Encumbrances and Encroachments: Texas Exam Guide

Encumbrances are the burdens that ride along with a property. Some cost money, like a mortgage or a tax lien. Some limit what you can do, like an easement or a deed restriction. The exam wants you to sort them, and to know what an encroachment is and how it gets found.

What is an encumbrance?

An encumbrance is any claim, lien, charge, or right that attaches to real property and either limits its use or reduces its value. An encumbrance burdens title but does not necessarily prevent a transfer. Whether it must be released, may remain as a permitted exception, or gives a party a remedy depends on the contract, its priority and enforceability, and the closing documents.

An encumbrance is a burden on real property held by someone other than the owner. It can be a financial claim, like a loan secured by the land, or a limit on use, like a right of way. The exam rule is that an encumbrance can burden property without making transfer impossible. Do not turn that into a closing rule: a lien may be paid and released, an easement may remain as a permitted exception, and some defects must be resolved under the parties' contract before a buyer is required to close.

That is why encumbrances matter so much at closing. A title commitment lists them as exceptions, and the parties decide which ones get cleared and which ones the buyer accepts. An encumbrance that is not cleared can be a cloud on the chain of title.

Money encumbrances vs non-money encumbrances

Encumbrances come in two families. Money encumbrances are liens, which are financial claims like a mortgage, a property tax lien, a judgment lien, or a mechanic's lien. Non-money encumbrances limit use rather than secure a debt, and include easements, deed restrictions, encroachments, licenses, and profits. All liens are encumbrances, but not all encumbrances are liens.

The cleanest way to organize the topic is to split encumbrances into two groups by what they do.

The exam loves one relationship here: all liens are encumbrances, but not all encumbrances are liens. A lien is a money claim that can lead to a forced sale if the debt is not paid. An easement or a deed restriction is not a lien, because it limits use rather than securing a debt.

Two smaller non-money terms round out the list:

• License. Revocable permission to use land, which is not a true interest in the property. Easements and licenses are compared in the easements guide.
• Profit. A right to enter another's land and take something from it, like timber, gravel, or minerals. A profit allows removal, while an easement only allows use.

Encroachments: when a structure crosses the line

An encroachment is a building, fence, driveway, or other improvement that extends over a boundary onto a neighbor's land or into an easement or setback. It is a physical or boundary problem that can create trespass, title, marketability, or insurance issues. A current survey is the standard way to discover it. Passage of time alone does not create ownership or an easement; every element of the applicable Texas limitations doctrine must be proved for the required period.

An encroachment is a physical intrusion. A fence built three feet over the line, a driveway that crosses onto the lot next door, or a roof overhang that hangs above a neighbor's yard are all encroachments. Because the structure sits where it does not belong, an encroachment can amount to a trespass and can cloud title or impair marketability.

How encroachments are discovered

The way encroachments get discovered is a survey. This ties encroachments to legal descriptions and surveys, because only a measured survey shows exactly where the boundaries and the structures fall. In Texas, a title company relies on a survey and a signed affidavit to decide whether it will give area and boundary coverage, so an encroachment found before closing can be handled instead of becoming the buyer's surprise.

Why time alone does not decide

Time can matter with encroachments, but time is not the only element. Facts meeting every requirement for a prescriptive easement or adverse possession claim for the applicable limitations period may mature into a right. Mere existence, permission from the owner, or neglect for an unspecified time is not enough. That is why a small encroachment is worth resolving early rather than ignoring.

Deed restrictions, restrictive covenants, and CC&Rs

Deed restrictions, also called restrictive covenants or CC&Rs, are private limits on how land can be used, placed in a deed or a recorded subdivision declaration. A valid covenant that runs with the land can bind later owners who take subject to it. Enforcement rights and remedies depend on the covenant, the parties, notice, defenses, and current law; an injunction is a common remedy.

Deed restrictions are private rules rather than government rules. A developer may record a declaration of covenants, conditions, and restrictions (CC&Rs) for a subdivision, and later buyers commonly take title subject to the valid restrictions affecting their lots. Typical restrictions set minimum home sizes, ban commercial use, control fences and paint colors, or require architectural approval.

The key features for the exam:

• Valid covenants can run with the land. When the legal requirements are met, the restriction can bind later owners rather than only the person who first agreed to it.
• They are private, not public. Deed restrictions come from the developer and the owners, unlike zoning, which comes from the government.
• They are enforced privately. A property owners association, the developer, or a neighboring owner can sue to enforce them, most often by seeking an injunction to stop a violation.
• They cannot be discriminatory. A restrictive covenant based on race is unenforceable, and covenants must comply with fair housing law.

