Business, Legal & Accounting Glossary

Definition: Encumbrance

What is the dictionary definition of Encumbrance?

Dictionary Definition

(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.

Full Definition of Encumbrance

An encumbrance on the Title to land or property is any interest — legal or equitable — that detracts from the owner’s ability to enjoy the land or property without hindrance. Encumbrances range from a long Lease made out of the property, to an Easement preventing the obstruction of light to other buildings. A prospective purchaser will be interested in such things during the Investigation of title. When an estate in land is sold, the seller will contract to provide the land free of encumbrances or, at least, with only specific encumbrances as disclosed to the purchaser. If encumbrances turn up after the sale, then strictly speaking the purchaser has an action against the seller for breach of contract. In reality, these actions are rarely successful, and the purchaser should be very careful to check for encumbrances.

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Encumbrance. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. September 25, 2021 https://payrollheaven.com/define/encumbrance/.
Chicago Manual of Style (CMS):
Encumbrance. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/encumbrance/ (accessed: September 25, 2021).
American Psychological Association (APA):
Encumbrance. PayrollHeaven.com. Retrieved September 25, 2021, from PayrollHeaven.com website: https://payrollheaven.com/define/encumbrance/

Definition Sources

Definitions for Encumbrance are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 27th April, 2020 | 0 Views.