Encumbrance: Definition, Example, and Types of Encumbrances.

What is an encumbrance?
An encumbrance is a legal claim or right against property that may reduce its value or burden its owner. For example, a mortgage is an encumbrance on a house. What is another name for a financial encumbrance? The most common type of financial encumbrance is a mortgage. What is the difference between encroachment and encumbrance? An encroachment is an unauthorized use of another person's land. An encumbrance is a legal claim or restriction on the use of property. What type of account is an encumbrance? An encumbrance is a legal claim or lien on a property that reduces its value or limits its use. Encumbrances can include zoning restrictions, easements, outstanding mortgages or tax liens. Is a loan an encumbrance? A loan is not an encumbrance, but it can be a lien.

What are the different types of encumbrances?

There are many different types of encumbrances that can be placed on real property. Some of the more common encumbrances include mortgages, liens, easements, and restrictive covenants.

A mortgage is a loan that is secured by the property itself. The lender has a legal claim on the property if the borrower fails to repay the loan.

A lien is a legal claim on the property that is held by someone other than the owner. This can happen if the property owner owes money to another person or entity, such as a contractor who has not been paid for work performed on the property.

An easement is a legal right to use someone else's property for a specific purpose. For example, an easement may give a utility company the right to run power lines across a piece of property.

A restrictive covenant is a legal restriction on the use of the property. For example, a restrictive covenant may prohibit the construction of a second home on a lot that is zoned for single-family residences.