Spot the Difference: Liens and Encumbrances
CMS Mortgage Solutions Inc.
CMS Mortgage Solutions Inc.
Published on February 4, 2023

Spot the Difference: Liens and Encumbrances

When it comes to liens and encumbrances, there are some key differences that you should be aware of. A lien is a legal claim on a property as security for repayment of debt or performance of an obligation, while an encumbrance is any right in another's property that limits its use or enjoyment. Liens and encumbrances can both affect the title to a piece of real estate, but they have different implications when it comes to ownership rights. Understanding the differences between liens and encumbrances can help protect your interests if you’re considering purchasing or selling a home.

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A lien is typically associated with debt and can be placed on a property to secure repayment. If a lien is placed, it essentially gives the creditor or lender a legal claim over the property until the debt is paid in full. A lien can also be voluntary; for example, if you voluntarily mortgage your home as collateral for a loan, you would be placing a voluntary lien on your property.

Encumbrances, on the other hand, are not related to debt and do not give someone else ownership rights over your property. An encumbrance is any right in another's property that limits its use or enjoyment. Common examples of encumbrances include easements (the right of one person to use another's property for a specific purpose), a lien (the right of one person to hold a claim on another's property as security for debt repayment or performance of an obligation) and restrictions (limits placed on the use of a property that protect its value).

In summary, liens give someone else ownership rights over your property while encumbrances limit the use or enjoyment of your property. Knowing the difference between liens and encumbrances can help you make informed decisions when it comes to buying or selling real estate. Be sure to check title records to ensure there are no liens or encumbrances that could impact the sale.

 

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CMS Mortgage Solutions Inc.
CMS Mortgage Solutions Inc. Virginia Beach
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