How to find encumbrances on property

Few things sour a property purchase faster than discovering, after settlement, that you cannot build a garage, extend upwards or even fence your land the way you planned. In most cases the culprit is an encumbrance: a legal or financial interest that someone other than you holds over the land. Mortgages, drainage easements, restrictive covenants, caveats and owners corporation rules are all examples.

The good news is that encumbrances are not hidden if you know where to look. This guide sets out a clear, step by step process for Melbourne buyers who want to uncover every encumbrance before signing a contract. It uses UK spelling, plain language and local Victorian sources so you can act with confidence.

1. Encumbrances explained

An encumbrance is any claim, liability or restriction recorded on (or capable of being recorded on) the Certificate of Title. Common examples include:

Mortgage or charge – gives a lender power of sale until the loan is repaid

Easement – allows a service provider or neighbour to use part of the land (often a drainage or carriageway strip)

Restrictive covenant – a private agreement limiting building materials, height or the number of dwellings

Section 173 Agreement – a planning contract registered on title, usually setting landscaping or developer obligations

Caveat – a warning that someone claims an interest; it temporarily freezes dealings

Owners corporation rules – by laws that bind townhouse and flat owners

Statutory charge – unpaid land tax or council rates

While some encumbrances merely add paperwork, others can halt a renovation in its tracks or reduce resale value. Knowing which is which is vital.

2. Key documents: where encumbrances hide

Victorians rely on three core documents during due diligence:

Title search (Register Search Statement) – the official Land Use Victoria record that shows owners and registered instruments at the moment of download. land.vic.gov.au

Plan of Subdivision – a survey drawing that depicts lot boundaries, easement corridors and sometimes a schedule of covenants.

Section 32 Vendor Statement – the bundle of certificates that a seller must supply before contracts are exchanged. It must disclose mortgages, covenants, easements, planning information, zoning and certain outgoings. 

Supporting certificates from council, water authorities and the State Revenue Office fill any gaps.

3. Step-by-step search process

Step 1 – Order a current title search

Search directly through LANDATA (about $17) or ask your conveyancer. Check the "Encumbrances, Caveats and Notices" panel, jotting down every registration number.

Step 2 – Pull the imaged instrument

Click each registration number and download the instrument. This is where easements and covenants are actually written. Many buyers skip this step, relying only on the one line summary. 

Step 3 – Review the Plan of Subdivision

Open the plan linked in the title search. Easements appear as shaded strips (for example "E-1"), while covenanted land may be hatched. Pay attention to notation panels that mention Section 173 Agreements.

Step 4 – Examine the Section 32 pack

Victorian sellers must attach:

• a fresh title search and plan
• planning and property certificates
• owners corporation certificate (if applicable)

Check dates. Certificates older than 90 days can miss new rates or planning changes. Request updates before you commit. 

Step 5 – Look for unregistered or statutory interests

Water and sewerage authorities hold statutory easements not always shown on title. Power companies may have a right of entry under their governing Act. Long used laneways in Brunswick and Fitzroy can give rise to implied rights of way. A physical inspection spot manholes, stormwater pits, power poles reinforces the paperwork.

Step 6 – Run planning checks

Download a free Planning Property Report via VicPlan, then call the council duty planner if anything is unclear. Overlays such as Heritage or Design Development can thwart demolition or second storeys even where no covenant exists.

Step 7 – Check owners corporation and PPSR (if applicable)

An owners corporation certificate outlines fees, special levies and insurance. For rural or commercial deals involving equipment, a Personal Property Securities Register (PPSR) search confirms whether any chattel mortgages could extend to fixtures.

4. Interpreting what you find

5. Common pitfalls

Out of date Contract packs – estate agents sometimes recycle a Section 32 from the first open home months earlier.

Skipping instrument images – covenant text, not the one line title entry, controls what you can build. 

Assuming every easement shows on title – statutory rights also exist.

Ignoring overlays – planning controls can trump your architect's drawings.

Rushing finance – banks may down value encumbered land, forcing a bigger deposit.

6. Managing or removing an encumbrance

Sometimes a restriction is not fatal but needs adjustment. Here are typical Victorian pathways:

Discharging a mortgage – organised by the vendor's bank; roughly $150 in registry fees.

Relocating a drainage easement – engage a civil engineer and surveyor, gain water authority consent and lodge an amended plan. Expect three to six months and $8,000–$15,000 in professional costs.

Varying a covenant – apply to council for a planning permit or petition the Supreme Court. Straightforward greenfield cases take six months; urban infill sites often stretch to a year. Legal and notice fees range from $10,000–$20,000.

Removing a caveat – serve a lapsing notice; if the caveator does not issue proceedings within 30 days, the caveat falls.

Amending a Section 173 Agreement – negotiate with council and register a deed of variation. Because timelines can blow out, start early and factor potential delays into any settlement date.

7. Case study: Jack and Priya in Coburg

Jack and Priya loved a weatherboard cottage on a 12 metre frontage. Their vision: a double storey rear extension. Their conveyancer ran the searches and found a "single dwelling" covenant. At first it seemed harmless they were keeping one dwelling but the imaged instrument revealed extra wording banning second storeys that overlooked neighbours.

Armed with this information, Jack and Priya negotiated $40,000 off the price to compensate for the risk and cost of varying the covenant. Six months later they secured council approval and registered a deed of variation. Without that early diligence they might have paid full price and faced a redesign or legal fight.

8. Cost and timing checklist

Build these figures into your budget so there are no surprises.

9. Why local expertise matters

Victorian conveyancing is state-wide, yet practice varies among councils. Moreland, Darebin and Yarra, for example, interpret heritage rules differently. A Melbourne based conveyancer:

• knows which authorities answer phones and which prefer email
• has template consent letters that speed up applications
• understands local tribunal trends and neighbour objection patterns.

Their insight can shave weeks off your due diligence and strengthen your negotiation stance.

Conclusion – your next step

Uncovering encumbrances is not glamorous, yet it may save you tens of thousands of dollars and years of frustration. A careful title search, a rigorous Section 32 review and targeted planning checks expose hidden costs before they bite. If you are short on time or simply want peace of mind, outsource the paperwork to a professional.

Pearson Chambers Conveyancing has guided thousands of Victorians through this process. Our local team orders and interprets every search, translates legal jargon and negotiates with councils and lenders on your behalf.

Contact us today for more information and a free Section 32 contract review:

Phone: 03 9969 2405 

Email: contact@pearsonchambers.com.au