A mere burden on a person or obligor is not an encumbrance. Needless to say, every
person who has an obligation to pay money is expected to have assets to pay the
same. If all the lender is expecting is that the obligor will pay money and will have
enough assets to pay the same, it is not a case of encumbrance. In case of
encumbrance, the burden shifts from the person to the property – and the burden
travels with the property.
One of the most characteristic features of encumbrance
would be that the encumbrancer will not be free to deal with the property in the
way he likes. Second, the lender will have a right over the property, so as to extract
money from the property if the personal obligation fails.
A mere restraint on the owner of property that he will not alienate his property
cannot be said to be an encumbrance. If that were so, every obligation to pay money
will amount to an encumbrance because in every obligation, the creditor expects
that the debtor will not alienate property or deal with it to the detriment of the
creditor.
The following important features of encumbrances arise from the discussion above:
• An encumbrance is a burden attached to property;
• If it is a burden for the owner, it must be a benefit for the person holding the
encumbrance. This also follows from the discussion by Salmond which has
taken encumbrances to be jura in re propria, that is, rights over estate of
someone else. That is, the burden created by the owner must be such which
can operate as a benefit in the hands of the person holding the encumbrance.
• The burden must necessarily be attached to the asset in question.
• Since the essence of attachment or concurrence of the burden is that the
burden will pass on a person acquiring the property, it necessarily follows
that the burden must be on an ascertainable, identifiable property.
• A mere restraint on sale or negative covenant is not an encumbrance. A
leading English case law on whether a negative covenants “runs” with the
property is Tulk v Moxhay (1848) 41 ER 1143. This classic ruling holds that a
negative covenant is passable to the buyer of the property only where the
parties intended the same to pass, and the burden “touches and concerns”
the property. Here, a question of intent of parties will come in.
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person who has an obligation to pay money is expected to have assets to pay the
same. If all the lender is expecting is that the obligor will pay money and will have
enough assets to pay the same, it is not a case of encumbrance. In case of
encumbrance, the burden shifts from the person to the property – and the burden
travels with the property.
One of the most characteristic features of encumbrance
would be that the encumbrancer will not be free to deal with the property in the
way he likes. Second, the lender will have a right over the property, so as to extract
money from the property if the personal obligation fails.
A mere restraint on the owner of property that he will not alienate his property
cannot be said to be an encumbrance. If that were so, every obligation to pay money
will amount to an encumbrance because in every obligation, the creditor expects
that the debtor will not alienate property or deal with it to the detriment of the
creditor.
The following important features of encumbrances arise from the discussion above:
• An encumbrance is a burden attached to property;
• If it is a burden for the owner, it must be a benefit for the person holding the
encumbrance. This also follows from the discussion by Salmond which has
taken encumbrances to be jura in re propria, that is, rights over estate of
someone else. That is, the burden created by the owner must be such which
can operate as a benefit in the hands of the person holding the encumbrance.
• The burden must necessarily be attached to the asset in question.
• Since the essence of attachment or concurrence of the burden is that the
burden will pass on a person acquiring the property, it necessarily follows
that the burden must be on an ascertainable, identifiable property.
• A mere restraint on sale or negative covenant is not an encumbrance. A
leading English case law on whether a negative covenants “runs” with the
property is Tulk v Moxhay (1848) 41 ER 1143. This classic ruling holds that a
negative covenant is passable to the buyer of the property only where the
parties intended the same to pass, and the burden “touches and concerns”
the property. Here, a question of intent of parties will come in.
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