The Texas rule: covenants are liberally construed, and Houston runs on them

Texas gives restrictive covenants real strength. Under Texas Property Code Section 202.003, a restrictive covenant is liberally construed to give effect to its purposes and intent. That is a pro-enforcement rule, and it applies broadly to Texas covenants.

Nowhere is this more visible than in Houston, the largest major U.S. city without a traditional zoning ordinance. Houston regulates development through tools such as subdivision, development, building, floodplain, parking, and other public rules, while private deed restrictions can separately control land use. The City of Houston also maintains a deed-restriction enforcement program. The exam takeaway is not that Houston is unregulated; it is that public development rules and enforceable private covenants can operate together.

Deed restrictions vs zoning: both applicable rules must be satisfied

When a valid private deed restriction and a public zoning rule both apply to the same property, the owner ordinarily must comply with both. Exam books often compress this into “the more restrictive rule controls,” because the use left available is the one allowed by both layers. Neither rule automatically repeals or invalidates the other.

A property can be governed by both a deed restriction and a zoning ordinance at the same time. For exam questions, ask whether the proposed use satisfies both.

Say zoning allows a duplex, but the subdivision's deed restrictions allow only single-family homes. The owner is held to single-family use, because the deed restriction is stricter. Now flip it. If zoning bans commercial signs but the deed restrictions are silent, the owner still cannot post the sign, because the stricter public rule controls. Public zoning is covered as a police power in the land-use materials, and deed restrictions are the private layer that can tighten it further.

How encumbrances affect marketable title and closing

Encumbrances shape whether title is marketable. Money liens generally must be paid off or released at closing so the buyer takes clear title. Many non-money encumbrances, like normal utility easements and standard deed restrictions, are accepted as permitted exceptions. A survey and the title commitment together show the buyer what burdens the property.

Encumbrances decide what a buyer is really getting. The goal is marketable title, meaning title a reasonable buyer would accept without fear of a lawsuit.

• Liens usually get cleared. A mortgage payoff, unpaid taxes, or a judgment lien is typically paid and released at or before closing, so the buyer is not stuck with the seller's debt.
• Some use encumbrances are accepted. Ordinary utility easements and standard subdivision deed restrictions are common and are usually accepted as permitted exceptions rather than defects.
• Surprises are the problem. An unexpected encroachment, an unrecorded easement, or a violated deed restriction can make title unmarketable until it is resolved.

The tools that reveal all of this are the title commitment and a current survey. Together they tell the buyer which burdens ride with the land, which is why an agent should make sure both get reviewed before closing.

Common exam traps to remember

Encumbrance questions punish a few confusions: thinking every encumbrance is a lien, treating every covenant as automatically enforceable forever, forgetting that zoning and private restrictions can both apply, and mixing up an encroachment with an easement.

• Not every encumbrance is a lien. All liens are encumbrances, but easements, deed restrictions, and encroachments are not liens.
• Valid covenants can run with the land. That is the exam rule; enforceability in practice still depends on the documents and law.
• Both layers apply. The exam's “more restrictive” shortcut means the proposed use must satisfy both zoning and an enforceable private restriction.
• An encroachment is not an easement. An encroachment is a trespass found by survey, while an easement is a permitted right to use.
• An encumbrance does not necessarily prevent transfer. Whether it must be cleared before closing is a separate contract-and-title question.

You can drill these against timed Texas questions in the free practice test, and look up any unfamiliar term in the Texas real estate glossary.

Original practice questions

Use these to check yourself. They are written for practice and are not copied from any real exam.

Question 1. Which of the following is an encumbrance but is not a lien?

• A) A mortgage
• B) A property tax lien
• C) A utility easement
• D) A judgment lien

Answer: C. A utility easement is a non-money encumbrance that limits use, not a lien. The other three are money encumbrances that secure a debt. All liens are encumbrances, but not all encumbrances are liens. (Original question.)

Question 2. A homeowner's new fence is built two feet over the property line onto the neighbor's lot. What is this, and how is it usually discovered?

• A) An easement, discovered in the deed
• B) An encroachment, discovered by a survey
• C) A license, discovered at closing
• D) A profit, discovered by the appraiser

Answer: B. A structure that crosses onto a neighbor's land is an encroachment, a form of trespass. A current survey is the standard way to discover it, because only a survey shows where the boundaries and the fence actually fall. (Original question.)

