Your Guide to Debt and BankruptcyYour Guide to Debt and Bankruptcy

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Your Guide to Debt and Bankruptcy

About 10 years ago, I secured my dream job with one of the largest corporations in the country. The job came with a substantial increase in pay and I soon looked for a large house for my family. After living the life I dreamed of, I was let go from my current position. I had a large amount of savings, but the economy took a turn for the worse and savings were quickly drained. I soon became stressed about finances. I could not pay the mortgage and bill collectors started to call my house. I refused to be defeated though, so I met with a bankruptcy attorney instead. I live a much simpler life now with my family, and I want you to know that financial stress does not have to affect you for years. Read my blog to learn about bankruptcy, debt laws, and how to hire an attorney.

How To Deal With An Encumbrance Of A Property

One of the more potentially annoying issues you may have to handle when buying, selling, or transferring real estate is what the law calls an encumbrance. In theory, this covers anything that serves as a potential negative for the acquiring party in the process. Typical encumbrances include things like unpaid mortgages, unclear titles, liens, easements, and court orders. Here is a look at what a real estate law firm might try to do while handling an encumbrance on behalf of a client.

Assessing the Whole Situation

Given there may be multiple encumbrances involving a property, it's wise to get a fuller sense of what's going on. An attorney will typically order a title search to learn about any oddities with a property's title so the client can make fully informed decisions.

If you're acquiring property, you should also ask the folks who currently own it about what representations they can make and how much liability they're willing to accept. Although this won't protect you from misrepresentations, it might provide the basis for legal action down the road if an encumbrance proves to be problematic.

Sellers should also note this is why complete disclosures are critical because they can be accused of fraud in these scenarios if they don't come clean. When in doubt, disclose anything you think might even potentially have a hint of encumbrance.

Seek Arrangements

Another tool is to simply ask specific parties to the encumbrance if they can accommodate you. For example, a bank may be perfectly comfortable with you taking over a mortgage. A neighbor who has a permanent easement might no longer use it and be happy to give it up in exchange for a small amount of compensation. Even government entities dealing with things like pending sheriff's sales may call them off if they're assured you'll be a faithful taxpayer on a property that has cost them money.

Go to Court

When asking politely doesn't work, there is that most American of solutions: petitioning the court for relief. Suppose a property is encumbered because there is an old lien against it. Under some circumstances, such as the lien holder failing to act for decades, you may be able to ask the court to cure the title.

This means a judge would review the case. If your argument that lien has never been meaningfully exercised holds water, the judge may lift the lien and give you a clear title for the property. Remember, governments don't like properties going fallow.