Unencumbered property

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Unencumbered property
See also

An unencumbered property refers to real estate free of loans and pledges and is not subject to any claims by creditors[1].

The term unencumbered also applies to real estate that has been fully repaid and the owner no longer has restrictions on his ownership and has obtained full rights to the property[2]:

  1. Right of use
  2. Right of exclusion
  3. Right of transfer

In practice, an unencumbered property means that there are no debts on it, therefore the creditors have no claims for it[3].

To better understand what an unloaded real estate is, it is important to explain what burdens are not subject[4]:

financial charges:

  • Mortgage loans are a burden when the property owner sets it as collateral for the loan.
  • Tax pledges are imposed by tax institutions if the owner does not comply with the obligation to pay property taxes.
  • Contractor's pledges, when the property owner commissions the repair or repair contract and will not pay for it, then the contractor has the right to impose a pledge on the property

non-financial charges:

  • Easements when third parties have the right to use the property without being the legal owner.

Sale of unencumbered property

The sale of real estate with zero indebtedness is definitely easier than the real estate burdened. The property is free from encumbrances, has no debts attached to it and is the full property of the person who owns it.

In the situation where the owner would like to sell his property, he sets the amount for which he sells his property, and then the buyer approves the sale with the buyer.

In the case of a chargeable property, the sale is more complicated and takes longer, because the sale must also be approved by any entity that has any claim to the property. If the house was the subject of collateral for the loan, then the bank may impose requirements as to the sale price to cover the amount of the debt incurred, thereby effectively paying it off as part of the sale of the property [5].


  1. Brown R.J. 2004
  2. Austin J.J., Louziotis D. Jr. 1996
  3. Lux, N. 2012
  4. Schneider P.J., Pinheiro B.M. 2016
  5. Snajberg O. 2015


Author: Izabela Wilczyńska