Legal Definitions - incumbrance

An incumbrance (also commonly spelled encumbrance) refers to a claim, liability, or right held by someone other than the property owner, which is attached to a property or another legal right. While it does not prevent the transfer of ownership, it can reduce the property's value or restrict its use, and it remains with the property even after it is sold or transferred to a new owner. It represents an interest in the property that is less than full ownership.

• Example 1: Utility Easement

  A homeowner discovers that a local water utility company has a legal right (an easement) to access a specific strip of land across their backyard to maintain underground water pipes.

  This easement is an incumbrance because it grants the utility company a specific right to use a portion of the homeowner's property without owning it. This right restricts the homeowner's ability to build structures or plant large trees in that area, potentially reducing the property's overall value or desirability, especially if a buyer wants to build a pool or extension. The easement will remain attached to the property even if the homeowner sells it.

• Example 2: Restrictive Covenant in a Planned Community

  A house is located in a community governed by a Homeowners Association (HOA) that has established specific rules, known as restrictive covenants, for all properties. For instance, these covenants might dictate that all fences must be made of a certain material and cannot exceed a specific height, or that commercial vehicles cannot be parked overnight in driveways.

  These restrictive covenants are incumbrances because they impose limitations on how the property owner can use and modify their land. They are not an ownership interest but are legally binding and "run with the land," meaning they apply to all future owners. These restrictions can affect a property's market value by limiting a buyer's freedom to customize their home.

• Example 3: Neighbor's Right of Way

  A property owner has a landlocked parcel of land behind their house and has been granted a legal "right of way" across a portion of their neighbor's driveway to access their own property. This right was formally recorded.

  The neighbor's right of way is an incumbrance on the driveway property. It grants the neighbor a specific, non-ownership right to use a part of the property for passage. This can affect the value or desirability of the driveway property, as the owner cannot block the neighbor's access and must share the use of that portion of their land. This right will persist even if the driveway property is sold to a new owner.