The terms Encumbrance and Lien are often used interchangeably, but they are not the same thing.
In simple terms, a Lien is a type of Encumbrance. So, all Liens are Encumbrances, but not all Encumbrances are Liens.
An Encumbrance is a broad term that means a claim against someone’s property. It’s a term often used in real estate, but Encumbrances can be against other types of personal property like cars or boats. The Encumbrance can be financial, such as money owed, like a mortgage, or it can also be non-financial, such as an easement or right-of-way.
Lien is a narrower term that refers to a special type of Encumbrance. For example, with regards to property, we often hear of a tax Lien. A Lien is placed against the property of someone who has not paid Federal, Provincial or Municipal Government taxes.
A Lien could also be placed under the Strata Property Act. A Lien is placed on an owner’s property for non-payment of strata fees or fines.
A BUILDER’S LIEN
The Builder’s Lien is registered against the title of the property by a builder or tradesman if the builder believes you owe him or her money for work done on the property. It is not removed until the builder (creditor) is satisfied that the debt has been paid.
Some Encumbrances and/or Liens can interfere with the transfer of property in a purchase or sale of real estate. The Encumbrance or Lien may need to be satisfied before the title may be transferred. In other cases, the Encumbrance may stay on the title during and after the title is transferred.
Conveyance is the procedure followed when the title of property changes from one owner or group of owners to another owner following a purchase or sale.
When you use a NOTARY PUBLIC for a real estate transaction, one of the first things that the Notary does is research whether there are any kinds of Encumbrances or Liens on the title of the property. The Notary can help you to determine if an Encumbrance would prevent the transfer of title, or how to satisfy an Encumbrance so that the transaction can move ahead.
If you are in the process of doing a real estate transaction, please feel free to contact us, as we are experts on Encumbrances and Liens.
Based in White Rock, BC, Goddyn Notary Legal Services works with individuals, businesses and families to navigate notarial and legal matters since 1984. If you have any questions about this article or would like to make an appointment with us, please call (604) 531-2611 or email us at firstname.lastname@example.org.