California Partition Law Blog
An encumbrance is a term frequently used in context with real estate. It is most often used with regards to property transfers. When contracting to sell or convey property it is usually implied that that property is being delivered free of encumbrances. (Smiddy v. Grafton (1912) 163 Cal. 16, 18.) This means the property is free or will be freed by time of sale, of any issues with title or things on the land that would decrease its value or cause problems with ownership down the line. (Hagge v. Drew (1945) 27 Cal. 2d 368, 376.) As such, encumbrances can make the property unmarketable and can affect the title to the property or the physical condition of the property.
What are some encumbrances that affect a property’s title?
If an encumbrance impacts a property’s title it may hold implications for the future holder of title. For example, a mortgage is a type of encumbrance that impacts a property’s title. (Cal. Civ. Code § 2923.) Encumbrances may be any taxes, assessments, or liens on the property. (Cal. Civ. Code § 1114.) The list of encumbrances offered by under the California statute is not exhaustive, so anything impacting a property’s value may be covered. (Evans v. Faught (1965) 231 Cal.App.2d 698, 706-707.) If these types of encumbrances are present, they may impact future payments an owner has to make on the property. If the encumbrance is a lien the new owner may have a claim against the prior owner for delivering encumbered property. This is because if the lien is defaulted on, creditors may come after the property for repayment. Similarly, a mortgage acts as a debt on the property and the new owner should be aware whether they are assuming liability for the mortgage or not.