What is an encumbrance?

• A. A challenge to the legality of the title that renders it invalid.
• B. A claim or liability that affects title or use.
• C. A transfer of ownership by deed.
• D. A sale of the property to pay off debts.

Answer: (B)

An encumbrance is a claim or liability that burdens the property's title or its use. This can include liens like mortgages or mechanics’ liens, easements that give others a right to use part of the property, and restrictions or covenants that limit how the property may be used. Encumbrances matter because they can affect marketability and the ability to transfer clear title; buyers and lenders often want those burdens resolved or disclosed so the title can pass cleanly.

It isn’t about transferring ownership, so it’s not a deed conveyance. It isn’t a sale to pay debts, which would be a transaction or foreclosure. And while encumbrances can complicate title, they don’t automatically make the title invalid or void a title challenge might.