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Why do I need attorneys to identify encumbrances?

When you are gearing up to buy a new home or property, the last thing you want is for unexpected complications to derail the deal. One potential hiccup in the process is encumbrances on the property. These encumbrances can cloud the title and create legal issues down the road. Fortunately, attorneys play a crucial role in ensuring a smooth real estate transaction by addressing encumbrances before closing the deal.

What are encumbrances?

Encumbrances refer to legal claims or restrictions placed on a property or asset. These can include mortgages, liens, easements and property taxes. These encumbrances can affect the property’s value and the owner’s ability to use it freely.

Why do encumbrances matter?

Encumbrances matter because they affect property ownership and financial transactions. For instance, a mortgage encumbrance means the property serves as collateral for a loan. The lender can foreclose on the property if there is an unpaid loan.

Conversely, easement grants specific rights to others, like access to your land for utility maintenance. If there are existing easements on your property, it may hinder any plans to change the property’s layout.

Property taxes are a common encumbrance used to fund local services. If there are existing property taxes on a property you are buying, and you do not pay them, you may face penalties.

How can an attorney help identify encumbrances?

Before closing a real estate purchase, an attorney’s first task is identifying any property encumbrances. They may delve into public records to check for any outstanding debts or legal claims against the property.

Once identified, they work to resolve encumbrances to ensure a clean title transfer. For instance, if there is a mortgage on the property, the attorney will coordinate with the lender to ensure it is paid off before closing. If there is a dispute over an easement, the attorney can negotiate with the involved parties to find a mutually acceptable solution.

In cases where encumbrances are legitimate but need clarification or modification, attorneys can draft legal documents that can protect your interests as a buyer and ensure a smooth transaction.

Understanding and investigating encumbrances are critical when dealing with property. They can affect property value, ownership rights and financial transactions. Although it is not required, being guided by an attorney and their meticulous approach can ensure that you can confidently proceed with your real estate transaction.



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