Understanding Incumbrances in Real Estate
Incumbrance refers to any financial or legal obligation that restricts the use of a property or asset. It can include mortgages, liens, taxes, and other debts that must be paid before the property can be sold or transferred. Incumbrances can limit the ability of the property owner to sell or transfer the property, and can also affect the property's value and marketability.
Examples of incumbrances include:
Mortgages: A mortgage is an incumbrance on a property, as it restricts the owner's ability to sell or transfer the property until the mortgage is paid off.
Tax liens: Unpaid taxes can become an incumbrance on a property, preventing the owner from selling or transferring the property until the taxes are paid.
Mechanics' liens: A mechanics' lien is an incumbrance that can be placed on a property if a contractor or subcontractor has not been paid for work done on the property.
Easements: An easement is an incumbrance that allows one party to use another party's property for a specific purpose, such as access to a neighboring property or a utility line.
Restrictive covenants: Restrictive covenants are incumbrances that limit the use of a property and can be included in the deed or other legal documents. They can restrict the type of building that can be constructed on the property, the color of the paint, or other aspects of the property's use.
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