An encumbrance is any right or interest a party other than the owner holds in a property that can affect its value, use, or transferability. It is a broad umbrella term covering several kinds of claims and restrictions.
Encumbrances include financial claims like liens and mortgages, as well as non-financial ones like easements, deed restrictions, and encroachments. Some encumbrances, such as a mortgage, are cleared at sale, while others, such as an easement or CC&Rs, remain attached to the property.
Buyers should identify encumbrances during due diligence because they can limit what an owner can do with the property or reduce its value. A title search and title commitment disclose recorded encumbrances before closing.