What is an encumbrance?

An “encumbrance” is a formal obligation on the land, with the most common type being a “mortgage”.

As well as describing the land, a full copy of the title will identify any encumbrances, caveats and notices. Encumbrances are identified on the title (register search statement) under the header “Encumbrances, Caveats and Notices”.

The actual details of an encumbrance are usually provided in a separate document (instrument) associated with the title. Sometimes encumbrances are also marked on the title diagram or plan, such as easements or building envelopes.

Aside from mortgages, the following encumbrances can potentially limit or even prevent certain types of proposals:

• A restrictive covenant is a written agreement between owners of land restricting the use or development of the land for the benefit of others, (eg. a limit of one dwelling or limits on types of building materials to be used).
• A section 173 agreement is a contract between an owner of the land and the council which sets out limitations on the use or development of the land.
• An easement gives rights to other parties to use the land or provide for services or access on, under or above the surface of the land.
• A building envelope defines the development boundaries for the land.

Note, if the land is affected by a restrictive covenant,  a council can not grant a permit that authorises anything that would result in a breach of a  registered restrictive covenant (sections 61(4) and 62 of the Planning and Environment Act 1987).

 Derived from How to complete the Planning Permit Application Form by the State of Victoria