Legal Due Diligence: Ownership, Easements & Burdens

The property you think you are buying is not necessarily the property you get. Title, encumbrances and easements can look harmless in a land registry certificate — right up until a restriction on use, a right of repurchase or an old sight-line easement turns out to block exactly the project you have already costed. Legal due diligence is the work that determines whether the purchase price matches what you are actually acquiring the right to do.

For the professional buyer, legal due diligence on property is not a formality to tick off, but a risk assessment. The difference between a deal that holds and one that ends in a damages claim or a dead project often comes down to three or four documents that you either read — or did not read — before signing. This review focuses on the legal track: title, encumbrances, easements, burdens and planning. Technical and environmental matters belong to a broader investigation, which we cover in the complete review of property due diligence — legal, technical and environmental.

Start with title: does the seller actually own what you think?

The first question is the most basic and the most important: does the seller own the property, and can the seller dispose of it? Title appears in tingbogen (the Land Registry), where the title section shows the registered owner and the deed underlying it. Pull a current land registry certificate on the parcel and check that the registered owner is identical to the party named on the purchase agreement.

Pay particular attention to:

• Companies as seller. When the seller is a company, the signing rule and the beneficial ownership must be verified. A deed signed by one director, where the company can only be bound by two acting jointly, is not valid. Company identity, ownership chain and solvency should be checked separately — we cover this in the counterparty background check before a deal.
• Estates, bankruptcy or guardianship. An estate may require the involvement of the probate court or the estate administrator, and a bankrupt seller may have lost the power to dispose. These circumstances leave traces in the Land Registry.
• Co-ownership and co-ownership agreements. Where several parties own the property jointly, all must dispose of it — and a registered co-ownership agreement can limit the individual party’s right to sell.

Title verification sounds simple, but this is precisely where the expensive mistakes arise: you negotiate for weeks with a party that legally cannot bind the property.

Encumbrances: what comes with the money?

The encumbrances section of the Land Registry shows the financial burdens resting on the property — typically mortgage deeds, owner’s mortgage deeds and attachments. For the buyer, the key is to get an overview of what must be redeemed, what may be assumed, and what is to be cancelled as part of the deal.

Rule of thumb: everything in the encumbrances section must either be redeemed and cancelled at completion, or knowingly assumed with a known outstanding balance and terms. Nothing may remain unresolved at signing.

An owner’s mortgage deed is worth studying closely. It is a framework that the owner may have pledged as security for one or more loans — and the outstanding balance does not appear in the deed itself, but in the underlying loan relationship. An “empty” owner’s mortgage deed on paper can in reality cover a substantial debt. Demand documentation of the actual outstanding balance and of the chargeholder’s release for cancellation against redemption.

Attachments and seizures are red flags that point to a seller under financial pressure. They should be fully resolved before the deal — both because they must be redeemed, and because they can signal further claims that have not yet been registered.

Easements and burdens: this is where the project risk lies

Where encumbrances are about money, easements are about the power to use — and it is often the easements that determine whether your project can be carried out at all. Easements in a property purchase fall broadly into two groups: those that impose a duty or an obligation to tolerate on the owner (a utility line may cross the plot, the neighbour has a right of way), and those that restrict the owner’s use (building lines, height and density limits, preservation provisions).

For anyone buying with development in mind, use-restricting easements are the single largest risk. A registered building line, a sight-line easement at a road junction or an old covenant stating “only one dwelling on the plot” can directly contradict the project you have calculated. Easements do not disappear by themselves, and they often take precedence even when a newer local plan opens for more.

Review each burden systematically:

• Who holds the right to enforce? An easement can only be enforced — and cancelled or waived — by the entitled party. Is it the municipality, a neighbour, a property owners’ association or a utility company? That determines how hard it is to have lifted.
• What is the actual content? The Land Registry heading can be misleading. Pull the full easement document, not just the section text, and read it word for word. Older easements are often handwritten and require interpretation.
• Is it still relevant? Some easements are effectively obsolete or refer to circumstances that no longer exist. But they are binding until cancelled — never assume that a burden is “dead” without clarifying it with the entitled party.

When a burden stands in the way of the project, the question is whether it can be waived or cancelled, and what that costs in time and money. That answer should be available before signing — or made a condition in the agreement.

Planning: the local plan and municipal plan as the framework around everything

Easements regulate the individual property, but the public-law framework is set by the planning basis. The local plan is binding for what may be built, and a current local plan takes precedence over the more general provisions. Where there is no local plan, the municipal plan framework and the general rules of the Planning Act apply — including the indicative plot ratios (typically 30 for detached, 40 for low-density attached and 60 for multi-storey housing), which must always be verified in the specific planning basis.

Check the planning status in Plandata.dk (the national planning register) and clarify:

• Which local plan or municipal plan framework applies, and what does it permit in terms of use, plot ratio, number of storeys and height?
• Is the property subject to zoning status (urban, rural or summer cottage zone) that requires a permit or a change of zone?
• Are there preservation, conservation or protection interests that limit changes?

If the project requires a dispensation from the local plan, you must assess whether it is a dispensation from a provision that lies within the plan’s principles — the municipality cannot grant a dispensation from a plan’s fundamental purpose and use. And if the municipality is in the process of new planning, a temporary prohibition can be imposed against an otherwise lawful construction under the relevant rules of the Planning Act. Dispensation and prohibition rules change over time and should always be verified in the current Planning Act and with the municipality. A thorough reading of the planning basis is a discipline in itself — we have described the method in the guide to how to read a local plan correctly.

Tying it together: from findings to conditions in the purchase agreement

Due diligence is only half the work. The other half is translating the findings into terms in the agreement. An unresolved matter — an easement that might be cancellable, a dispensation that might be granted, an outstanding balance not yet confirmed — should not decide whether you dare to deal. It should instead be handled as a conditional term.

The legal review of the purchase agreement builds directly on due diligence: every material finding that is not finally resolved can be made a condition for completing the deal. How you formulate and bound them so that they actually protect you, we cover in the article on conditions precedent in the property purchase agreement. The point here is the sequence: investigate first, condition afterwards — never the other way around.

Remember also to cross-check the physical data. The Land Registry tells you about rights, but not about the building’s actual legality. Registered areas and details in BBR (the Buildings & Dwellings Register) can differ from reality, and discrepancies can have both financial and legalisation consequences — we have gathered the typical pitfalls in the review of what to watch for in BBR data. A complete legal due diligence is a precondition for a fair price, but not a guarantee — it removes the known risks and surfaces the remaining ones, so you can price them or reserve against them.

How to do the exercise faster in Arcili

Legal due diligence is by nature a puzzle of sources: tingbogen (the Land Registry) for title, encumbrances and easements, Plandata.dk for planning, matriklen (the cadastre) for the plot’s boundaries, CVR (the Central Business Register) for company matters on the seller’s side. The manual work lies in gathering them, cross-checking them and discovering where they are in conflict.

In Arcili’s Ejendomme (Properties) module, the public registers sit gathered on the individual property — title and registered matters, planning, BBR data and the surrounding area split across detail tabs — so you quickly get an overview of what rests on the parcel and where you need to dig deeper. It does not replace the legal assessment: it is still you who reads the easement and decides what it means for the deal. But it removes most of the time that otherwise goes into obtaining and collating the documents before the actual analysis begins.

Arcili brings public property data together in one workflow. Want to see what a legal due diligence looks like when the sources are already gathered on the property? Book a walkthrough.