If you’re not sure what is meant by Easements and Encumbrances, it’s a good idea to get your head around them before commencing any property transaction. They’re not the same thing, and they can have a big impact on what you’re hoping to achieve.
It might be necessary for certain parties to enter your property for a specific reason. Their right to do this is known as an Easement. Council or SA Water may need this right to access sewerage or drains. SA Power Networks have the right to access the property at any time to work on their infrastructure if needed, and commonly won’t be registered on the Title as an Easement. It is however mentioned in one of the government searches given with the Form 1. But it could also be your neighbour, who can only access their property by using a designated section of your land.
Most other Easements will only affect a specific portion of the property though, and this is outlined on the Title. If you don’t get permission from the relevant authority to build on an Easement, you may find that your works get removed or damaged if an authorised entity needs to access their infrastructure on your property.
An Encumbrance tells the land-owner of things they can’t do to the property. They often affect a group of properties that a developer has created. Some examples include how long you can leave the block vacant before building on it, what type of building materials you can use, where you can and can’t park, and items that can’t be displayed to the public (such as washing hanging on a front balcony and Foxtel dishes, etc). It may also state whether or not the land can be subdivided in the future.
Certain Encumbrances will be registered on the Title by the very first person who buys that piece of land. They will then stay on the Title for future transfers to new owners. But, there are other types of Encumbrances that need to be discharged off the Title each time a settlement occurs. When this happens, a new version is entered into by the next purchaser. Some developers like every purchaser of the land to enter into a new Encumbrance. This ensures that the new owner knows about the terms and conditions (the developer can then prove it also).
Some Encumbrances are put in place to ensure that the property, and the nearby properties, all remain similar. This helps to keep the value of the area stable. If you’re okay with the Encumbrances, you get the added benefit of knowing that the surrounding area will remain similar to what it was like when you purchased.
Each Encumbrance varies, so you need to read carefully through each one, each time.
Easements and Encumbrances are registered on the Title. So, if you’re considering a property purchase, it’s wise to ask the Agent to disclose a copy. That way you can do your research to see if anything applies to the property you are considering.