Definition

Encumbrance (sometimes used in the old form of incumbrance) (RO.: în domeniul drepturilor reale, sarcină/servitute asupra unui imobil, ipotecă, Gr.: βάρος, Cz.: finanční břemeno) (See also: lien, easement, restriction, encroachment, security interest, servitude, lease, charge, mortgage, zoning ordinance, clear title)

=

(in real estate) is a right to, interest in, or legal liability attached to immovable property.  There are encumbrances which affect the title (lien, charge) and others that only affect the use of the property (easements, restrictions, encroachments). The encumbrance does not prohibit the transfer of property, but it does diminish its value.

(in accounting) regards the funds put aside for a transaction until the payment can be concluded, making them unavailable for other transactions. The funds are still part of the account, but cannot be spent.

(regarding movables) may represent  a claim against someone else’s property. The person who purchases personal property is provided with a warranty of title against unknown encumbrances (RO.: garanția contra evicțiunii).

In all instances, the encumbrance restricts the use of property/funds until the issue is resolved. 

 

Useful links

Legislation

http://www.eba.europa.eu/regulation-and-policy/supervisory-reporting/draft-implementing-technical-standard-on-supervisory-reporting-asset-encumbrance - European Bank Authority, Draft Implementing Technical Standard (ITS) on Supervisory Reporting (Asset Encumbrance)

http://www.oregonlaws.org/ors/411.694 – Oregon Code, Request for notice of transfer or encumbrance of real property held by recipient

http://www.codulcivil.ro/?s=ipoteca – Romanian Civil Code, Ipoteca

http://www.codulcivil.ro/?s=servitute – Romanian Civil Code, Servitutea

http://www.codulcivil.ro/?s=evictiune – Romanian Civil Code, Garanția pentru evicțiune

Online articles

http://www.finweb.com/real-estate/types-of-real-estate-encumbrances.html#axzz2kcCrG9jo - Financial Web, Types of encumbrances

http://realestate.about.com/od/realestatebasics/p/proencumbrnc.htm - Kimmons, J., Types of Real Estate Encumbrances

http://www.smallcommunications.com/PrelicensingReview/Real_Property/Encumbrances.html - Perkins, I., Physical Encumbrances Chart

 

By Irina Negruțiu