encumbrance

  

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.
2.

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.


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