How do I know if a property is free of encumbrances and debts?

If you are thinking of buying a property, one of the first steps you should take is to check if it is free from encumbrances and onerous liabilities. If not, you may become vicariously liable for such loans secured by real estate, among other things. You will also be liable for some of the outstanding property tax or utility bills if the previous owner did not pay them on time. To avoid this, make a note of how to find out if a property is free of encumbrances, how to obtain a certificate of freedom from encumbrances, and the price of this document and the information that can be obtained from it.

What does "freedom from encumbrances" mean?

If you are wondering what it means for a property to be free and clear of encumbrances, the answer is that it means that there are no obligations attached to the property. The most common obligations associated with real estate are debts owed to a homeowner's association, unpaid property tax levies... But also mortgages, uses, encumbrances,...

Thus, an encumbrance-free property is one that does not have any outstanding obligations that could negatively affect your investment. This will allow you to rest easy and make sure that you know the final price of the property, without any possible subsequent surprises.

What does it mean to purchase real estate without freedom from encumbrances?

It is possible to purchase a property with outstanding liabilities, although it is advisable to assess these and 'write them off' when negotiating the price of the property, also taking into account the real risk of you becoming liable for their payment in the future. Ultimately, as a buyer, it is best to make sure that the property you are about to purchase is free of encumbrances and debts, as otherwise you run the risk of becoming their payer. To do this, you need to request various documents. For example, a simplified extract from the Registrar's Office or a certificate of payment to the property manager (service charges) and the relevant municipality (property tax).

How do I know if a property is free of encumbrances?

The easiest way to check whether a property is free of encumbrances is to request a simplified extract from the property register at the Property Registry or online at the website of the Registrar's Office with the property details. This document contains all the information about a particular property: Identification, ownership, rights, characteristics, encumbrances...

By requesting a simplified extract from the registry, you will learn about the ownership and characteristics of the home. The document will show us if it is in a condition that the seller has informed us about mortgages, arrests or tax liabilities.

We must then make sure that this obligation of a caring neighbor is fulfilled and that the payments in the neighboring house are regularly made.

Next, it is advisable to find out if he or she pays utility taxes such as property taxes (IBI). Debts require payment from the owner, so the seller should move the home to us without such debts. To verify this, we can ask for receipts or documentation of payment.

Another way to find out if a property is free of encumbrances is to request a registration certificate: the difference between this document and the simplified extract is that the latter is informative only and serves to ensure that the person requesting it knows the basic content of the Registry, only regarding the owners, rights and encumbrances in force at the time of the request. Thus, the simplified extract cannot provide information about old owners or rights that have already been canceled.

Certification, however, is a public document signed by the registrar, which certifies the contents of the register and holds authority over everyone. Thus, it can confirm the information related to the land plot in the register, including both current and past rights, whether active or extinguished.

What types of encumbrances exist on residential real estate?

Here are some types of encumbrances you might encounter: mortgages, enforcement proceedings related to mortgage loans, tax lien notices, warning annotations about enforcement, restrictions on disposal, use, encumbrance, letters from homeowners' associations, property tax, and deliveries.

In the case of the last three types of encumbrances (partnership, IBI, and supplies), it may happen that they are not listed in the simplified extract. Therefore, it is important to obtain information through other means to verify whether such encumbrances are absent.

How to request a certificate of freedom from encumbrances?

You can request both a simplified extract and certification from the relevant land registry in paper form or through the website of the Registrar's Chamber.

A simplified extract and a certificate of freedom from encumbrances on property are available at an affordable price: many people wonder how to find out if real estate is free from encumbrances for free, but in reality, if the agency or individual or legal entity involved in the sale agreement does not offer you these documents for free (which is quite common), you will have to pay for them. It is important to ensure the information is up to date.

The good news is that these documents are quite inexpensive and can also be obtained online, making it very easy to get any of them. You just need to go to the interactive services section and request the desired document: you can pay with a credit card and receive it via email.

The cost of a simplified extract currently amounts to 9.02 euros; in the case of certification, the cost will depend on the rates that the registry must apply for issuing the requested certification.

I graduated in journalism and law and work as a copywriting specialist in legal and economic content. I write for Idealista news about the legal aspects of real estate. Throughout my more than 10 years of work in this field, my main principle has always been to focus on popularization, trying to make legal language easier to understand. I'm glad to be part of this team!