For property owners and buyers alike, the concept of a clear title is paramount. One of the most critical steps in achieving this is the cancellation of encumbrance. By definition, an encumbrance is any legal interest that someone other than the owner has in the land.
Why You Should Remove Encumbrances
Clearing these claims is necessary to provide peace of mind to future buyers and lenders. If these legal marks remain, selling the asset or obtaining a loan becomes a significant challenge.
What Needs to be Cancelled?
Understanding the variety of encumbrances is the first step toward removal. Common examples include:
Financial Claims: Unpaid debts or home loans that use the property as collateral.
Rights of Way: Legal permissions for neighbors or cancellation of encumbrance utilities to access specific areas.
Property Restrictions: Guidelines often set by HOAs that dictate architectural or usage standards.
The Step-by-Step Process for Cancellation
The procedure for the cancellation of encumbrance usually follows a specific legal path.
Title Search: Start by ordering a title report to see exactly what is recorded against the property.
You must settle any financial disputes or balances that led to the claim in the first place.
Get a Discharge: The creditor must provide a "Release of Lien" or cancellation of encumbrance "Discharge of Mortgage" document.
Official Recording: The final step is filing the cancellation with the county or municipal clerk to update public cancellation of encumbrance records.
What to Watch Out For
While the process seems straightforward, complications can arise. Sometimes, historical claims from decades ago require a cancellation of encumbrance judge's intervention to be officially removed.
The Bottom Line
Ultimately, clearing your title ensures that your most cancellation of encumbrance valuable asset remains marketable. Do not wait until you are in the middle of a sale to check for these legal hurdles.