- An encumbrance is a claim, charge, or liability that attaches to real estate.
- An encumbrance does not have a possessory interest in real property.
- An encumbrance may decrease the value or obstruct the use of the property.
- An encumbrance is a right or an interest held by someone other than the property owner that affects title to the real estate but does not necessarily prevent a transfer of title.
Encumbrances may be divided into two classifications:
- Liens (usually monetary charges)
- Physical restrictions, easements, licenses, and encroachments
Liens
A lien is a charge against property that provides security for a debt or an obligation of the property owner. If the obligation is not repaid, the lienholder is entitled to have the debt satisfied from the proceeds of a court ordered or forced sale of the debtor’s property. Real estate taxes, mortgages and trust deeds, judgments, and mechanics’ liens all represent possible liens against an owner’s real estate.
Deed Restrictions
Deed restrictions are private agreements that affect land use. Once placed in the deed by a previous owner, they “run with the land,” limiting the use of the property and binding to all grantees. Deed restrictions are enforced by an owner of real estate and are included in the seller’s deed to the buyer.
Covenants, Conditions, and Restrictions (CC&Rs)
These are private agreements that affect land use typically imposed by a developer or subdivider to maintain specific standards in a subdivision. CC&Rs are listed in the original development plans for the subdivision filed in the public record. They may be enforced by the original owner, developer, or by a homeowners’ association.
