Over the years, homeowners may take out mortgages, leave debts unpaid, agree to easements, or deal with ownership disputes. Some of these issues can stay connected to the property and cause problems when it’s time to sell.
All of these issues fall under the legal umbrella of title encumbrances – claims, liabilities, or restrictions attached to a property’s record.
Today, we’re explaining what title encumbrances are in full detail, examine the different types you might encounter, and break down how they affect your home purchase.
What is a title encumbrance?
A title encumbrance is a claim, restriction, or legal right tied to a property that can affect how it’s owned, used, or sold. That could be a mortgage, lien, or one of several other possible encumbrances that show up during a title search.
Some are completely normal but others can bring everything to a standstill until they’re sorted.
Encumbrances usually show up in the property records. For example, an old mortgage might still show up on the property record if it was never properly signed off. Or a contractor who wasn’t paid for a project might have placed a lien on the house that has to be cleared before closing.
That said, every encumbrance isn’t a dealbreaker. Things like utility easements are completely normal and simply map out who can access certain parts of the land. What matters is catching these details early and understanding how they could affect you as the property owner.
What are the most common types of encumbrances in real estate?
Title encumbrances can come in a few different forms. Some relate to money owed on the property, while others affect how the land can be used or who may have a legal interest in it.
Here are some of the most common ones buyers may come across:
- Mortgage liens: If there’s still money owed on the mortgage, the lender has a claim against the property until that loan is paid off.
- Tax liens: Fall behind on property taxes and the government can place a lien on the home. That will usually need to be sorted before the sale can go through.
- Contractor or mechanic’s liens: If a builder or contractor does work on the property and never gets paid, they may file a lien against it.
- Judgment liens: A court judgment can end up attached to the property too, depending on the circumstances. That can create another issue to clear up before closing.
- Easements: These give someone else the right to use part of the property. Think utility access, a shared driveway, or a path across the land.
- Ownership claims: Sometimes someone else may still have a legal stake in the property, such as an heir, former spouse, or co-owner.
- Restrictive covenants: These are rules tied to the property that limit how it can be used or changed. Some may come from a homeowners association, while others are written directly into the property records.
- Encroachments: An encroachment happens when part of one property crosses onto another, such as a fence, shed, driveway, or other structure sitting over the legal boundary line.
The property deed and other land records can contain important clues about these rights and restrictions, which is one reason they’re reviewed so closely during the title process.
What happens if a title encumbrance is found on a property?
If a title search uncovers an encumbrance, the next step depends on what it is.
Some issues only need a document corrected or an old lien formally released. Others take more time and may need the seller, lender, attorney, or another party to get involved before closing can move ahead.
In many cases, the seller will need to clear the problem before transferring the property.
That might mean paying an outstanding tax bill, getting proof that an old mortgage was paid off, or sorting out a claim from an heir or former co-owner.
Other encumbrances may stay with the property after the sale. Easements and deed restrictions are good examples. They don’t necessarily stop you from buying the home, but you’ll want to know exactly what they allow or restrict before you sign.
If the issue is more serious and can’t be resolved in time, closing may need to move back. And if there’s a major ownership dispute or another problem that puts your rights to the property at risk, the sale may not be able to go ahead at all.
How title companies help resolve encumbrances and clear ownership issues
When a title company spots an encumbrance during their search, their main job is figuring out how to clear the board before you take over the keys.
Sometimes that’s as simple as chasing down a lender for a formal mortgage release or verifying that an old tax bill was paid. Other times, it means fixing a typo in county land records or tracking down a long-lost heir who still technically holds a stake in the house.
They handle the heavy lifting behind the scenes – coordinating with sellers, lenders, and attorneys – to resolve these issues before closing day. Once the title is officially clean, they issue your title insurance policy, giving you a safety net against any hidden defects that might pop up down the road.
Don’t let hidden title issues stall your purchase
You shouldn’t have to play private investigator when buying a home. Brick City Title carries out all the hard work long before you reach the closing table. Our team digs deep into public records, tracks down loose ends, and works directly with lenders and sellers to clear encumbrances.
We want you to step into your new home with complete peace of mind. Contact Brick City Title today for a drama-free closing.
