Encumbrance
A claim, right, or liability that another party holds against a property, such as a lien, easement, or deed restriction. It limits the owner's use or lowers value but does not block ownership.
Key Takeaways
- An encumbrance is any claim, right, or liability that a party other than the owner holds against a parcel of real property.
- Encumbrances split into two families: financial encumbrances, which are liens, and non-financial encumbrances such as easements, deed restrictions, and encroachments.
- An encumbrance limits use or reduces value, but the owner keeps title and can still sell the property.
- A Washington statutory warranty deed carries a covenant that the property was free from all encumbrances when the deed was delivered (RCW 64.04.030).
What It Means
An encumbrance is any claim, right, or liability that someone other than the owner holds against a parcel of real property. The owner keeps title and can still occupy, refinance, or sell, but part of the bundle of rights now belongs to another party, and that burden normally stays attached to the land when it changes hands.
Encumbrances fall into two families. Financial encumbrances secure money, and those are the liens: a deed of trust, a court judgment, unpaid property taxes, an unpaid contractor's claim. Each of them can be satisfied with a payoff and released. Non-financial encumbrances restrict what can be done with the land rather than collect a debt. An Easement gives a neighbor or a utility the right to cross a defined strip. A deed restriction or a set of recorded covenants can cap building height or bar a home business. An Encroachment is a physical intrusion, such as a fence built three feet over the boundary. The relationship between the two families runs one way only: every Lien is an encumbrance, and most encumbrances are not liens.
How It Works in Washington
In Washington, an encumbrance is created and proved on paper. Every conveyance of real estate or any interest in it, and every contract creating or evidencing an encumbrance upon real estate, must be by deed (RCW 64.04.010). Making the document is only half the job. An unrecorded interest is void against a later purchaser or mortgagee who pays value in good faith and records first (RCW 65.08.070), which is why the recorded chain at the county is treated as the authoritative list, and why a preliminary title report sets out the encumbrances it found as exceptions to coverage.
Encumbrances also decide what a Washington seller can safely promise. A statutory warranty deed carries a covenant that the grantor held an indefeasible estate in fee simple, that the property was then free from all encumbrances, and that the grantor will defend the title against anyone who lawfully claims it (RCW 64.04.030). No seller wants to make that promise blind over a parcel that carries a utility easement and a subdivision covenant, so the transaction handles it in two pieces: the known items are listed as permitted exceptions in the purchase and sale agreement, and Title Insurance backs the buyer against what the search missed.
Example
Devon buys a 1.4-acre lot outside Olympia for $189,000. The preliminary title report lists four exceptions: a recorded utility easement ten feet wide along the north property line, a subdivision covenant limiting outbuildings to 800 square feet, a $2,340 unpaid irrigation district assessment, and the county's right of way along the road frontage. Only one of the four is a lien. The $2,340 assessment secures money, so escrow collects it from the seller at closing and it comes off the title. The other three cannot be paid off at any price. They stay on the land, they pass to Devon, and they are the reason his planned 1,200 square foot shop has to shrink to 800 square feet and move off the north line before the county will issue a permit.
Common Mistakes and Exam Traps
- Every lien is an encumbrance, but most encumbrances are not liens. Easements, deed restrictions, and encroachments burden the land without securing a debt.
- An encumbrance does not defeat ownership. A property loaded with liens and easements can still be sold, and title still passes to the buyer.
- Money does not clear every encumbrance. A lien is released with a payoff, but an easement or a recorded restriction usually needs the holder's written release.
- A title search will not reveal an encroachment. It is a physical intrusion found by a survey, not a document sitting in the recorded chain.
Where you'll learn this
Frequently Asked Questions
What is the difference between an encumbrance and a lien?
A lien is one kind of encumbrance, the kind that secures money and can be cleared by paying the debt. Encumbrance is the wider category and also covers easements, deed restrictions, and encroachments.
Does an encumbrance stop a property from being sold?
No. Ownership still transfers. The encumbrance transfers with it, so the buyer takes the property subject to whatever was recorded against it.
Where does a buyer find out which encumbrances exist?
The preliminary title report lists the recorded encumbrances as exceptions to coverage. A survey is what catches physical problems such as an encroaching fence or driveway, because those are not in the record.