What does "encumbrance" mean in real estate?

In real estate, "encumbrance" refers to a claim, lien, or liability that affects the value or use of property. This can include various types of legal rights or interests held by others that encumber the property. For instance, a mortgage is an encumbrance because it is a claim against the property until the loan is repaid. Other examples include easements, which allow others to use a portion of the property for a specific purpose, or tax liens, which arise when property taxes are not paid. Understanding encumbrances is crucial for title insurance producers, as they impact the marketability of the property and can affect the transaction process, particularly in ensuring clear title for buyers. Recognizing the implications of encumbrances is integral to assessing property value and the risks involved in real estate transactions.