When you buy or sell a property, one of the primary things to consider is the property title. This is an essential aspect of the due diligence process involved in any transaction of property. During the settlement process, a conveyancer or solicitor will typically conduct a search of property title records, or it may be included in the contract of sale.

While looking over the title, you might notice that there are certain encumbrances that exist on the title. Some of these encumbrances are no problem at all, but some can be big trouble. It’s important for both parties to be aware of these encumbrances. This ensures that everyone is informed and eliminates the risk of the deal falling through.

What is an Encumbrance?

An encumbrance is a restriction placed on a land title, which can be due to a local council, land zoning, or present for other reasons. It can also be a registered interest in the property by a person who is not the landowner. Either way, all encumbrances should be disclosed and appear on the title search.

Read on to learn more about some common encumbrances and how they can affect your property transaction.

Easements

An easement allows another party the right to use land they don’t own, as well as enforcing certain restrictions on the owner. For example, an easement might be granted to a local council, allowing them to ensure gas, water, or sewage to flow through your property.

There are positive easements. For example, an easement might let someone cross a neighbour’s land to reach their own. There are also negative easements, which restrict what a landowner can do on their property. A common reason is to ensure a homeowner doesn’t do anything to obstruct a neighbour’s view.

Covenants

Covenants place restrictions on the use of the land, such as dictating which kinds of material can be used to build. These are common in new developments, where developers use them to ensure properties maintain a level of uniformity.

When you take ownership of a property, you must agree to abide by any restrictions. Some covenants impose an obligation on the owner, such as maintaining the garden, while most others limit the use of the land. A covenant can be changed or removed, though. You should seek the advice of a conveyancer to determine how this can happen.

Caveats

The existence of a caveat indicates that another party holds a claim to the property. The purpose is to warn anyone involved in the transaction of the property that someone claims an unregistered interest in the land and the title transfer may not be able to proceed without the consent of the caveator.

Dealing with properties, whether buying or selling, can be tricky. If you have any queries about encumbrances on property titles, or require conveyancing services in Melbourne, talk to the experienced team at Just Conveyancing.

Call us today on (03) 8580 2276 or contact us online.

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