What does "encumbrance" refer to in real estate?

In real estate, the term "encumbrance" refers specifically to a claim, lien, or liability that is attached to a property and can affect its transferability. This encompasses various interests, such as mortgages, easements, and restrictive covenants that can restrict the owner's use of the property. Encumbrances can complicate the process of selling or transferring property since they may need to be addressed or cleared before a sale can proceed.

For instance, if a property has a mortgage on it, that mortgage is an encumbrance that the seller must consider when selling the property, as the buyer may only receive the property free and clear if all debts attached to it are resolved. Understanding encumbrances is crucial for both buyers and sellers in order to navigate the complexities of real estate transactions effectively.