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Encumbrance

With regards to property an Encumbrance is a burden, obstruction, or impediment on the property that lessens its value or makes it less marketable.

Types of encumbrances include mortgages, leases, easements, encroachments, liens and covenants.

An easement is a party’s right to use or improve a portion of a property they do not own. For example, a utility company may need access to gas pipes that run through your property or pedestrians may have the right to use a footpath that goes through your property.

A lien is an encumbrance that affects the title to a property in the form of a security interest. It gives the creditor the ability to seize the property if payments and obligations are not met. A mortgage is one of the most common examples of this.

A restrictive covenant is an agreement that is written into the buyer’s deed of a property that could restrict the future owner. For example, it may include a provision that the façade of a home must be kept intact.

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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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