Property Encumbrances to Avoid

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Quality is important when investing large amounts of capital into a piece of real estate. However, while savvy buyers closely examine the physical aspects of a property, certain nontangible defects may escape notice. These types of encumbrances and defects of title can be just as damaging to a property’s value as a serious physical defect. Identifying these types of problems and assessing whether they can be efficiently resolved is crucial before buying any piece of real property.

Several types of encumbrances can be detrimental to the value of real estate in California:

  • Easements — An easement is a limited right that a person other than the landowner has to use land in particular way. Most easements are bargained for and should be recorded in the chain of title. Others, however, may arise by implication under certain circumstances. These can be difficult to uncover, even after a proper title search.
  • Covenants — Covenants are promises among landowners to use or refrain from using land in a particular way. Covenants can run with the land under some circumstances, meaning they can remain in force long after the landowners who actually made the agreement have moved on.
  • Liens — A lien is an equitable interest in a piece of property that a creditor takes to secure payment of a debt by the landowner. The most common type is a mortgage, but other types include tax liens and judgment liens. Liens must be satisfied before the property can be sold.
  • Regulatory issues — While often arising from the physical condition of a property, these issues are usually not as evident as a cracked foundation or a mold problem. When a property violates zoning or land use requirements or past uses require particular environmental oversight and action, it can place a heavy burden on a new owner, especially one who purchased the property without knowledge of the condition.

Discovering these issues before purchase is essential to getting a fair deal on your property transaction.