A claim against a property by another party. Encumbrance usually impacts the transferability of the property and can restrict its free use until the encumberance is removed. The most common instances of an encumbrance occurs in real estate such as an outstanding mortgage or unpaid property taxes. However, encumbrance can also be used in an accounting context to refer to restricted funds inside an account that are to be used only for a specific liability.

In real estate, if the property has an encumbrance on its title, this will affect the transferability of the title to another party. Encumbrances can also affect property other than real estate such as car titles. With respect to encumbrance accounting, the presence of an encumbrance can give the illusion that there are more available funds inside an account than is actually free for use. In both cases, it is best to understand the details and implications of an encumbrance before engaging in any transaction.

Investment dictionary. . 2012.

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  • encumbrance — en·cum·brance also in·cum·brance /in kəm brəns/ n: a claim (as a lien) against property; specif: an interest or right (as an easement or a lease) in real property that may diminish the value of the estate but does not prevent the conveyance of… …   Law dictionary

  • Encumbrance — is a legal term of art for anything that affects or limits the title of a property, such as mortgages, leases, easements, liens, or restrictions. Also, those considered as potentially making the title defeasible are also encumbrances. For example …   Wikipedia

  • encumbrance — en‧cum‧brance [ɪnˈkʌmbrəns] noun [countable, uncountable] PROPERTY LAW something such as a mortgage, lease, or charge on property, that may cause difficulties when the property is passed on to someone else: • Most directors would like to keep the …   Financial and business terms

  • Encumbrance — En*cum brance, n. [Cf. OF. encombrance. Cf. {Incumbrance}.] 1. That which encumbers; a burden which impedes action, or renders it difficult and laborious; a clog; an impediment. See {Incumbrance}. [1913 Webster] 2. (Law) Same as {Incumbrance}.… …   The Collaborative International Dictionary of English

  • encumbrance — early 14c., from O.Fr. encombrance, from encombrer (see ENCUMBER (Cf. encumber)) …   Etymology dictionary

  • encumbrance — [n] burden albatross, ball and chain*, cross, debt, duty, guilt, handicap, hindrance, impediment, load, millstone, monkey on one’s back*, obstruction, responsibility, saddle, thorn in one’s side*, weight, worry; concepts 532,690 …   New thesaurus

  • encumbrance — ► NOUN 1) a burden or impediment. 2) Law a mortgage or other charge on property or assets …   English terms dictionary

  • encumbrance — [en kum′brəns, inkum′ brəns] n. [ME & OFr encombraunce] 1. something that encumbers; hindrance; obstruction; burden 2. Rare a dependent, esp. a child 3. Law a lien, charge, or claim attached to real property, as a mortgage …   English World dictionary

  • encumbrance — Incumbrance In*cum brance, n. [See {Encumbrance}.] [Written also {encumbrance}.] [1913 Webster] 1. A burdensome and troublesome load; anything that impedes motion or action, or renders it difficult or laborious; clog; impediment; hindrance; check …   The Collaborative International Dictionary of English

  • encumbrance — /en kum breuhns/, n. 1. something that encumbers; something burdensome, useless, or superfluous; burden; hindrance: Poverty was a lifelong encumbrance. 2. a dependent person, esp. a child. 3. Law. a burden or claim on property, as a mortgage.… …   Universalium

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