What encumbrance means
An encumbrance is somebody else's interest attached to the property.
It does not stop the property being sold, but it follows the property into the buyer's hands. A mortgage over land, an unregistered right of way, an unpaid charge, a pending court case, a caveat lodged by a rival claimant. Each of these is an encumbrance, and each reduces what the buyer actually gets.
Which is why the standard promise in a Nigerian deed of assignment is that the property is being sold free from encumbrances.
How it is used
Encumbrances are the thing a property search exists to find. When a lawyer conducts a search at the state lands registry, they are looking for exactly this, meaning registered interests, charges and anything else on the file that would bind a new owner.
Where something is found, the usual outcomes are that the seller clears it before completion, the price is reduced to reflect it, part of the money is held in escrow until it is resolved, or the buyer walks away.
Key features
- Attaches to the property rather than to the individual owner
- Includes mortgages, liens, easements, caveats and pending litigation
- Discoverable through a search at the lands registry, though not all types are registered
- Reduces the value of what the buyer receives
- Usually addressed in the deed by a covenant that the property is free from encumbrances
How this works in Nigeria
The registry search is the main defence, and it is cheap relative to the purchase price. It reveals registered interests such as mortgages and charges.
The harder problem is the unregistered encumbrance, including family claims, undisclosed occupants, and disputes that have not yet reached a court file. This is why physical inspection matters as much as the paper search. Visiting the land, speaking to neighbours and confirming who is actually in occupation catches things no registry will tell you.
Encumbrance vs lien vs caveat
Encumbrance is the umbrella term for any third party interest burdening the property.
A lien is one type, a right to hold or claim against property in respect of a debt.
A caveat is a formal warning entered on a register to stop dealings until a claim is resolved. Finding a caveat on a property file is a red flag, because somebody has taken a deliberate step to say they have an interest in it.
Limits and risks
A registry search finds registered encumbrances, not every possible claim. Occupancy rights, family interests and informal arrangements often leave no paper trail.
The seller's warranty is also only as good as the seller. A promise that the land is free from encumbrances is worth what the seller can pay if it turns out to be untrue, which for an individual who has already spent the proceeds may be nothing.
Worth knowing
Search the registry and visit the land. A significant share of Nigerian property disputes involve people physically living on land the buyer was told was vacant.
Questions people ask
What is an encumbrance on property?
A third party claim or restriction attached to the property, such as a mortgage, a lien, an easement or a pending court case. It follows the property to the new owner, which is why buyers search for it.
How do I find out if land has an encumbrance?
Conduct a search at the state lands registry, which reveals registered interests. Combine that with a physical inspection of the land and enquiries about who is in occupation, because not all encumbrances are registered.
Can I buy land with an encumbrance on it?
You can, but you take it subject to that interest unless it is cleared. Usually the seller is required to discharge it before completion, or part of the price is held back until they do.
What does free from encumbrances mean in a deed?
It is a covenant by the seller that no third party interests burden the property. If the promise turns out to be false, the buyer has a claim against the seller, which is only as valuable as the seller's ability to pay.
Is a tenant an encumbrance?
A tenant in occupation is an interest a buyer needs to know about, because a valid tenancy binds a new owner for its remaining term. Buying a property assuming it is vacant when a tenant holds a subsisting tenancy is a costly surprise.
Documents that use this
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