners for a certain length of time. Although it is a remote possibility, adverse possession can be a threat to ownership. The fact that such actions can be successfully undertaken serves as a reminder that adhering to the guiding principles of property ownership such as maintaining structures, paying homeowner fees, spraying for noxious weeds, and staying current on property taxes are not always enough to ensure ongoing ownership.
Adverse possession laws were established to ensure that land is always being used. In general terms, enforcement of the law means that whoever makes use of land owns the land. Many suggest that laws such as adverse possession are only consistent with the nature of an earlier time in American history and, as such, are outdated. Still, many legal cases serve as a grim reminder to homeowners that, despite the antiquated and obscure nature of the law, instances remain where land can and will be taken through legal actions.
A lien is another encumbrance on real property. Liens are monetary claims that are placed against real property to secure a financial obligation of the property owner. For example, mortgages are a lien against a property. Court judgments can also create a lien. In some cases, a sale of the property can be forced in order to satisfy lien-holders. Other examples of liens placed on the property include the following situations:
- In some states, unpaid child support can be used to place a lien on real property.
- In a divorce case, a court can award a spouse ownership of the marital home, yet grant the other spouse a lien on the property to satisfy that spouse’s financial interests in the property.
- Unpaid state or federal taxes, including sales taxes and income tax, can become a lien on the property.
- A contractor can place a mechanic’s lien on real estate to secure unpaid debt.
The laws governing the rights of contractors to place a lien on real property to secure unpaid debt differs from state to state. However, all state laws have common characteristics, namely, every contractor has the civil right to file a lien if a property owner does not pay for materials and services provided by the contractor for the improvement of the property. If an unpaid creditor goes to court and obtains a judgment against a property owner, the law usually permits the creditor to file it in the land records. By doing so, the creditor has created a lien on the debtor’s real property. In some instances, a debtor can sell the property without meeting the statutory requirements of the lien. In most instances, a bank or other mortgage lender will not provide mortgage financing until all liens on the property have been satisfied.