What Are Encumbrances & Liens And Why Are They Important?
What is an encumbrance? Wikipedia has en excellent definition.
-An encumbrance is a right to, interest in, or legal liability on real property that does not prohibit passing title to the property but that diminishes its value. Encumbrances can be classified in several ways. They may be financial (ex: liens) or non-financial (ex: easements, private restrictions).
So what does that actually mean?
An encumbrance is a liability held by someone else against your land. Encumbrances effect the use, enjoyment and most likely the value of the property. Encumbrances include restrictions, liens, easements or encroachments.
In order to research a property to see if there are encumbrances, you can start with the online search of the county's website. (County name, state, government) Some counties have this information online. But you might have to search the website for this information. Start with the Recorder's site and then Assessor's. Look on the Treasurer's site for any liens for back taxes.
If the information isn't online, then call the Recorder's office. Ask how to find the information. Again, you will need the APN or parcel number.
If this task seems daunting or if you are purchasing an expensive piece of land, you might want to consider getting a title company involved. This is what title companies do. Online title companies can cost as little as $150 (Pro Title USA). Using a title company local to the property is also a possibility. However the average cost is higher, $500-$750.
One thing you or the title company won't find while looking at the records is an encroachment. An encroachment is not common on vacant land. An encroachment is an "intrusion on a person's territory, rights, etc." The most common type of encroachment is when a neighbor builds a fence that trails over into your yard or a shed that goes over the property line into your yard.
The best way to uncover an encroachment is by visually inspecting the property. Here at Sandy Land, we highly recommend that you go and view a property before you buy.
Keep an eye out for the next email where we will be discussing HOA/POA. These can have their own set of restrictions on your land.
Happy Land Hunting,