In real estate, what is an encumbrance?

An encumbrance refers to a limitation or claim on property ownership that can affect the property’s value or restrict the owner's ability to transfer or use the property. Common examples of encumbrances include liens (such as mortgage liens), easements, and zoning restrictions. These claims can arise from various sources, including lenders, government entities, or other parties who have a legal right to the property.

Understanding encumbrances is critical in real estate, as they must be disclosed during property transactions and can significantly influence the buying and selling process. If a property has an encumbrance, the buyer must be aware of it because it may affect their future use of the land or their financial investment in the property.