en·​cum·​brance | \ in-ˈkəm-brən(t)s How to pronounce encumbrance (audio) \

Definition of encumbrance

1 : something that encumbers : impediment, burden
2 : a claim (such as a mortgage) against property

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Examples of encumbrance in a Sentence

without the encumbrance of a heavy backpack, I could sprint along the trail

Recent Examples on the Web

Perhaps the Prius’ greatest accomplishment — making hybrid technology mainstream — is now its greatest encumbrance. Bloomberg, Twin Cities, "Prius sales are falling, but hybrids are more popular than ever," 3 June 2019 Musk points out that with shipping-container farms, which lock out all the traditional encumbrances of farming—drought, locusts, 24-hour cycles of day and night—optimization of food is possible. Kevin Dupzyk, Popular Mechanics, "Kimbal Musk Is Reinventing Food One Shipping Container at a Time," 24 Oct. 2018 That might sound nice to Trump: a Supreme Court justice who’s sympathetic to the encumbrance of an ongoing investigation. Jen Kirby, Vox, "7 legal experts on how Kavanaugh views executive power — and what it could mean for Mueller," 11 July 2018 Google has been an advocate for open video To be fair to Google, the search giant has often been an advocate of keeping video standards free of patent encumbrances. Timothy B. Lee, Ars Technica, "Inventor says Google is patenting work he put in the public domain," 10 June 2018 The North Face bills the Flight RKT as a running shell, and the jacket performs well in high-output situations that call for protection without the encumbrance of layers. Ariella Gintzler, Outside Online, "Battle of the Lightweight Storm Shells," 11 May 2018 For a quarter-century, your humble Observer's gaze has peered through ice, rain, steam, sweat and most other encumbrances, but even he was staggered by the downpours challenging this year's party. The Masked Observer, AL.com, "Masked Observer muses on Mellow MoonPies and Carnival's unwavering spirit," 16 Feb. 2018 The agreement temporarily helps Sears with its goal to get its products into the hands of consumers without the encumbrance of expensive real estate holdings. Deb Gabor, Fortune, "How the Amazon-Sears Deal Could Make the Smart Home a Reality," 26 July 2017 What was the overwhelming encumbrance of that area? C. J. Hughes, New York Times, "Second Avenue Subway Brings New Development," 7 July 2017

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'encumbrance.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of encumbrance

1535, in the meaning defined at sense 1

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Statistics for encumbrance

Last Updated

18 Jun 2019

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Time Traveler for encumbrance

The first known use of encumbrance was in 1535

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Financial Definition of encumbrance

What It Is

An encumbrance is a limitation on the ownership of a property.

How It Works

In the real estate world, an encumbrance is similar to a lien. The bond world also includes encumbrances. For instance, let's consider a $100 million bond issue by Company XYZ. Let's say that Company XYZ is willing to pledge $100 million of its assets to the bondholders (that is, let the bondholders place liens on specific assets that they may seize in the event of default), giving them a little extra assurance that they will be paid on time. In that case, the bonds would be considered securitized or asset-backed because the assets have $100 million of encumbrances on them.

Why It Matters

Encumbrances provide security to lenders and bond investors in the case of bankruptcy or default. For example, it is important to note that debentures (bonds backed by the full faith and credit of the issuer) do not have encumbrances. That is, they are not secured by specific pieces of property or collateral and they do have a general claim on the assets and earnings of the issuer. Therefore, if the issuer were to liquidate, the holders of the debenture bonds have a claim on any assets not specifically pledged to secure other debt.

Companies that are extremely creditworthy often have no reason to encumber specific assets in order to sell a bond issue because they'll still pay relatively low interest rates. (This is why debentures can sometimes sell for more than bonds with encumbrances from less creditworthy issuers.) Sometimes issuers also want to leave their assets unencumbered in order to make future financings possible.

Source: Investing Answers


variants: also incumbrance \ in-​ˈkəm-​brəns \

Legal Definition of encumbrance

: a claim (as a lien) against property specifically : an interest or right (as an easement or a lease) in real property that may diminish the value of the estate but does not prevent the conveyance of the estate that these premises are free from all encumbrances

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More from Merriam-Webster on encumbrance

Thesaurus: All synonyms and antonyms for encumbrance

Spanish Central: Translation of encumbrance

Nglish: Translation of encumbrance for Spanish Speakers

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