Encumbrance

Any interest in or claim on the land that limits the fee simple title to a property, such as a mortgage, lease, easement or restriction.

Anything that affects title to a property, such as loans, leases, easements, or restrictions.

Encumbrance is legal technical terminology for anything that affects or limits the title of a property, such as mortgages, leases, easements, liens, or restrictions. Also, those considered as potentially making the title defeasible are also encumbrances. For example, charging orders, building orders and structure alteration. In Hong Kong, there is statutory definition of "encumbrance". In Conveyancing and Property Ordiance (Cap. 219) it reads: ""encumbrance" (產權負擔) includes a legal and equitable mortgage, a trust for securing money, a lien, a charge of a portion, annuity, or other capital or annual sum;and "encumbrancer" (產權負擔人) has a meaning corresponding with that of "encumbrance" and includes every person entitled to the benefit of an encumbrance, or to require payment or discharge thereof". It is also a term used by colleges and universities to describe limitations placed on a student's account due to late payment, late registration, or other reasons stated by the institution. An encumbrance can prohibit students from registering for classes, affect the release of their transcripts, or delay the reception of their diplomas. In management accounting, encumbrance is a management tool used to reflect commitments in the accounting system and attempt to prevent overspending. Encumbrances allow organizations to recognize future commitments of resources prior to an actual expenditure.