daily life examples of encumbrance, lease,servitude,security and trusts
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What Is an Encumbrance?
An encumbrance is a claim against a property by a party that is not the owner. An encumbrance can impact the transferability of the property and restrict its free use until the encumbrance is lifted. The most common types of encumbrance apply to real estate; these include mortgages, easements, and property tax liens. Not all forms of encumbrance are financial, easements being an example of non-financial encumbrances. An encumbrance can also apply to personal – as opposed to real – property.
The term is used in accounting to refer to restricted funds inside an account that are reserved for a specific liability.
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