Definition of unencumbered
: free of encumbrance
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Recent Examples of unencumbered from the Web
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Buildings are unencumbered by kudzu or graffiti and have tidy, sparsely furnished rooms, as though the inhabitants had only just fled (or been vaporized).
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Yet, The Lonely One feels absolutely unencumbered by that weight.
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The study of personalist dictatorships looks at regimes in which the leader exercises power with little outside restraint, unencumbered by rules or commitment to an ideology.
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His campaign team, unencumbered by a serious primary challenge, will be able to focus on mobilizing voters for the November general election.
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The Detroit RiverFront Conservancy is set to choose among four design proposals for the 22-acre park, which today is largely a flat, unencumbered green space.
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Trade barriers would be especially damaging to Britain’s fresh-food retailers, who rely heavily on the unencumbered movement of perishable goods throughout the EU.
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These are largely self-determining institutions, presumably unencumbered by Byzantine federal hiring regulations and politically motivated leadership and oversight.
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Abraham Lincoln, unencumbered by the opposition of Democratic slave-holding states that seceded in 1861, saw Congress enact legislation to build the first transcontinental railroad.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'unencumbered.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
First Known Use of unencumbered
1722
Financial Definition of UNENCUMBERED
unencumbered
What It Is
An encumbrance is a limitation on the ownership of a property. When an asset is unencumbered, there are no limitations on its ownership.
How It Works
To understand what unencumbered means, it's important to understand how encumbrances work. 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. If 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, then 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 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. Unencumbered assets can therefore help reduce the risk of debt if they become encumbered.
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, which do not have encumbered assets attached, 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
Seen and Heard
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