https :// en . wikipedia . org / wiki / Recording _ ( real _ estate ) The lending industry sometimes uses the terms lien and encumbrance interchangeably . However , a lien is generally a recorded monetary charge against a property . All liens are encumbrances , but not all encumbrances are liens . They both create claims against the property that impact the ownership rights , processionary interest , and transferability . All three restrict free use until the claim is lifted , reconveyed , or modified .
Some liens and encumbrances may remain on the title of the property . Property ownership may be conveyed to another party by a negotiated purchase contract , “ subject to ” certain items remaining on the title . A new owner may or may not take steps to have some of the encumbrances removed .
Generally , lenders will not accept irrational or illegal restrictions . Some restrictions cloud the title and may void as a matter of law . I once witnessed a deed that had a condition that the property could not be sold to a person of a certain ethnic group . I also read a deed restricting future property owners from selling or serving alcohol . Fortunately , I did not make a loan or purchase that property .
Some encumbrances negatively affect
free use , desirability , and marketability . In some cases , the adverse effects might be significant enough that the title cannot be conveyed legally or transferred to another party .
Dozens of issues may create conflicts , such as disagreements in limited partnership ownership rights , claims of processionary rights , and many other problems . The purchasing party may be unable to convince a title insurer to provide a title policy on the conveyance . In some cases , a court process called a declaratory relief action may be required so that the court can mediate and decide on the validity of the contested claim . In a court process , never expect a rational outcome . Judges are ideologically driven and do not always follow the law .
4 ) How does a lien or encumbrance become attached to a property ?
The United States has a standardized government records system called the municipal recorder ' s office . Whether in a city or county municipality , the recorder ' s office maintains public records and documents relating to real estate ownership and other public notices . Their job includes recording and preserving historical records and making them available to the public .
Modern technology has made the recording process and public records management more convenient .
5 ) What is the purpose of recording documents ?
The purpose is to convey constructive notice to the public of recording documents and instruments that affect the chain of title . The objective is to access public records and provide a traceable chain of title documents attached to real properties . Interested parties may trace recorded documents for many years to determine ownership , liens , encumbrances , and whether they were voluntary or involuntary . Recording statutes permit ( not require ) the recording of instruments that historically affect the chain of title to or possession of the real property .
Suppose a person fails to record an instrument that should have been recorded . Even though a recorded deed is not essential for a valid transfer , an unrecorded deed leaves the property vulnerable to other events and documents that may be recorded . Ignorance could cause another unrelated recorded document to take a senior lien or encumbrance position . The penalty is that the person may have difficulty with any subsequent conveyance action desired to prove ownership or status of the possessory interest .
https :// www . boe . ca . gov / proptaxes / pdf / O wnership _ DeedRecording . pdf
https :// www . investopedia . com / ask / answer s / 100214 / whatrealestate documentsneedberecorded . asp
https :// en . wikipedia . org / wiki / Recording _ ( real _ estate )
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