An encumbrance is an interest or right to a property by someone who is not the homeowner. There are two types of encumbrances:
- Monetary encumbrance – an interest that affects a property’s ownership. Mortgages and liens are common monetary encumbrances.
- Non-monetary encumbrances – an interest that affects how the property can be used. Easements are the most common form of encumbrances.
- What Can a Property Buyer Do if Encumbrances were not Disclosed?
- What Can a Buyer Do to Guard Against Undisclosed Encumbrances?
- What Can a Seller Do to Make Sure All Encumbrances are Disclosed?
- Does a Realtor Have a Duty to Disclose Encumbrances?
- Should I Consult an Attorney for My Encumbrance Problem?
When an estate in land is sold, the seller has a duty to provide the land free of any encumbrances or give buyer adequate notice of any outstanding encumbrances. If a seller has failed to disclose any encumbrances, a buyer may have a claim against the seller for breach of contract. The contract may be terminated if the encumbrance is of such a substantial nature that it should have been disclosed.
A buyer could be held liable for any encumbrances on the property after sale. This liability could occur even if a buyer was unaware of the encumbrance. A buyer should:
- Check with the County Recorder’s Office where encumbrances are recorded
- Ask the seller for a list of any encumbrances in writing
- Hire a building inspector to evaluate the condition of the property
A seller could have a contract for the sale of a home terminated if any encumbrances are not disclosed. A seller should:
– Be honest and disclose all known or possibly known encumbrances; and
– Inspect the property for any encumbrances.
Any and all facts an agent is aware of must be disclosed to the buyer. This includes relevant information or material facts that the agent knows or should have known.
Resolving an encumbrance problem can be difficult. An experienced real property attorney can help you understand your rights and duties. A real property lawyer can also represent you in court.