Definition of unencumbered
: free of encumbrance
Recent Examples of unencumbered from the Web
Most casual celebrity parties are private affairs, an escape from cameras, but photos of this annual tradition fly free and unencumbered.
So much of what defines craft beer is an independent spirit to be innovative and creative and unencumbered.
By 2012, Farnham's path back to Springfield seemed largely unencumbered.
Majority leader Beth DelBuono said the town will pay for whatever costs the health benefit refund does not cover in January, when the charter allows them to transfer unencumbered funds.
The ruling is largely a salary-cap mechanism that allows the Heat to enter free agency unencumbered by the possibility of Bosh's salary returning to their payroll.
Unlike the U.S., states are unencumbered by international historical baggage such as human rights, Tibet, the South China Sea, North Korea and nuclear proliferation, through Brown has at times expressed interest in those topics.
The result of such a shift in relations is likely to be a more independent Europe, very likely led by a robust Germany increasingly unencumbered by the restraints of World War II memories, some experts say.
Unafraid of confrontation and unencumbered by an active sense of humor, Bunning could come across as pugnacious.
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
Financial Definition of 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.
Seen and Heard
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