What is an Encumbrance?

An encumbrance is quite simply a legal claim on an estate. The most common types are mortgages, easements, warrants of execution and caveats. On the standard REIQ Contract there is a section in the schedule for the seller to insert the details of any encumbrances which will remain on the property after the property is transferred to the buyer. Consequently the mortgage over the property should never be inserted as this will be released at settlement. If an easement is inserted you should find out the details about the easement before signing the contract.