What type of encumbrance is primarily used to prevent certain activities on a property?

• A. Title insurance
• B. License
• C. Deed restriction
• D. Lease

Answer: (C)

A deed restriction is a specific type of encumbrance that is used to impose limitations on how a property can be utilized. These restrictions are typically placed by a property developer or a previous owner to maintain a certain standard within a neighborhood or to protect the interests of surrounding property owners. Deed restrictions can dictate various conditions, such as prohibiting certain types of construction, limiting the use of the property for residential purposes only, or regulating the aesthetic aspects of properties to ensure uniformity.

For example, a developer may implement a deed restriction in a subdivision to prevent the construction of commercial buildings, ensuring that the area remains residential in nature. This form of encumbrance is legally binding and can be enforced by property owners within the affected area, making it a powerful tool in land use planning and community cohesion.

In contrast, title insurance protects against defects in the title but does not place restrictions on property use. A license is a temporary permission that allows a party to use someone else’s property for a specific purpose without granting any ownership rights, and a lease involves renting property but does not impose restrictions on the property itself in the same way that a deed restriction does.