Texas Real Estate State Practice Exam

What is the definition of an Encumbrance in real estate?

1. Plot

2. Involuntary lein

3. Limitation on your rights

4. Created by law

The correct answer is: Limitation on your rights

An encumbrance in real estate refers to a limitation on the rights of a property owner, which can affect the property’s value and the owner's ability to sell or transfer the property. This definition encompasses various types of claims, liabilities, or restrictions that can be placed on a property. For instance, easements, mortgages, and tax liens are all considered encumbrances because they restrict the property owner's use of their property. The concept of encumbrance emphasizes the idea that while you may own a property outright, there can be legal claims or restrictions that impact your ownership rights. Such limitations can arise from various sources, including contracts, laws, or agreements between parties. Therefore, this answer captures the essence of what an encumbrance is in real estate terms, since it highlights the constraints imposed on ownership rights, making it the most suitable definition.