![[object Object]](https://umsousercontent.com/lib_lphGCikIbVHjRWIV/w8mzrofmgaa9b3om.png?w=52){kind=small}
You’ve found a place you love. The kitchen works, the backyard gets sun, and you can already picture your first winter evening with the heater on and the footy on in the background. Then a note lands in your inbox: there’s an easement right where you planned to extend, or a covenant that limits what you can build. Suddenly, the ‘perfect’ property comes with fine print.
That fine print is often an encumbrance. It won’t jump out at an open for inspection, and it rarely features in marketing photos. Yet it can shape what you’re allowed to do with the land, what it’s worth, and how smoothly settlement runs.
This guide is general information for property transactions in Victoria, written for Melbourne buyers and sellers.
If you’re buying at auction, the timing is even tighter. Once you’re the successful bidder, you’re locked in. That’s why the ‘check it later’ approach can be risky. Getting the contract and Section 32 reviewed before you raise your paddle can save a lot of stress.
Encumbrances in plain English
An encumbrance is a legal interest, restriction, or claim that affects a property’s title. Some encumbrances are financial (like a mortgage). Others are about use and access (like an easement or a right of way). Some sit quietly in the background and never change how you live. Others matter the moment you renovate, rebuild, subdivide, or try to add a second storey.
A helpful way to think about it is this: the title is the property’s ‘rule book’. Encumbrances are rules that give someone else a right, or place limits on you.
Where encumbrances show up in a Victorian sale
Before a buyer signs, a seller must provide certain disclosure documents. The centrepiece is the Section 32 vendor statement. It usually includes a title search and plan, plus certificates and details about services, outgoings and notices.
Many encumbrances are revealed through the title documents and attachments. Still, buyers can get caught when:
the paperwork is incomplete or out of date
a restriction is described in a way that’s hard to picture on the ground
the legal wording is clear, yet the practical impact isn’t
there are arrangements people treat as ‘understood’, even when they aren’t neatly described in a single document
Your conveyancer’s role is to read past the paperwork and explain what it means for your plans.
The most common encumbrances Melbourne buyers run into
Every title is different, yet a few patterns show up repeatedly across Melbourne.
Easements and rights of way
An easement gives someone else a right over part of your land, or gives an authority a right to access infrastructure. In tight inner suburb blocks, easements can make the difference between an easy extension and a design rethink.
Common examples include:
drainage and sewerage easements (often along the back or side boundary)
shared driveway easements, common in townhouse rows and older subdivisions
rights of carriageway or rights of way, where a neighbour has legal access through a lane or side passage
service easements for utilities
Easements don’t always stop you building, yet they can restrict where you place footings, pools, studios, or even deep planting. If you’ve got your heart set on ‘pushing out the back’, it’s worth knowing where the easement sits before you fall in love with a floorplan. On a Brunswick East or Northcote block, that easement can run right through the best part of the yard.
Covenants that limit use or building
A covenant is a promise recorded on title that restricts use, building, or subdivision. Some are old estate conditions in parts of the inner east, including pockets of Camberwell and Kew. Others are modern, especially in newer estates and multi townhouse developments.
When covenants sit on title, they’re often restrictive covenants. Depending on the wording, they can deal with things like subdivision limits, building envelopes, setbacks, or certain types of use.
Covenants can look like one short line on the title, while the attached instrument does the real work. The detail matters.
Mortgages and other financial interests
Most sellers have a mortgage, and in a typical sale it’s discharged at settlement. The question isn’t whether a mortgage exists, it’s whether the seller can clear it properly, and whether there are any other interests noted that could complicate transfer.
Caveats
A caveat is a warning notice on title. It signals that someone claims an interest in the property, such as a purchaser, lender, or another party in a dispute. Caveats can complicate a sale because they may need to be withdrawn or resolved before settlement can proceed. If a caveat appears, you want to know who lodged it, why, and what needs to happen for the title to transfer cleanly.
Agreements and notices recorded on title
Some agreements with government bodies can be recorded on title and may create ongoing obligations. They’re less common than easements and mortgages, yet they can have a big impact, particularly if you’re buying with development plans in mind.
Planning controls aren’t always ‘encumbrances’, yet they still shape what you can do
Melbourne property comes with layers. Title restrictions sit on (or attach to) the title. Planning controls come from the council planning scheme, like zoning and overlays. They might not be ‘encumbrances’ in the strict title sense, yet they can still limit what you can build and how you can use the land.
