Investopedia explains 'Encumbrance'
In real estate, if the property has an encumbrance on its title, this will affect the transferability of the title to another party. Encumbrances can also affect property other than real estate such as car titles. With respect to encumbrance accounting, the presence of an encumbrance can give the illusion that there are more available funds inside an account than is actually free for use. In both cases, it is best to understand the details and implications of an encumbrance before engaging in any transaction.
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