Easements, Liens and Encumbrances in Real Estate

Troubled Mortgage Negotiations
Troubled Mortgage Negotiations. Jim Kimmons

Real Estate Property Ownership Can be Threatened:

Just because one owns real estate, it doesn't mean that they have full control over it, or that there aren't others with claims or rights to use of the property. There can also be limitations on the owner's use or transfer of the property.  And, it can be taken away from you by government and HOAs if you don't follow the rules and pay your dues and taxes.

 Understanding what threatens your ownership and control is how you can avoid problems.

Encumbrances on Real Estate:

What is an encumbrance?  It's a claim or other issue that encumbers your full ownership rights.  It can be a repair person's lien, a tax or HOA lien, or some claim of ownership or an interest in ownership.  An example might be an ex spouse who isn't on the deed but claims some ownership based on being married and possibly state community property laws.

If there is an encumbrance on your property, it may be something you're aware of and it may not be an issue to you.  However, if you decide to sell, potential buyers may find that encumbrance to be a barrier to purchase.  You shouldn't just accept encumbrances as a matter of course.  They should be resolved prior to purchase.

Types of Real Property Encumbrances

Easements on Real Property:

An easement is the right of one party to use the land of another.

Rights might include passing over the property to access another, using a pond for fishing, placing utilities across it, etc. Easements can be granted at any time, and under the right circumstances, they can be removed.

Most modern subdivisions have some very well-defined easements for utilities.  You can't enjoy that electricity or sewer unless there's a way to get the service to you and remove the waste you create.

 There will be easements for utilities, normally a certain number of feet into a propery along one or more property lines.

There are some interesting easements out there however, and you need to watch for them if you're buying a property.  One I remember well was the easement for a certain person by name to cross the property to access something on the adjuacent property.  This may not be a problem, and it certainly would go away as an issue when the named person died.  It's just an indication of the kind of easements you may encounter.

Ways That Easements Can be Created

Ways to Terminate Real Estate Easements

LIens on Property:

Liens are definitely a concern.  HOAs can place liens if dues aren't paid, and governments get priority if they place a line for non-payment of real estate taxes.  

Just understand the limitations and threats to property ownership so that you're and informed buyer.