1.1.E.108 Encumbrance

Usage

These definitions apply to all payments subject to assets testing provisions.

Usual types

The usual types of encumbrances are:

  • a registered mortgage,
  • a bank overdraft secured by lodgement of title deeds,
  • accumulated interest,
  • arrears of rates,
  • other outstanding local government charges,
  • amounts outstanding to water, sewerage or electricity authorities if the charges are recoverable by statute against the property,
  • a solicitor's lien for costs and fees,
  • a banker's lien for money advanced, and
  • legally enforceable liens against stock and other farm assets.

Excluded security loans

An excluded security is the amount of a charge or encumbrance that is:

  • a collateral security (fall back security that is provided in addition to the principal security),
  • provided for the benefit of a third party.

Act reference: SSAct section 1121 Effect of charge or encumbrance on value of assets

Policy reference: SS Guide 4.6.6.10 General Provisions for Valuation of Assets, 4.6.6.30 Encumbrances & loans against assets

Last reviewed: 15 August 2016