Buying property involves more than checking its price, condition and location. Existing claims or restrictions can affect whether you receive clear title, how you may use the property and what obligations remain after ownership changes.
These interests are known as encumbrances. Understanding common property encumbrances in Florida can help you identify potential issues before completing a Florida real estate transaction and taking ownership.
1. Property liens
A lien is a claim against real property connected to a debt or financial obligation. Mortgage debt, unpaid property taxes, contractor claims, judgments and unpaid association assessments can potentially result in liens. Some liens may need to be satisfied or otherwise resolved before clear title can transfer to a buyer.
2. Easements
An easement gives another person or entity the right to use part of a property for a particular purpose without transferring ownership.
For example, a utility company may have access rights over part of the land. A neighboring property owner might also have an easement allowing access across the property. These rights can affect how an owner uses certain areas.
3. Encroachments
An encroachment occurs when a structure or improvement extends across a property boundary. Fences, sheds, walls and other improvements can create this problem.
A property survey may reveal an encroachment before closing. Depending on the circumstances, the issue can create disagreements over boundaries, interfere with title matters or require resolution between neighboring owners.
4. Restrictive covenants
Restrictive covenants place limitations on how property can be used. They are commonly associated with planned communities, condominium associations and homeowners associations.
Restrictions may regulate construction, architectural changes, residential use or rentals. Because these limitations can continue after a sale, reviewing applicable restrictions can help buyers understand what they can and cannot do with the property.
5. Existing leases
Buying a property does not necessarily mean an existing tenant must immediately leave. An active lease can give a tenant rights to occupy the property for an agreed period.
This can affect buyers who intend to move into the property, renovate it or rent it to someone else. Reviewing existing lease terms before purchasing can reveal obligations that may continue after ownership changes.
Before buying property, consider seeking legal guidance to understand any recorded claims, restrictions or occupancy rights that could affect your purchase.