Encumbrances on Real Property

If you decide to purchase real property, it is very important to be aware of any encumbrances on the property. An encumbrance is a claim against property held by someone who is not the owner of the property. Encumbrances affect title, meaning that the owner’s rights to the property are limited in some way, and those limitations sometimes continue even if the property is purchased by someone else. There are several types of encumbrances in Florida.

Liens

Liens are the most common type of encumbrance on real property. A lien is a monetary claim secured by property, which serves as collateral for the debt. In some cases, if the debt is not paid, a lienholder can force the sale of the encumbered property to satisfy the lien. Liens stay attached to the property if the property is transferred, so if they are not paid, they reduce the value of the property.

There are several kinds of lien. Mortgages are the most common type of lien. Construction liens can be placed on property by anyone who provides labor or material for improving the property, and is not paid. Property may be encumbered by a tax lien if the owner has not paid taxes. A judgment lien results from a court order. If the court orders the owner of property to pay another person money, and the owner does not pay, the other party can get a lien attached to the property.

Restrictive Covenants

A covenant is an agreement between two or more parties that limits how real property can be used or requires something to be done to the land. Often, restrictive covenants are created at the time a subdivision is developed. The covenants are then included in each parcel as it is sold. Some common restrictive covenants include limits on the size of building allowed, aesthetic requirements, such as what color a house may be painted, restrictions on outbuildings, or minimum lot sizes.

Licenses

A license is a right granted by the owner of real property to another party, giving permission to use the land in some way. Licenses can be revoked, and do not transfer if the property is sold.

Easements

An easement is a right granted to another party to use the real property. Unlike a license, it cannot easily be terminated. Easements usually must be in writing. There are a few different types of easement. An easement in gross is tied to a particular person or organization. Utility easements, giving a utility company the right to put power or gas lines on property, are a common example. Generally, easements in gross may not be sold or otherwise transferred.

An easement appurtenant is tied to an adjoining piece of property. For example, an owner may give a right-of-way to a neighbor if the owner’s property is between the neighbor’s property and a public road. Easements appurtenant transfer with the land.

An easement by prescription occurs when someone uses the owner’s property, openly and without the owner’s permission, for twenty continuous years. Then the owner may not stop the holder of the easement from continuing that use.

Adverse Possession

Adverse possession lets a squatter obtain title to land if certain circumstances are satisfied. The adverse possessor must occupy another’s land for seven continuous years. He or she must either have color of title, meaning some claim to the land that appears to be good but has a defect, or must pay taxes on the land. Additionally, he or she must protect the property by an enclosure or must cultivate, maintain, or improve the property. The possession must be open and notorious, not secret, and must be exclusive, meaning that possession cannot be shared.

Encroachments

An encroachment happens when a neighbor intrudes on another’s land by building a physical structure, such as a fence or the corner of a building, on the owner’s property. Encroachments create problems when the owner wants to sell the land, and must be resolved.

If you are considering purchasing real property, it is essential to understand any encumbrances that may be on the property. Encumbrances on real property are commonly not obvious and require the evaluation of a trained professional. Contrary to what many real estate brokers, realtors and mortgage brokers may advise, it important to hire counsel when making real property purchases to conduct title and lien searches and evaluate and remedy any existing encumbrances. Please contact the Boca Raton Law Offices of Larry E. Bray for an initial consultation.