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

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