Finding out that there is some kind of encumbrance on the deed will bring just about any real estate deal to a screeching halt until the issue is investigated and (hopefully) resolved.
An encumbrance is some type of limitation on or a claim against the property. An encumbrance can be a significant liability for the owner — which makes the property difficult to sell or even transfer the title. It may also lessen a property’s value.
Here are some of the most common encumbrances that you may see:
Easements give someone aside from the landowner a right to use the property in a certain way. Easements can include things like the right of a utility company to come onto the land to install or maintain their lines. They can also include things like another property owner’s right to pass through your driveway on the way to the main road.
Most people have a passing familiarity with liens. Liens are some type of financial claim against the property after the property has been used to secure a loan or there’s been a judgment against the owner. Mortgages are liens (and generally aren’t a problem), but so are unpaid property taxes, mechanic’s liens for unpaid construction work and other things.
Sometimes a survey turns up the fact that one property owner’s rights have been eroded in some way by another’s. For example, maybe one neighbor put an elaborate rock garden two feet over the property line — thereby diminishing the other neighbor’s property.
Buying real estate is one of the biggest financial transactions most people ever make in their lifetimes, so it’s always smart to seek experienced counsel before you sign any contracts.