Check Your Understanding Answers
- Define an encumbrance.
An encumbrance is the term used to describe another’s interest in and right to real property that limits the legal owner's freehold interest.
- List three types of nonfinancial encumbrances. (Additional answers on page 2.)
- Easements
- Encroachments
- Deed Restrictions
- What is the purpose of deed restrictions?
The purpose of deed restrictions is to create a standard within a community and protect home values.
- What is a lien?
A lien is a creditor's claim against personal or real property as security for a debt of the property owner.
