encumbrance

Definition 1

Accounting: contingent liability, contract, purchases order, payroll commitment, tax payable, or legal penalty that is chargeable to an appropriation account. It ceases to be an encumbrance when paid-out or when the actual liability amount is determined and recorded as an expense.

Definition 2

Real estate: Charge, claim, liability, or regulation which is attached to and is binding upon a property. It may affect the clarity of a good title (see clear title) or may diminish the value of property, but may not prevent transfer of title. An encumbrance can take several forms: mortgages, claims by other parties, court judgments, pending legal action, unpaid taxes, restrictive deed or loan covenants, easement rights of the neighbors, or zoning ordinances.