In terms of real estate, what is an encumbrance?

An encumbrance is defined as a legal claim or liability against a property that may affect its transfer of ownership or reduce its value. This could take various forms, such as a mortgage, a lien, or a easement. Essentially, an encumbrance serves as an assertion by a third party over the property, which means that this third party has a legal interest in the property that may need to be settled before the property can be sold free and clear.

In the context of real estate transactions, it is crucial for buyers and sellers to be aware of any encumbrances because they could impact the way a property can be used or the overall financials related to the property ownership. Understanding the nature of different encumbrances helps in assessing potential risks involved in a transaction.

The other options, while related to real estate, represent different concepts. For instance, a tax on the property refers specifically to governmental charges rather than a claim by a party. A type of lease agreement pertains to the rental of real estate rather than a legal claim about the ownership or rights to the property. A home warranty, on the other hand, is a service contract that covers certain repairs within a home and does not represent a legal claim against it. Therefore