What is an encumbrance in real estate?

An encumbrance in real estate refers to a claim or liability attached to a property that can affect the owner's ability to transfer title or use the property freely. This could include liens, mortgages, easements, or restrictive covenants, which all represent some form of obligation or restriction on the property. Understanding encumbrances is crucial for potential buyers or anyone involved in real estate transactions, as they can impact the value and usability of a property.

For example, if a property has a mortgage, the lender has a claim against it, meaning the owner must fulfill the mortgage obligations before being able to sell or refinance the property. Similarly, easements can allow others to use a portion of the property for specific purposes, thereby limiting the owner's rights. Therefore, recognizing encumbrances is essential for comprehensively understanding property rights and obligations.