What is an encumbrance?

An encumbrance is a legal claim or limitation on property that exists when an individual or organization has a legal right to property or a claim on it. This claim or limitation may affect the use, enjoyment, or value of the property. In California, encumbrances can take the form of mortgages, liens, easements, or covenants. Mortgages are the most common type of encumbrance and involve a loan to purchase property. Liens also involve a loan, but they are usually secured by the property, such as property taxes or mechanics liens. Easements involve granting a person or organization the right to use or access a portion of the property. Covenants are promises or restrictions that are contained in the deed or title of a property. These encumbrances can affect the transfer of property, as they must be satisfied or removed before a title can transfer completely. Depending on the type of encumbrance, the owner or organization may need to take certain steps to satisfy or remove it. In California, all parties must be aware of any encumbrance on property before a purchase or transfer is made.

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