When looking to buy property, there are several things you should look out for. One of these things is property encumbrances. A property encumbrance is a legal right to property, and while it doesn’t prohibit one to pass title unto a property, it DOES decrease its value.
Obviously, decrease in value is bad. So how do you know if there are property encumbrances on any property you’re looking at? We’ll explain below.
The Types of Property Encumbrances
Not only should you know what a property encumbrance is, but you should also know the different types, and how they affect the transfer of a title. Let’s begin:
- Lien: Liens occur when property-related debts are not yet paid off. You are probably familiar with the most common type of lien, which is a mortgage. A contractor can put a mechanic’s lien on the property if they have not yet been paid for work done on it. Whenever these debts are failed to be repaid, they result in foreclosure to pay off the debts.
- Easements: An easement allows legal right for someone to use the property, without having ownership. When utility companies come on the property to build power lines, or cut down trees that may be too close to powerlines, it’s legal because of an easement.
- Encroachments: While these are usually accidental and things that don’t seem too problematic, encroachments are when some of the property crosses boundary lines onto other property. If a fence was built encroaching on someone else’s property, or even tree branches are hanging over another person’s property, it can cause issues for title transfer.
- Deed restrictions: Although most common with newly-built property, deed restrictions tell the property owner what they can and can’t do with that property. You may also see this with historical property that is required to remain historical, or could even prohibit use of satellites on homes.
With so many types of possible property encumbrances, you want to make sure you know ahead of time if any of them affect the property you’re interested in, or may cause issues with transferring the title.
About Colony Title Associates:
Founded in 1995, Colony Title Group handles in excess of 2000 real estate closings in Washington DC and the Delmarva area every year. The founder Tee Tillman has over 23 years of experience in the title and real estate law fields. Colony handles closings for several lenders, including banks, credit unions and mortgage brokers. Colony is the preferred choice for many real estate brokers in the Baltimore area. If you have any questions concerning issues that Baltimore title insurance protects you from, such as property encumbrances, feel free to contact us at 410 884-1160 or visit ColonyTitle.com today!