When dealing with property transactions, ensuring a clear title is a top priority. 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.
The Importance of Clearing Titles
The primary reason for seeking a cancellation of encumbrance is to ensure the property is "free and clear." Unresolved encumbrances can stall real estate deals and prevent owners from accessing the full equity of their homes.
What Needs to be Cancelled?
Before you can initiate a cancellation, you must identify what type of burden exists. You will likely encounter one of the following:
Loans or tax debts that have been registered against the deed.
Rights of Way: Rights granted to third parties to use a portion of the land, such as utility companies.
Restrictive Covenants: Rules that limit how the property can be used or cancellation of encumbrance developed.
Steps to a Clean Title
Clearing your title involves several key legal and administrative phases.
Conduct a Search: First, perform a thorough title search cancellation of encumbrance to identify all existing encumbrances.
If the encumbrance is a lien cancellation of encumbrance or mortgage, the underlying debt must be paid in full.
The cancellation of encumbrance creditor must provide a "Release of Lien" or "Discharge of Mortgage" document.
Take the release document to the local land registry or recorder's office.
What to Watch Out For
The cancellation of encumbrance is not always a simple task. For instance, if a lienholder has gone out of business or a private lender cannot be found, you may need to file a "Quiet Title" action in court.
The Bottom Line
Ultimately, clearing your title ensures that your most valuable asset remains marketable. Whether you are planning to cancellation of encumbrance sell soon or simply want to ensure your records are accurate, addressing encumbrances promptly is always the best strategy.