Encumbrances On The Property

We were asked to clarify the terminology of encumbrances, so Mike Shepard was happy to weigh in. Here is a list of possible encumbrances to a property (whether a financial liability to the property or a physical liability) An encumbrance restrains or burdens full ownership rights to a property.

  • Right of Way: Simply, a right to pass.  Typically this is a right granted to another person or organization to travel by foot or vehicle.  For example: shared driveways, to obtain property access, etc…. There is a unique field in FlexMLS data input called “Right of Way”.
  • Easement: When the title to a specific piece land remains with the landowner, but another person or organization is given a right to use that land for a distinct purpose. Examples: utility lines, powerline, water line, sewer easements encroachments. A power line easement might also contain a right of way for maintenance. There is a unique field in FlexMLS data input called “Easement”.
  • Deed Restriction: Contained within the body of the deed or by reference to a deed where enumerated, there is a property restriction. For example, in some areas of Pittsfield, the original developer place deed restrictions on future building that allowed only single family dwellings to be built, prohibited detached garages, required minimum square footage of homes, maintained uniformity of siding or exterior features, etc..) Shared wells, if recorded on the deed to the property the well is located. There is a unique field in FlexMLS data input called “Restrict Covenants”.
  • Encumbrance: Any third party contractual obligation(s) that could pass to future buyers, such as equipment rental agreements. For example: Hot water tanks or solar panels lease or rental agreements. There is a unique field in FlexMLS data input called “Rentals” but could also be disclosed elsewhere if applicable”. Some encumbrances such as a shared well, could be recorded in the field in FlexMLS data input called “Restrictive Covenants”.
  • Restrictive Covenants: Set of rules that affect the ownership or use of condo or development.  Most common types of restrictions: (1) HOA rules (2) HOA monthly fees (3) HOA special assessments.  All are considered a lien on property, recorded as a master deed and in a declaration of trust. There are several fields that allow an agent to disclose HOA fees or services provided.

Betterment: Special tax by a municipality for a municipal project that benefits a particular area of the community.  Example: Hinsdale municipal sewer installation around Ashmore and Plunket lake assessed to only those property that benefited. The betterment was recorded in the registry with lien and should be on the assessor’s card for the property it affects.  The town tax collector can provide the balance of the betterment. There is a unique field in FlexMLS data input called “betterment”.