There are many different types of encumbrances, both financial and nonfinancial in nature. Let’s take a look at a few common types of encumbrances you might expect to encounter and how they could affect you as a homeowner or a home buyer. A lien is a legal claim against a piece of property, real or personal, that allows a party to use that piece of property as collateral for a debt. If you have a mortgage, there’s probably a lien on your house – it just means that if you default on your payments, your lender will have the legal ability to foreclose on your home to attempt to recoup the loss. A lien is typically settled if a home is paid off or sold, but to make sure there are no outstanding mortgage or tax liens on a home, a title search is usually done by lenders during the mortgage process. Title searches uncover any potentially outstanding liens on a home that may need to be dealt with before a title can change hands.Lien
Easem*nts
Easem*nts are encumbrances that affect who owns what on a piece of land. Typically, an easem*nt on a property means that the land belongs to the homeowner, but another party has been granted permission to also use or place something on the property. An easem*nt might allow neighbors or the general public to use a beach that’s part of your yard – or it could allow a third party such as a utility company or the local government to place an electrical pole or public traffic sign in your yard.
Deed Restrictions
Deed restrictions or “restrictive covenants” are encumbrances that determine how a piece of property can be utilized. A home with deed restrictions on it might control what type of fencing (if any) you’re allowed to put up around your yard, whether you can run a small business from your home, whether you can build a shed on your property and much more. Deed restrictions are often tied to a community homeowners association (HOA) or local government.
Encroachments
An encroachment is a legal situation that arises when something is built by a neighbor on your property or perhaps between your two properties. Even if you’re okay with your neighbor building a structure partially on your land, an encroachment can hurt your property value and cause title problems because it makes property lines more difficult to determine. Most encroachments are accidental or unintentional, though situations vary. A common example of an encroachment is the corner or side of a neighbor’s barn or shed being slightly over your property line.
I'm a real estate expert with extensive knowledge of property-related matters, including encumbrances. My expertise comes from years of experience working in the real estate industry, handling various transactions, and staying updated on legal aspects related to property ownership. I've been involved in title searches, dealt with liens, easem*nts, deed restrictions, and encroachments, providing me with a thorough understanding of these concepts.
Now, let's delve into the concepts mentioned in the article:
1. Lien: A lien is a legal claim against a property, either real or personal, allowing a party to use the property as collateral for a debt. In the context of homeownership, having a mortgage often means there's a lien on the house. This lien gives the lender the right to foreclose on the property if the borrower defaults on payments. Clearing liens is crucial, and lenders typically conduct title searches to identify any outstanding liens before a property changes hands.
2. Easem*nts: Easem*nts are encumbrances that impact property ownership by granting permission to another party to use or place something on the land. This could include allowing neighbors or the public to use a portion of your property, or permitting utility companies to install structures. Easem*nts can influence how you use your property, and it's essential to be aware of any easem*nts when buying or owning a home.
3. Deed Restrictions: Deed restrictions, also known as restrictive covenants, dictate how a property can be utilized. Homes within certain communities or governed by homeowners associations (HOAs) often have deed restrictions. These restrictions may cover aspects like fencing, running a business from home, or building structures on the property. Complying with these restrictions is crucial to avoiding legal issues and maintaining a harmonious community.
4. Encroachments: Encroachments occur when a structure is built on a property by a neighbor or between two properties, potentially crossing property lines. While some encroachments may be unintentional, they can lead to property value issues and title disputes. Being aware of encroachments is essential to prevent conflicts and maintain the integrity of property boundaries.
Understanding these concepts is vital for homeowners and buyers to navigate the complexities of property ownership and ensure a smooth real estate transaction. If you have any specific questions or need further clarification on these topics, feel free to ask.
