What is defined as any claim, lien, or charge against real estate that reduces its value?

An encumbrance refers to any claim, lien, or charge against real estate that reduces its value. It represents a limitation on the property owner's rights or the value of their interest in the property. Common examples of encumbrances include mortgages, easements, and property tax liens. Each of these can affect how the property can be used or its market value.

In the context of real estate, understanding encumbrances is crucial because they can influence the transaction process, financing, and the ability of an owner to use or sell the property. Encumbrances must be disclosed and resolved during title searches and closings to ensure that the buyer is fully aware of any potential issues that could impact the property's value or usability. This knowledge is essential for making informed decisions in real estate transactions.