Encumbrance

Understanding Encumbrance

Encumbrance is a term used to describe a claim made on a real estate property by a third party. This claim doesn't involve ownership of the property, but it does restrict further transfers of the property. It can be applied in various contexts such as mortgages, property tax liens, easements, and so on. Encumbrance can be both financial and non-financial. 

Encumbrance Types

Encumbrance includes financial and non-financial cases. Let's look at different types: 

Deed Restrictions

This is a limitation that restricts the activities or transfer of property, typically involving a homeowners association (HOA). 

Lien

A lien allows the asset owner to borrow a loan for purchasing real estate or assets. The financial institution places this lien on the real estate or asset. 

Encroachment

An encroachment encumbrance allows intrusion of another's property beyond an acceptable limit. 

Easement

An easement involves a nonpossessory right in exchange for a fee, permitting use of neighbor's land. 

Other Encumbrance Uses

Encumbrance is also used in: 

• Management accounting
• Colleges & universities
• Intellectual property

Applying for an Encumbrance Certificate

Form 15 and Form 16 are examples of encumbrance certificates. They can be obtained online on the official website of the respective State's land registration. Here's how to apply: 

1. Visit the website and apply for an Encumbrance Certificate.

2. Enter the required information and save or update the details. 

3. Enter the desired duration of the certificate and calculate the fee.

4. Pay the fee and view the acknowledgement. You can also print a copy of the payment.

5. An officer from the land records department will then inspect and validate the submitted information and proofs. 

6. Once approved, an Encumbrance Certificate will be issued for the specified period.