Encumbered

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Encumbered

A property owned by one party on which a second party reserves the right to make a valid claim, e.g., a bank's holding of a home mortgage encumbers property.

Encumbered

Describing securities or assets that are subject to one or more liens. That is, encumbered securities belong to one person or entity but are subject to a claim by another. Encumbered securities or assets may not be sold until the lien or debt on them is satisfied. One of the most common encumbered assets is a house with a mortgage. A homeowner may not sell the house until the mortgage is paid off (though, in practice, the proceeds from the sale of the house pay off the mortgage).