When buying a property, you must review the encumbrances that it may have registered. The following article will explain what is an encumbrance in real estate. Also, we will include the most common types of encumbrance that affect the property and some other helpful information about this type of registration.
What is an encumbrance in real estate?
An encumbrance is a limitation, burden or obligation imposed on the movable or immovable property to guarantee an obligation. An encumbrance limits the domain of an asset since it constitutes a right in favor of a third party over that asset.
For example, an owner of a real estate may have his property with a usufruct encumbrance in favor of another person. As long as that encumbrance remains registered in the property, the owner will not enjoy the property, as we will see later. Read our Tips for selling a home
The encumbrance of a property is registered in the Real Estate Registrar using a public deed signed before a notary public.
What are the most common types of encumbrance on real property?
Here we explain the most common encumbrance that is recorded on real property.
Mortgages
The mortgage is a way of guaranteeing the fulfillment of an obligation. For example, the payment of a mortgage loan, constituting an asset of the debtor or a third party the right to auction it. So, the creditor is considered paid in the case that the debtor breaches his obligation.
Usufruct
To better understand this definition, let us first clarify that a fungible thing is consumed with its use. For example, money. On the other hand, real estate is non-expendable since it is not consumed with its use.
The definition established by law points to the idea of “enjoying something.” In this context, this concept aims to appropriate the natural and civil fruits one thing. Natural fruits are those given by nature, helped or not by the human industry, while civil uses correspond to prices, pensions, or rental fees.
Use rights and room
Although the name and definition of the rights imposed by this type of tax imply that there are two rights. The use and the habitation. It is a single right: the fundamental right of use, which simply takes the name of the right of habitation, is carried out on the house. This does not mean that if it is another type of property, that right cannot be exercised.
The rights imposed by this encumbrance may appear similar to the rights of usufruct. In effect, the usufruct also includes the right to use and make use of an asset. For its part, the right of use and habitation is limited, among other things, because it cannot be assigned or leased, unlike what the right of usufruct empowers.
Easements
The law defines servant property as the one that suffers the encumbrance, exercising passive easement. The property that receives the utility of the easement is called the dominant property, exercising an active easement.
In practical terms, this levy imposes restrictions in terms of space for a property. For example, a property may be imposed a transit easement to access a public road for an adjoining property (the dominant property). It would not otherwise have access to said road. With this, the servant property will not be able to occupy the space destined for the imposed easement (otherwise, it would be blocking access).
Why is it essential to check encumbrance?
As a real estate investor, you must know the encumbrances that a name has registered, as they can seriously affect your investment plans.
For example, suppose you are considering investing in a residential property to rent it out. The property has a usufruct encumbrance. In that case, you will not appropriate the income it generates. Or, if you have a right of use encumbrance, you will not even be able to inhabit the property.
In another scenario, if you are thinking of investing in a property to develop a real estate project. The easements have registered may restrict the architectural planning of the project.
How to know if a property has encumbrance?
As we mentioned earlier, an encumbrance on a property is registered with the Real Estate Registrar. This information is public and therefore, anyone can consult the encumbrance of any real estate.
To do so, a Certificate of Mortgages, Encumbrances and Prohibitions (GP) must be obtained from the Real Estate Registrar. It contains information on the encumbrances that affect real estate to its prohibitions, such as encumbrance and bank impediments.
For Santiago, this document takes approximately 4 days to obtain and has a current cost of 6,600 pesos. To consult it, you must know the page, number and year of registration of the property in the conservatory. You can alternatively obtain these data by knowing the surnames of the current owner. The commune where the property is located and the year in which the property was acquired.
Tags: encumbrance, real estate
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