Lien and encumbrances

DearPAO, I am reviewing the draft Contract proposing for approval. I noticed lien and encumbrances .” Frankly implication of these words in our proposed Contract to Sell?

Elvie

Dear Elvie,

To answer to your query, first, we would need to define “lien” and “encumbrances.” In this regard, allow me to lead your attention to a Supreme Court decision defining these terms. In the case of People vs The Regional Trial Court of Manila (GR 81541 Oct. 4, 1989), ponencia of Associate Justice Abraham Sarmiento, the high court elucidates, viz:

“On the other hand, a ‘lien’ is a charge on property usually for the payment of some debt or obligation. A ‘lien’ is a qualified right or a proprietary interest, which may be exercised over the property of another. It is a right, which the law gives to have a debt satisfied out of a particular thing. It signifies a legal claim or charge on property, either real or personal, as a collateral or security for the payment of some debt or obligation.”

Similarly, an “encumbrance is a burden upon land, depreciative of its value, such as a lien,

easement, or servitude, which, though adverse to [the] interest of [ the] landowner, does not conflict with his conveyance of [the] land in fee.

“The following are considered encumbrances: a claim, lien, charge, or liability attached to and binding real property; e. g., a mortgage, judgment lien, lease, security interest, easement or right of way, accrued and unpaid taxes. A lien is already an existing burden or charge on the property while a notice of lis pendens, as the very term connotes, is only a notice or warning that a claim or possible charge on the property is pending determination by the court.” (Emphasis supplied)

In line with the above-cited jurisprudential definitions of the words lien and encumbrance, it follows then that when the contract to sell in your query stated that the subject property is “free from any lien and encumbrances,” it means that the same property is free from any charge, debt or obligation.

Moreover, such statement amounts to an undertaking on the part of the seller that the property subject of sale is not imputed with any qualified right, proprietary interest or by an exercisable burden upon the land by another. In sum, the phrase you just mentioned is your seller’s way of telling you that the property subject of sale is clear from any problem or any kind of obligation.

We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Editor’ s note: Dear PA O is a daily column of the Public Attorney’ s Office. Questions for Chief A costa maybe sent to dear pao@ manila times.