The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

1.1.E.108 Encumbrance


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 General provisions for valuation of assets, Encumbrances & loans against assets

Last reviewed: