Encumbrance

An encumbrance is any registered claim, right, or interest that affects a property and stays attached to the land rather than to the owner. Encumbrances are recorded on title, and they can limit how a property is used, sold, or pledged as mortgage security.

In Canada, land is registered under a provincial land titles or registry system, so an encumbrance is only as effective as the record behind it. A buyer's lawyer or notary typically orders a title search before closing to confirm what is registered and what must be cleared.

Common types of encumbrances

Mortgage charge — the lender's registered security against the property.
Lien — a claim for unpaid work, materials, taxes, or other debts, including construction liens from trades.
Easement — a right for someone else to cross or use part of the land, such as a utility corridor or shared driveway.
Restrictive covenant — a registered promise limiting use, such as a ban on certain outbuildings or commercial activity.
Caveat — a notice that someone claims an interest in the land and that title should not be dealt with until the claim is resolved.

Why it matters to a mortgage borrower

A lender will not advance funds unless its mortgage can hold first priority. If a lien, caveat, or existing charge ranks ahead of the new mortgage, the lender may require it to be paid out and discharged, or it may require subordination so the new mortgage ranks first. Easements and covenants usually stay on title because they run with the land, but they can still affect value and future renovations or resale. Encumbrances also matter on refinance, where a registered judgment or second charge reduces the equity a homeowner can access.

Example at closing

A buyer agrees to purchase a home where the seller has an unpaid contractor's lien registered. At closing, the seller's lawyer pays the lien from the sale proceeds and registers a discharge so the buyer takes title free of it. If the seller wanted to leave the debt registered, the buyer's lender would likely decline to fund.

Many encumbrances are routine and simply remain on title; others must be removed before completion. A title search and title insurance are the usual tools for identifying them, and the treatment depends on the type of encumbrance and the lender's requirements.

Frequently asked questions

Can I buy a house with an encumbrance on the title?

Often yes, if the encumbrance is compatible with the sale and the lender's requirements. Routine easements or covenants may simply remain on title. A lien, caveat, or prior charge usually must be paid out, discharged, or subordinated before the new mortgage can fund. Your lawyer or notary reviews the title search and confirms what must be cleared before closing.

Does an encumbrance stop me from getting a mortgage?

Not automatically. Lenders focus on whether their mortgage will hold first priority and whether the property is readily marketable. An easement or utility right-of-way may have no effect on approval, while an unresolved lien or judgment usually blocks funding until it is cleared or subordinated. Requirements vary by lender, so confirm before you waive conditions.

How do I find out if a property has encumbrances?

A title search at the provincial land registry shows registered claims, charges, liens, and caveats on the property. Buyers typically receive this through their lawyer or notary as part of the purchase, and mortgage lenders also review title before advancing funds. Title insurance may cover certain undiscovered or fraudulent claims, subject to the policy terms.