Back to Glossary
January 19, 2023
An encumbrance is a claim made against a property by someone other than the owner. An encumbrance can affect the property's transferability and restrict its free use until the impediment is gone. Mortgages, easements, and property tax liens are the most frequent types of encumbrances on land. Encumbrances are not always monetary; easements are examples of a non-financial encumbrance. Personal property, as opposed to real property, can be encumbered. In accounting, the word refers to restricted funds inside an account set aside for a particular liability.