Which statement best describes a mortgage's relationship to encumbrance?

A mortgage is correctly identified as a form of encumbrance that secures a loan with the property. Encumbrances are legal claims or liabilities on a property that affect how it can be used or transferred. In the case of a mortgage, the lender holds a lien against the property as collateral for the loan. This means that if the borrower fails to repay the loan, the lender has the right to take possession of the property through foreclosure.

This relationship underscores the nature of the mortgage as an encumbrance—it does not transfer ownership but rather establishes a financial obligation tied to the property. Therefore, the existence of a mortgage affects not only the borrower but also any subsequent transactions involving the property, since any new owner would need to address the outstanding mortgage obligation.

The other options do not accurately reflect the nature of a mortgage as it relates to ownership and encumbrances. For instance, stating that a mortgage has no effect on ownership overlooks the significant legal and financial implications it imposes on how the property can be maintained and what obligations the owner has.