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Understanding Real Estate Encumbrances:

An encumbrance is a legal right or interest in land that affects or limits ownership and control over property. It may be in various forms, such as mortgages, liens, easement rights, zoning ordinances, restrictive covenants, unpaid taxes, etc. Although many encumbrances may not prevent the transfer of property, it can diminish its value. A preliminary title search will almost certainly reveal any encumbrances.

Property subject to an encumbrance may still be bought or sold. The purchaser of the property will be bound by any encumbrances attached to that property, unless released by the party holding the encumbrance. There are two basic types of encumbrances: liens (such as mortgages, taxes, or other debt), and property limitations (such as easements, covenants, and restrictions).

Liens are monetary claims against a property to secure the property owner’s debt or financial obligation. Mortgages, unpaid taxes, and unpaid bills for work done on the property (mechanics lien) are primary examples. Other liens are placed by court judgments, such as delinquent financial support payments.

Deed restrictions known as covenants or conditions are limitations on how the property may be used or built on. Such deed restrictions are generally made by developers in order to control the uses of the property. Such restrictions usually are intended to maintain value regarding issues such as view protection, over-building for the lot size, and setbacks from boundary lines.

Easements are the right of someone to use a part of property owned by someone else. Utility easements allow utility company companies to place or install water, gas, electric, and cable lines over or under a portion of the property. Other types of easements would include a right to drive across someone’s property for access (called a right-of-way). Such an easement is a specific right, limited to the access that it states.

A license (whether verbal or written) is a right granted to one party to use a portion of someone else’s property, and it may be terminated at any time. For example, a neighbor being allowed to park a car on the property next door may be asked to remove that vehicle at any time.

Michael Edlen, an agent with Coldwell Banker in Pacific Palisades, can be reached at 310.230.7373 or Michael@MichaelEdlen.com.


Michael Edlen

Special to the Mirrorstaff@smmirror.com

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