What Is an Encumbrance?

An encumbrance is any limitation, liability, and any other legal claim against a piece of real estate that will affect property title and value. This will burden or restrict an owner’s desire to use or transfer a property.

Encumbrances in real estate come in many forms.

  • Deed restrictions are restrictions, private agreements, covenants, and conditions that are listed in the deed. A property developer, for example, will restrict development to a certain amount of uniformity.
  • Easements refer to the placement of utilities along property lines. These are necessary to allow installation of electric, gas, sewer, and water lines. Some easements of roads and streets can also take up part of someone’s property.
  • Encroachments
  • happen when a neighbor places a fence on someone else’s property because he/she is uncertain about where his/her property line ends and another starts. Such installations are noted in title insurance policies and surveys until they are removed.

    Downed fence or one that is no longer standing are still noted in a survey. There are other inclusions and exceptions that fall under encroachment as well. Speak to a real estate expert for professional advice.

  • Liens can arise from a variety of situations, from non-payment of taxes to losing in a lawsuit. Failure to pay property tax or income tax, for example, will result in a lien placed against a property. The unpaid tax will have to be paid in full before a property can change ownership.

 

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