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

Keep scrolling for more

Examples of encumbrance in a Sentence

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

First Known Use of encumbrance

1535, in the meaning defined at sense 1

Keep scrolling for more

Learn More about encumbrance

Dictionary Entries near encumbrance








Statistics for encumbrance

Look-up Popularity

Time Traveler for encumbrance

The first known use of encumbrance was in 1535

See more words from the same year

Keep scrolling for more

More Definitions for encumbrance



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

Keep scrolling for more

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

Comments on encumbrance

What made you want to look up encumbrance? Please tell us where you read or heard it (including the quote, if possible).


to move or obtain by small maneuvers

Get Word of the Day daily email!

Test Your Vocabulary

Summer 2019 Words of the Day Quiz

  • a-bowl-of-peach-sorbet-with-cut-peaches-next-to-it
  • Which is a synonym of desideratum?
Name That Thing

Test your visual vocabulary with our 10-question challenge!

Word Winder's CrossWinder

Test Your Knowledge - and learn some interesting things along the way.

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!