What is a claim against real property that can affect ownership transfer?

An encumbrance is a claim against real property that can impact the ownership transfer of that property. This term refers to any right or interest in the property that may diminish its value or restrict its use, but it does not represent ownership. Common examples of encumbrances include liens, mortgages, easements, and restrictions.

When a property has an encumbrance, it can complicate or even hinder the process of transferring ownership to another party, as prospective buyers must be aware of any existing claims that could affect their rights to the property. For instance, if there is a mortgage against the property, the buyer might be required to address that debt before the transfer can occur.

Understanding encumbrances is crucial for mortgage loan officers, as they play a significant role in the financing and legal aspects of property transactions. They must ensure that any existing claims are accounted for and resolved to facilitate a clear transfer of title to the new owner.