What is an encumbrance in real estate terms?

An encumbrance in real estate refers to a legal claim or liability attached to a property. This can include various types of claims such as mortgages, easements, liens, and restrictions that may affect the property's use or transferability. Recognizing that an encumbrance can impact the rights of property owners and potential buyers is crucial, as it represents a burden that could limit the enjoyment of the property or impose financial obligations. Understanding encumbrances is essential for anyone involved in real estate transactions, as they play a significant role in both the valuation and the legality of property transfers.