A good conveyancing review checks both, then explains how they interact, especially where a buyer is planning renovations.
Can an encumbrance derail a purchase?
Sometimes. Other times it’s simply a factor you price in.
In practical terms, encumbrances tend to fall into three buckets:
Must be dealt with for settlement to happen
Some interests need to be removed or managed so you receive clear title, such as the seller’s mortgage discharge, or certain caveats that prevent transfer.
Will stay on title after you buy
Many easements and covenants remain. You’re buying the land subject to them. The question becomes whether the restriction affects your plans or future resale.
Becomes a negotiation point
If something wasn’t properly disclosed, or its impact is larger than expected, you may have options to renegotiate or, in some situations, end the contract. Timing and contract wording matter.
This is where drafting can really matter. Encumbrance issues are often dealt with in contract special conditions that spell out what the seller must do before settlement, or what happens if a problem is uncovered.
Warning signs that deserve a second look
You don’t need to be a property expert to notice when something feels unclear. A few common warning signs are:
The agent says ‘it’s just a standard easement’, yet no one can show you where it runs.
There’s a shared driveway, laneway access, or a rear garage arrangement that relies on someone else’s land.
The yard has obvious infrastructure (manholes, inspection openings), and the paperwork is light on detail.
The seller is pushing for a quick exchange, or documents arrive late.
The block is narrow or oddly shaped, and you’re banking on renovating.
These are the types of issues behind many red flags in property documents.
How your conveyancer checks encumbrances in practice
A proper review is more than reading the Section 32 once. It’s a set of checks that build a picture of what you’re really buying.
Title and plan checks
The title search shows what is recorded against the property (mortgages, caveats, covenants, and many easements). The plan of subdivision shows where easements sit and how boundaries are defined. For apartments and townhouses, it can also help explain common property and owners corporation boundaries.
Mapping the paperwork to the property
This is where buyers often get clarity. If an easement is along the rear boundary, does it run under the existing deck? If a driveway is shared, does the plan match what’s fenced? If there’s a covenant, does it hit the exact thing you want to do, like adding a second storey?
Authority certificates and key disclosures
Depending on the property, the disclosure pack may include certificates from council and authorities. These can reveal notices, charges, or obligations that aren’t obvious from the title page alone.
Timing, especially for auctions
Auction campaigns move quickly and there’s no cooling off period for a successful bidder. That’s why we’re strong on getting a professional conveyancer involved early, ideally before you bid.
Three Melbourne scenarios where encumbrances sting
The inner north extension plan that hits a sewer easement
You buy a weatherboard and plan to push out the rear. The title notes an easement, and the plan shows it cuts across the area you wanted for the new living room. You may still build, yet the design can change and approvals can get trickier.
The townhouse with a driveway that isn’t as private as it looks
At inspections, the driveway feels like part of ‘your’ property. On the plan, it’s an easement for access or common property. That can affect parking, maintenance, and what you can add, like gates or storage.
The ‘easy subdivision’ that a covenant blocks
You spot a big block and assume you can subdivide. Then you find a covenant that limits further subdivision. At that point it’s not a minor detail, it’s the whole investment case.
What you can do before you sign
You don’t need to run a full conveyancing file yourself. Yet a few habits make a real difference:
Ask for the contract and disclosure documents early, before your second inspection where possible.
If you’re renovating, be clear about your non negotiables (extension, second storey, car access, pool) so your conveyancer can look for restrictions that touch them.
At inspections, look for clues: manholes, grates, overhead lines, shared driveways, rear lanes, fences that don’t quite line up.
If something seems unclear, don’t rely on verbal reassurance. Get it explained properly through the documents.
Buying property is emotional, especially after months of weekend inspections and tram rides to yet another open home. A careful encumbrance check keeps the practical side from being an afterthought.
The takeaway
Encumbrances are common, and they’re not always a problem. Many Melbourne homes have standard easements or old covenants that never affect day to day life. The risk is buying blind and assuming you can build, access, or change the property in a way the title doesn’t allow.
If you’re buying or selling in Melbourne and want peace of mind before you commit, speak with Pearson Chambers Conveyancing. We offer a complimentary Section 32 contract review, and we’ll explain any encumbrances in plain English so you can move forward with confidence.
Email contact@pearsonchambers.com.au.
This article provides general information only and isn’t legal advice.