Question 3. In a Texas subdivision, the deed restrictions allow only single-family homes, but city zoning would allow a duplex. What may the owner build?

• A) A duplex, because zoning controls
• B) Only a single-family home, because the more restrictive rule controls
• C) Either one, the owner chooses
• D) Nothing, because the rules conflict

Answer: B. The proposed use must satisfy both applicable layers. Zoning permits a duplex, but the valid single-family covenant does not, so only the single-family use satisfies both. “The more restrictive rule controls” is the common exam shorthand. (Original question.)

Question 4. Under Texas Property Code Section 202.003, how are restrictive covenants construed?

• A) Strictly against the association in every case
• B) Liberally, to give effect to their purposes and intent
• C) They are automatically unenforceable after ten years
• D) Only if a city adopts them as zoning

Answer: B. Texas Property Code Section 202.003 says a restrictive covenant is liberally construed to give effect to its purposes and intent. This is a pro-enforcement rule, and it is one reason deed restrictions are powerful in Texas. (Original question.)

Frequently Asked Questions

For quick answers to every common Texas exam question, see the Texas real estate exam FAQ.

What is an encumbrance in real estate?

An encumbrance is a claim, lien, charge, or right attached to real property that limits use or value without necessarily preventing transfer. Examples include mortgages, tax liens, easements, deed restrictions, and encroachments. At closing, a burden may be released, accepted as a permitted exception, or addressed under the contract; do not assume every encumbrance automatically passes to the buyer.

What is the difference between an encumbrance and a lien?

A lien is a type of encumbrance that secures a debt, such as a mortgage, a tax lien, or a mechanic's lien. An encumbrance is the broader category and also includes non-money burdens like easements and deed restrictions. The rule to remember is that all liens are encumbrances, but not all encumbrances are liens.

What is an encroachment?

An encroachment is a building, fence, driveway, or other improvement extending over a boundary or into an easement or setback. It can create trespass, title, marketability, or insurance issues, and a current survey is the usual discovery tool. It matures into a prescriptive or adverse right only if every element of the applicable Texas doctrine is proved for the required period, not merely because time passed.

What are deed restrictions?

Deed restrictions, also called restrictive covenants or CC&Rs, are private limits on land use placed in a deed or recorded declaration. A valid covenant that runs with the land can bind later owners. Who may enforce it and which remedy is available depend on the documents and current law; an injunction is common.

Do deed restrictions or zoning control when they conflict?

An owner ordinarily must comply with both an applicable zoning rule and a valid private covenant. “The more restrictive rule controls” is the exam shortcut: the permitted use is the one that satisfies both layers. Neither rule automatically cancels the other.

Why does Houston rely on deed restrictions?

Houston is the largest major U.S. city without a traditional zoning ordinance. That does not mean it has no land-use regulation: public development rules still apply, and private deed restrictions can separately limit use. Houston also operates a deed-restriction enforcement program. Texas Property Code Section 202.003 directs courts to construe restrictive covenants liberally to give effect to their purpose and intent.

Sources and Methodology

This article was reviewed against current Texas primary sources, City of Houston guidance, and the Pearson VUE national outline on August 12, 2026. The money-versus-non-money framework and the rule that every lien is an encumbrance but not every encumbrance is a lien are national exam concepts. Texas limitations law supplies the elements and periods for prescription and adverse possession; passage of time alone is not enough. Texas Property Code Section 202.003 supplies the liberal-construction rule for restrictive covenants. Houston's official materials confirm both the absence of a traditional zoning ordinance and the continued role of public development regulation and private deed restrictions. The “more restrictive rule controls” phrase is presented as an exam shortcut for complying with both applicable layers, not as a rule that one layer legally invalidates the other. Statutes, ordinances, covenants, and cases can change, so verify current sources for a real property.

Official Source Links

• Texas Property Code Chapter 202 (Construction and Enforcement of Restrictive Covenants)
• Texas Property Code Section 202.003 (Construction of Restrictive Covenants)
• Texas Property Code Chapter 209 (Texas Residential Property Owners Protection Act)
• City of Houston Planning and Development: Development Regulations
• City of Houston Planning and Development: About Deed Restrictions
• TREC: Become a Real Estate Sales Agent

This post is educational content for Texas real estate sales agent candidates. It is not legal advice. Whether a claim burdens a property, and how it affects a sale, depends on the documents, the survey, and current law, so confirm the current Texas Property Code and Texas case law and consult a licensed attorney before you rely on any point in a real situation.