5 Types of Encumbrances Homeowners Should Know About

Purchasing a new home has many moving parts. There is often a mortgage involved in addition to the requirements of banks, lawyers, and real estate agents. All of this can easily confuse even seasoned home buyers. For example, one of the basic requirements for obtaining title to a purchaser’s new home is an up-to-date copy of the property’s Certificate of Title. This is a document issued by the Alberta Land Titles Office, which lists all of the current instruments attached to that parcel of land. Instruments can include a range of different charges, liens, or other legal “promises” that run with the land when it changes ownership. Generally, these promises fall under the umbrella term of “encumbrances.”

Below are five examples of some of the most common ways title to a property can be encumbered:

  1. Homeowners’ Association Fees
    These are common encumbrances on title that require the homeowner to pay a set fee towards maintaining community amenities that are not the responsibility of the City. These can include signage, parks, ponds and lakes, and boulevard landscaping. These are common in communities with shared amenities, such as lakes, golf courses, or community centers. These fees must be paid by the property owner, and cannot be opted-out of just because an owner does not use the shared amenity.
  2. Restrictive Covenants
    These are restrictions like building schemes that operate outside of — and in addition to — municipal zoning bylaws. Restrictive covenants are designed by developers to maintain the value of the properties located in a given subdivision by ensuring consistency in (for example) the type or colour of roof, the exterior wall material or fences.
  3. Encroachment Agreements
    Encroachment agreements are for circumstances like that shed that is just barely inches over your property line from your neighbour’s lot. Alternately, an encroachment agreement may also be your right to walk on your neighbour’s side of the fence to trim the trees on your property that border your neighbour’s property line. Encroachment agreements can come in a variety of shapes and sizes. Mostly, they are used between neighbours to ensure that if Homeowner A completes home renovations with the permission of Homeowner B (say… for a slightly larger than normal deck) when Homeowner B sells their home and moves away, the new buyer cannot require Homeowner A to tear down what’s already been built. An up-to-date Real Property Report survey should indicate any encroachment agreements on your property.
  4. Easements
    This is one of the most common encumbrances on a piece of land, and is generally used by utility companies to check and maintain electrical, gas, or water supply lines into residential homes. Homes are regularly purchased and sold with easements for utility companies, but it is always prudent to have your lawyer check to make sure that you are aware of the nature of any and all easements on your property before you closing date.
  5. (Builders’) Liens
    Liens can also come in a variety of shapes and sizes, but builders’ liens are somewhat unique. When a tradesperson or a company enters a home to complete construction or renovations, Alberta legislation has provided those builders with a way to protect the value of their work. If a homeowner fails to pay for the workmanship agreed to, a tradesperson has 45 days from the completion of that work in which to register a builders’ lien. The lien encumbers the property, and is visible on the Certificate of Title.

If you, a family member, or a friend are looking for a reliable lawyer to help you through a purchase or sale, contact a member of our legal team at DBH Law. We look forward to the opportunity to treat the purchase of your residence with the same professionalism and efficiency that we offer to commercial purchases and sales each and every day.