What Are Encumbrances In Real Estate Law?

When people think about property ownership, they often focus on the benefits and rights that come with it. However, there is another side of the equation. Encumbrances entitle third parties to certain rights or uses, and they often allow those parties to restrict the owner's rights and uses of the property. Take a look at a few examples of encumbrances in real estate law and how they might affect your situation.

What Is an Encumbrance?

An encumbrance can emerge from a range of financial, contractual, or other legal reasons. Everyone who has been subject to the rules of a homeowners' association, for example, has likely been subject to numerous encumbrances. Classic complaints about HOAs include seemingly ridiculous concerns about a homeowner's choice of paints or desire to install a basketball hoop. Regardless of the homeowner's feelings about these encumbrances, they most likely have to tolerate them due to the HOA agreement they signed when they moved in.

Similarly, anyone who has ever had a mortgage has likely been subject to a financial encumbrance. The bank places a lien on the property, and this often comes with certain obligations for the borrower. A debtor, for example, might not be allowed to modify the house too aggressively. Understandably, they won't be allowed to sell it until they've paid off the mortgage.

There are also hybrid encumbrances. A judgment lien against a piece of real estate, for example, is both a financial and legal one.

Government and even utility companies also can encumber properties. If there are power lines crossing your property, there's probably an encumbrance in the form of a right of way or an easement. This allows the utility company to build and maintain the lines.

Dealing with Encumbrances

If you're inclined to fight any sort of encumbrance, you're probably going to want to hire a real estate attorney. There are often ways to address this issue, but most require showing a court that the encumbrance is problematic, legally flawed, no longer in effect, abandoned, or effectively moot.

Suppose a neighbor had previously had an easement allowing the use of a gravel road on your property. If the neighbor hasn't used the road in several years, you can argue the easement has lost its meaning. Even if the neighbor reasserts the easement after years of neglect, you might be able to convince a judge the neighbor has abandoned the easement.

Many encumbrances also come with terms. If the neighbor in the previous example had agreed to maintain the road and then let it crumble, a real estate attorney might argue the neglect nullified the agreement.

For more information, reach out to a real estate attorney near you.