Encumbrance Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Encumbrance, written in plain English, along with examples of how it is used.

What is Encumbrance?

(incumbrance)n. a general term for any claim or lien on a parcel of real property. These include: mortgages, deeds of trust, recorded abstracts of judgment, unpaid real property taxes, tax liens, mechanic’s liens, easements and water or timber rights. While the owner has title, any encumbrance is usually on record (with the County Recorder or Recorder of Deeds) and must be paid for at some point.

History and Meaning of Encumbrance

The term "encumbrance" refers to any claim or lien on a piece of real property, meaning anything that limits the owner's ability to exercise full control over their land or property. The concept of encumbrances can be traced all the way back to feudal times, where lords and vassals often held various feudal rights to each other's lands. Today, encumbrances include a wide variety of legal restrictions that may affect the title to a property or its use.

Examples of Encumbrance

  1. A mortgage: When a property is used as collateral for a home loan, a mortgage is created. The mortgage is a type of encumbrance that limits the owner's ability to sell or transfer the property until the mortgage is paid off.

  2. Easements: Easements are legal rights that give someone who doesn't own the property the right to use it for a specific purpose. A common type of easement is a utility easement, which allows the utility companies to access the property to install, maintain or repair utility lines.

  3. Property taxes: Unpaid property taxes create an encumbrance on the property. If the taxes are not paid, the government has the right to sell the property to recover the debt.

Legal Terms Similar to Encumbrance

  1. Lien: A lien is a type of encumbrance that creates a legal claim to secure payment of a debt. If the debt is not paid, the lien holder can foreclose on the property to recover the debt.

  2. Deed restrictions: Deed restrictions are legal agreements that limit the use of the property. For example, a developer may require new homeowners to comply with certain rules, such as restrictions on the type of fence they can install or the color of the house.

  3. Covenants: Covenants are similar to deed restrictions, but they usually apply to an entire community or neighborhood. Homeowners who live in a community with covenants must comply with certain rules, such as keeping their lawn mowed or maintaining a certain level of cleanliness.