Definitions (2)

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

Real estate: A charge, claim, liability, or regulation that 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.

Use encumbrance in a sentence

  • Taking care of a disabled person is seen by some as an encumbrance, but disabled people are more than their disabilities and are much more than someone who needs caretaking

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  • Even though the backpack is uncomfortable and an encumbrance, the contents are an important and vital part in completing the mission.

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  • Every purchase order is entered as an encumbrance on company funds, thereby reserving the use of those funds for a specific purpose.

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