Encumbrance

Encumbrance is any claim or liability appended to and binding upon the real property that may reduce the value and enjoyment of that property. It generally affects the transferability of the property and remains with it even after it has been transferred to some other person. It is also known as lien. It is of two types:

• Money encumbrance - such as mortgage, tax lien, mechanic's lien.



• Non money encumbrance - such as an encroachment etc.

For example, Adam has mortgaged his land to Sam Jones due to some personal reasons. Now Sam has a right and interest in the property of Adam, though he is not a legal owner of Adam's property. This is known as encumbrance.