encumbrances
Definition
An encumbrance is any claim, lien, or burden that someone else has against your property, which can limit what you can do with it or reduce its value. Think of it as a legal string attached to something you own, where another party has some rights or interest in that property even though you hold the title.
Example
If you took out a business loan and put up your commercial building as collateral, the bank now has an encumbrance on that property, meaning they have a legal claim against it until you pay off the loan.
Watch Out
Before buying any property or business assets, always get a title search done to uncover hidden encumbrances, because you could end up inheriting someone else's debts or legal problems along with the purchase.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.