encumbrance

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Encumbrance

1. In accounting, an amount of money that one is required to spend on a stated thing in the future. For example, a portion of the proceeds of a sale may be encumbered to pay for the cost of goods sold.

2. In real estate, any claim of ownership that may cloud the legitimacy of a sale. See also: Bad title.

encumbrance

1. A liability on real property. For example, a mortgage encumbers title to real estate because the lender has an interest in the property. Compare unencumbered.
2. A commitment within an organization to use funds for a specific purpose. Thus, a college may encumber funds for later payment to cover expenses associated with a faculty member's trip to recruit new professors.
References in periodicals archive ?
By cleaning our homes, we add to the natural joy of Spring and get rid of unnecessary encumberances, leaving ourselves free to concentrate on more spiritual matters.
The unemployment rate, which has remained stubbornly high at or near 10 percent since October 2003, is one of the main encumberances to economic expansion.
Any encumberances which might prevent students from registering (such as unavailability of transcript or non-completion of an advising process required for students under 20) are detailed in the packet.