Encumbrance Check: Liens, Mortgages, and Adverse Claims
Learn how to check for encumbrances annotated on a title. Understand the different types of liens, mortgages, adverse claims, lis pendens, and their impact on property transactions.
Types of Encumbrances on Registered Land
“Every registered owner receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted on said certificate, and any of the following encumbrances which may be subsisting, namely: (a) Liens, claims, or rights arising or existing under the laws and Constitution of the Philippines which are not by law required to appear of record in the Registry of Deeds; (b) Unpaid real estate taxes levied and assessed within two years immediately preceding the acquisition of any right over the land.”
What This Means
Encumbrances are claims or restrictions that affect a property's transferability or value. They appear as annotations on the back of the title. Common types include: real estate mortgages (securing a loan), adverse claims (third-party ownership claims), lis pendens (pending lawsuit), easements (right of way), usufruct, and lease annotations. Section 44 also recognizes "statutory liens" that bind even without annotation. most importantly, unpaid real property taxes for the last 2 years. A buyer takes the property subject to all annotated encumbrances unless they are cancelled.
- Mortgage: property secures a loan; must be released before clean transfer
- Adverse claim: third party claims ownership or interest; valid for 30 days unless extended by court
- Lis pendens: notice of pending lawsuit involving the property
- Easement: right of way or other servitude on the property
- Statutory liens (unpaid RPT for 2 years) bind even without annotation
Real-World Scenario
A TCT has the following annotations on its back: (1) Real Estate Mortgage in favor of BDO dated 2020, (2) an Adverse Claim by a certain "Pedro Santos" filed in 2023, and (3) a Notice of Lis Pendens from a 2024 court case. The seller says the mortgage is almost paid off and the adverse claim is "baseless."
Should a buyer proceed with this purchase?
How to Obtain an Encumbrance Certificate
“Any person may request the Register of Deeds for a certified true copy of any certificate of title or any document or instrument filed and registered, upon payment of the prescribed fees. The Register of Deeds shall, upon request, issue a certification as to the status of any property in the Registry, including any encumbrances, liens, or annotations thereon.”
What This Means
To check encumbrances, request a "Certification of Encumbrance" or "Certificate of No Lien" from the Registry of Deeds. This official document lists ALL current annotations on the title as of the date of issuance. Do NOT rely solely on the owner's duplicate title. the seller may have an old copy that doesn't show recent annotations. The original title at the Registry will always have the most current information. Some annotations (like adverse claims) have expiry periods but remain noted until formally cancelled.
- Request "Certification of Encumbrance" from the Registry of Deeds
- Shows ALL annotations as of the date issued. more current than owner's duplicate
- Owner's duplicate may NOT show recent annotations (mortgages, claims filed after issuance)
- Certificate valid only as of date issued. new encumbrances can be filed after
- Request close to your intended closing date for the most current status
Real-World Scenario
Buyer Tan requested a Certification of Encumbrance on January 15, which showed the title was clean. no encumbrances. The closing is scheduled for March 15 (two months later). Buyer Tan assumes the property is still clean.
Is it safe to proceed without rechecking?
Cancelling Encumbrances Before Sale
“Any annotation on the certificate of title may be cancelled upon presentation of: (a) the instrument of release or cancellation; (b) an order of the court directing the cancellation of the annotation; or (c) by lapse of time as provided by law or by the annotation itself. The entry of a cancellation shall be made on the certificate of title and on the owner's duplicate by the Register of Deeds.”
What This Means
Before a property can be transferred cleanly, all encumbrances should be cancelled from the title. The method depends on the type: mortgages are cancelled by filing a Deed of Release/Cancellation from the mortgagee-bank after full payment. Adverse claims expire after 30 days unless extended by court order. Lis pendens is cancelled when the case is dismissed or resolved. The Release/Cancellation document must be registered with the Registry of Deeds to update the title. Brokers should ensure all cancellations are reflected on BOTH the original title and the owner's duplicate before closing.
- Mortgage: file Deed of Release/Cancellation from the bank after full loan payment
- Adverse claim: expires in 30 days from filing unless court extends it
- Lis pendens: cancelled by court order upon case resolution
- Easement: may be permanent (legal easement) or voluntary (can be released)
- Register the cancellation document to update both original and owner's duplicate
Real-World Scenario
Seller Mendoza has a property with a mortgage in favor of Metrobank. She has fully paid the loan 6 months ago but never processed the cancellation of the mortgage annotation. She now wants to sell the property to Buyer Lim.
What must Seller Mendoza do before the sale can proceed?
Frequently Asked Questions
What is the difference between an adverse claim and a lis pendens?
An adverse claim is a unilateral claim of interest by a third party. anyone can file one by affidavit without a court case. It is valid for only 30 days unless the court orders its continuation. A lis pendens is a notice of a PENDING LAWSUIT involving the property. it can only be annotated if there is an actual court case filed. A lis pendens remains until the case is resolved, making it a stronger encumbrance.
Can I buy a property with a mortgage and just assume the loan?
Yes, through an "assumption of mortgage" arrangement. but this requires the mortgagee-bank's written consent. Without the bank's approval, the mortgage remains the original borrower's obligation and any private agreement between buyer and seller is not binding on the bank. If the bank consents, a new annotation is made on the title reflecting the transfer of mortgage obligation to the buyer.
Does a property with an easement of right of way lose value?
Generally yes. An easement of right of way means a portion of the property must remain accessible to others (usually a neighboring landlocked lot). This reduces the usable area and can limit development options. However, legal easements cannot be removed. they are permanent servitudes imposed by law. Voluntary easements (by agreement) can potentially be negotiated or relocated. Brokers should disclose easements and factor them into pricing.