Unencumbered

AAA

DEFINITION of 'Unencumbered'

An asset or property that is free and clear of any encumbrances such as creditor claims or liens. An unencumbered asset is much easier to sell or transfer than one with an encumbrance. Examples of typical unencumbered assets are a house without any mortgage or other lien on it, a car where the automobile loan has been paid off or stocks purchased in a cash account, rather than a margin account.




INVESTOPEDIA EXPLAINS 'Unencumbered'

For the majority of consumers, especially young couples and recent graduates, high-value assets such as real estate and cars are unlikely to be unencumbered, since these purchases are generally financed with debt. Over time, as the mortgage or car loan is paid off, these assets become unencumbered. A title search is a key part of the due diligence process for a buyer of real estate or a used car to check if the asset is indeed unencumbered or has outstanding liens.

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Defective Title

    A piece of property or asset that has a publicly-recorded encumbrance, ...
  3. Encumbrance

    A claim against a property by another party. Encumbrance usually ...
  4. Lien

    The legal right of a creditor to sell the collateral property ...
  5. Margin

    1. Borrowed money that is used to purchase securities. This practice ...
  6. Total Annual Loan Cost (TALC)

    The projected total cost that a reverse mortgage holder should ...
Related Articles
  1. Retirement

    Holding Titles On Real Property

  2. Home & Auto

    Top Tips For First-Time Home Buyers

  3. Credit & Loans

    The Importance Of Your Credit Rating

  4. Options & Futures

    Car Title Loans: Good Option For Fast ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center