An encumbrance is a legal claim or restriction on a property that affects the owner’s ability to transfer a title or reduces its value. Encumbrances can include various types of interests, such as mortgages, liens, easements, covenants, or restrictions. These interests do not prevent the transfer of ownership, but they may limit how the property can be used or affect its marketability. In real estate, common encumbrances include:
- Liens: Claims made by creditors to secure payment of a debt, such as mortgage liens or tax liens.
- Easements: Rights granted to others to use a portion of the property for a specific purpose, like utility easements.
- Restrictive covenants: Rules that restrict the use of the property, often set by homeowners’ associations.
- Encroachments: When a structure from a neighboring property extends onto the owner’s land.
Encumbrances remain attached to the property, and the new owner inherits them upon purchase unless they are cleared beforehand.
