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Encumbrances Encumbrances are the non-possesory interest in real property. In encumbrances the person has a right to claim against the property and not to possess the property.For eg Mortgage An encumbrance is any nonpossessory right that is held by someone other than the property's owner. It can affect the title to or the use of the property. Encumbrances are a burden on the title. There are 2types of Encumbrances Financial Non financial Financial encumbrances are also called lien .In lien a the lienholder has a financial claim against the property Eg- Mortgage is a type of lien. In lien the creditor holds the interest in debtor property and if the debtor fails to pay the debt the creditor/lienholder can foreclose the property. A lien doesn't prevent a property from being sold or transferred, but the new owner will take title subject to the existing lien, and a creditor can still foreclose against the property if the debt remains unpaid. Liens can be Voluntary or involuntary. A Voluntary lien is the one that the property owner grants voluntary to the creditor.Mortgage and deed of trust is Voluntary lien. A mortgage lien is when the property owner and the lender agrees on a contract that the lender will give a loan to the owner and in return the owner convey his property to a creditor as security .If the owner fails to repay the debt the lender can foreclose the secured property. Whereas involuntary liens are the one that are ordered by the law without owners consent. Like Judgement lien,Construction liens (also called Mechanic's lien) Lien can also be general lien and specific lien . In General lien ,lien is made against all of the debtors property . In contrats in Specific lien , a lien is made to one specific property of the debtor.Mortgage and Homeowner dues are specific liens because the creditor has interest in one specific property. Mortgage,Construction Liens are Specific Liens. Non financial encumbrance are easements and private restrictions. |