BUYERS AND SELLERS:
IS THAT PROPERTY FREE
AND CLEAR?
As a home buyer, do you know if the property you’re
considering is free and clear of things that might
interfere with your enjoyment or ownership. As a seller,
did you know that these same things can interfere with
the sale? What are they and how can you resolve them?
There are three major items that affect the enjoyment
and ownership of a property:
Encumbrances
What is it: An encumbrance is a
recorded claim or lien against the property. A
typical lien might be the result of nonpayment for a
contractor's work. To enforce payment, the
contractor can record a lien against the property.
This is serious because the lien encumbers title to
the property. In other words, until the debt is paid
and the lien is removed, the property cannot be sold
as free and clear.
How to avoid and resolve: If you
are the buyer, your real estate lawyer will do a
search for claims or liens. If any are found, the
lawyer can handle their removal. As a seller, you
should know if you have any unresolved disputes that
might have resulted in a lien against your property.
If you suspect this is possible, a call to your
local land registry office can tell you if there are
any liens. It is wise to resolve them before listing
your home for sale.
Easements
What is it: An easement is a
right of access to a property granted to a party who
is not the owner. A typical easement is one granted
to a telephone company so it may service an
underground cable that crosses the property.
Easements are usually specified by location (for
example: ten feet along the south property line).
They do not interfere with the sale. However, they
can interfere with the enjoyment of the property by
limiting what you can do with the affected portion.
If the easement is for underground cables or pipes,
you might be forbidden to build anything or plant
trees on that part of the yard. There is also the
possibility that one day, the party to which the
easement was granted will need to dig up that cable
or pipe. For these reasons, easements are considered
to be undesirable. Properties with easements tend to
attract fewer buyers and sell for slightly less than
similar properties without easements.
How to avoid or resolve: In most
jurisdictions, the law requires that all easements
to a property for sale be revealed in the listing
and be recorded on the survey. Even so, some
listings fail to mention easements and the survey
might be out of date. As a buyer, always ask if
there are easements. Even if the seller claims there
are none, make it a condition of the sale. That way,
you can let your lawyer search the deed. If an
easement turns up, you can terminate the deal or, if
you decide to accept the easement, negotiate the
price down.
As a seller, you should reveal any easements on
your property. If you believe that an easement will
deter buyers or reduce your selling price, you can
try to get them removed. Sometimes, the party to
whom the easement was originally granted, no longer
needs access. That telephone company, for example,
might have abandoned the old underground cable
behind your house and is now using a new one that
runs under the street. If this is the case, you can
often have the easement removed. This is called a
quit claim. It usually involves some minor
administrative fees to process the quit claim and
have the easement removed from your deed. If this
will help your property sell, it is worth doing.
Encroachments
What is it: An encroachment is
an unauthorized infringement on the property
boundaries. A typical encroachment might be a
neighbor’s fence or shed that crosses the property
line. Most encroachments are slight and unintended
and therefore, unnoticed until a survey is done.
Minor encroachments - such as the fence or hedge
that is slightly over the line - are quite common
and should not interfere with your enjoyment of the
property. A major encroachment, however - such as a
neighbor’s garden shed that is mostly or entirely on
the property, should be removed.
How to avoid and resolve: As a
condition of the sale, buyers can ask the seller to
provide an updated survey. In fact, in some
jurisdictions, sellers must provide a new survey
when they sell a property. The survey should reveal
any encroachments. If a neighbor has encroached on
the property - whether intentionally or not - he or
she must remove the infringing item
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