Encumbrance

An encumbrance is a broad legal term representing any limitation or claim on a property owner’s rights. Common examples of encumbrances include mortgages, easements, deed restrictions, property tax liens, and encroachments.

Texas-Specific Nuance & Citation

Under Texas real estate law, encumbrances can be physical (such as easements and encroachments) or financial (such as mortgage liens or mechanic’s liens). Sellers are generally required to disclose all known encumbrances to buyers under Texas Property Code § 5.008.

The Trap

Candidates sometimes think an encumbrance completely blocks a sale. It does not. A property can be sold with an encumbrance (like an easement), but the buyer will take title subject to that encumbrance. Mortgage encumbrances must typically be satisfied or cleared at or prior to closing.

Worked Example

A home buyer in Arlington purchases a property that has a documented easement allowing the city to access a sewer line in the backyard. This easement is an encumbrance. It does not prevent the sale, but the buyer must allow city utility workers access and cannot build a pool over that utility corridor.