When you decide to purchase a home, you want to ensure everything about the transaction is acceptable. Signing a home contract, only to discover something is structurally wrong with the property is every home buyer's worst nightmare. One often overlooked area where things could go awry in a home purchase, however, is in the home's title.
As a home seller, this is a concern as well. You want to ensure nothing in the title that goes undisclosed, even if by accident, can cause liability for you. Even if you've protected against this, you may want to avoid bad press, so to speak, with respect to your real estate transaction. Particularly if you live in a small town, news travels quickly when someone is dissatisfied. This could be a concern both for your reputation and your ability to enter successfully into future real estate transactions.
Encumbrances on the title of a home are another area that warrants special attention, even though most people are aware of and able to guard against a home's potential structural defects. In legal circles, then, an encumbrance refers to anything relates to your property's title in a negative or limiting way. Mortgages, leases, easements, liens, restrictions or virtually anything that can make the title transferable is included in this definition.
Some things to note about encumbrances follow. The best known and most common encumbrance is a lien. Employed to ensure the property owner's debt or obligation, liens are simply monetary claims by a creditor against a parcel of property. In order to satisfy lien-holders, a forced sale of property can sometimes occur. Since they create limitations on the property in question, deed restrictions are also encumbrances. On the other hand, since licenses are considered a privilege of the person granted the license and have the ability to be cancelled, they are not encumbrances. Since they remain active and transfer with the property from owner to owner, easements are also usually considered encumbrances.
Consequently, encumbrances are important to note and understand. If restrictive enough, they can make a property's title wholly unmarketable. This could either cost you the sale of your home if you are a seller or the purchase of your new home if you are a buyer. It is prudent to check with your realtor and ensure the property you're either interested in selling or buying is not in any way encumbered before going through with a timely and costly transaction.
As a home seller, this is a concern as well. You want to ensure nothing in the title that goes undisclosed, even if by accident, can cause liability for you. Even if you've protected against this, you may want to avoid bad press, so to speak, with respect to your real estate transaction. Particularly if you live in a small town, news travels quickly when someone is dissatisfied. This could be a concern both for your reputation and your ability to enter successfully into future real estate transactions.
Encumbrances on the title of a home are another area that warrants special attention, even though most people are aware of and able to guard against a home's potential structural defects. In legal circles, then, an encumbrance refers to anything relates to your property's title in a negative or limiting way. Mortgages, leases, easements, liens, restrictions or virtually anything that can make the title transferable is included in this definition.
Some things to note about encumbrances follow. The best known and most common encumbrance is a lien. Employed to ensure the property owner's debt or obligation, liens are simply monetary claims by a creditor against a parcel of property. In order to satisfy lien-holders, a forced sale of property can sometimes occur. Since they create limitations on the property in question, deed restrictions are also encumbrances. On the other hand, since licenses are considered a privilege of the person granted the license and have the ability to be cancelled, they are not encumbrances. Since they remain active and transfer with the property from owner to owner, easements are also usually considered encumbrances.
Consequently, encumbrances are important to note and understand. If restrictive enough, they can make a property's title wholly unmarketable. This could either cost you the sale of your home if you are a seller or the purchase of your new home if you are a buyer. It is prudent to check with your realtor and ensure the property you're either interested in selling or buying is not in any way encumbered before going through with a timely and costly transaction.
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