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Selling Houses Australia

What's an encumbrance? It could halt your renovation plans

Have you heard the term "encumbrance"? If not, you're not alone.

An encumbrance is a legal interest held by someone other than the property owner.

Don't worry, it's not too confusing. In fact, it's not a lot different to a body corporate or a strata.

It might be a financial interest, if money is owed on the property like a lien, or a non-financial interest, like an easement.

In its simplest form, an encumbrance is a set of rules and regulations that a homeowner must follow when maintaining the exterior of their property.

If you’re looking to buy in a waterfront development or a heritage property there’s a good chance there’s an encumbrance.

So do your homework and read the certificate of title.

An encumbrance prevents a property owner from having full "unencumbered" control of their property. So if you want to make any changes, you have to check the rules.

At the Hindmarsh Island property, there were restrictions on what could and couldn't be done to the front and the back of the house, and to the jetty and marina area.

Landscaping needed to include native plants and only use organic fertilisers, driveways had to be a certain width, rooves couldn't be flat and jetties had to be maintained to a certain standard.

Despite how it sounds, an encumbrance is not necessarily a burden. I myself am an encumbrancee, but it's part and parcel of where I choose to live.

So if there's a development or a heritage house that you like, you may have the encumbrance to thank.

 
 

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