ENCUMBRANCE–MEANING, TYPES

An encumbrance is a claim or liability against a property held by someone who isn't the owner of the property.

Because it is held by someone who isn't the owner, it limits the use of the property by the property owner.

It can make it difficult for the owner to transfer title to the property and can negatively affect the value of a property.

An encumbrance is not considered an estate because it does not confer any possessory interest. 

The most common types of encumbrance in real estate are easement, liens, deed restriction, profit à Prendre, encroachment

Now, let us take a closer look at each type of encumbrance. We start with the easement.

Easement

This is the right of a non-owner of a property to use the property for a specific purpose. 

An easement give a person who is not the owner of the property the right to use another person's property as long as its usage is consistent with the general use of the land.

There are two main types of easement namely: easement in gross and appurtenant easement

1. Easement in gross: A property owner can allow someone to make use of his/her land according to his/her wishes.

An easement in gross is a right to use a property that is usually attached to an individual.

An easement in gross is valid as long as the owner owns the property and it automatically terminates when the property is transferred.

Some examples of easement in gross are

  • A personal easement is gross, which allows a neighbor to cross someone's land.
  • A utility easement, which allows a utility company to build utilities like electric wire, pipelines in a property

2. Appurtenant easement: This is a right to use adjoining property that transfers with the land.

The party that benefits from an appurtenant easement is referred to as the dominant tenement while the party that supplies this easement is considered a servient easement.

Lien

This is a claim on the property that is used to secure a debt. In other words, a lien is the right of a creditor to take over a debtor's property as security until a debt is settled.

Liens can come from different sources. For example, when a person obtains a loan from a bank to purchase a house, a lien is usually granted to the bank. 

If the person fails to repay the loan, the bank may exercise its lien on the house by seizing the property and selling it to settle the debt.

Another type of lien is the property tax lien which is usually exercised by the government.

A property tax lien is a government-imposed lien on taxable property. This lien will remain in place until the property owner has paid all of his property taxes.

When there are exist any liens on a property,  the earliest recorded lien is usually given priority over later liens.

The only exception to this is property tax liens, which are usually given higher priority regardless of when they are recorded.

Deed restriction

This is a clause in the deeds that the seller (grantor) inserts to restricts, limits how a buyer or grantee can use land.

It limits how a property owner can use his property. Deed restrictions are also referred to as covenants, conditions, and restrictions (CCRs) or more simplistically, as restrictive covenants.

One feature of the deed restrictions is that the deed restriction is passed from one generation to another.

That is, they are binding on all future owners of the property, not just the owner at the time the restriction is put in place.

For example, deed restrictions may require that a historic tree be left intact. The present and future owners of the property restriction will be bound by such restriction unless it is removed by a court order.

Encroachment

This occurs when someone who isn't the owner of the property interfered, intrudes or builds something on a property without the consent of the owner.

An encroachment can pose a problem because it can prevent the property owner from using his property until it is removed.

As a result, the property owner has several options including suing the encroaching neighbor for damages or ordering the encroachment to be removed.

A neighbor tree that overhangs onto your property is an encroachment as is a neighbor's building that extends to the building of adjacent land.

Lease

A lease is an agreement where one party (the lessee) acquires rights from another (the lessor) to use a property for a specific period.

A lease is an encumbrance because,  while the lessor retains ownership of the property, he does not have free use of his property during the period of the lease agreement.

In other words, the property owner right of use is restricted by the lease agreement

Profit à Prendre

This is a French word meaning "profit to be taken". Essentially, a profit à prendre is the right to take something from the soil of another person's land for profit.

More precisely, a profit a prendre is the right to enter into another's person land and take some natural produce such as mineral, fish deposits, timbers, and crops

A profit à prendre can be distinguished from an easement. While an easement is generally a non-possessory interest in land that grants the holder the right to use a property, a profit à Prendre gives the holder the right to use and take something from someone else property for profit.

The taking of profit is what distinguishes profit à Prendre from an easement.

Like easement, profit à prendre can be in gross or as an appurtenance to a land.

1. Profit à Prendre in gross: This is a profit à prendre that is not dependent on the ownership of a specific piece of land.

It is instead held by an individual personally. This kind of profit a Prendre does not transfer with the land when the property is sold.

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2. Appurtenance Profit à Prendre: This is a profit à Prendre attached to a particular land.

The dominant estate is the land that benefits from the profit a prendre whereas the servient estate is the land that is burdened by the benefit is called the servient estate.

Appurtenance profit à Prendre is transferred when the land is sold.

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