An encumbrance is a third party's right to, interest in, or legal liability on property that does not prohibit the property's owner from transferring title (but may diminish its value). Encumbrances can be classified in several ways. They may be financial (for example, liens) or non-financial (for example, easements, private restrictions). Alternatively, they may be divided into those that affect title (for example, lien, legal or equitable charge) or those that affect the use or physical condition of the encumbered property (for example, restrictions, easements, encroachments). Encumbrances include security interests, liens, servitudes (for example, easements, wayleaves, real covenants, profits a prendre), leases, restrictions, encroachments, and air and subsurface rights.

In Hong Kong, there is a statutory definition of "encumbrance". In Conveyancing and Property Ordinance (Cap. 219) it reads: ""encumbrance" (產權負擔) includes a legal and equitable mortgage, a trust for securing money, a lien, a charge of a portion, annuity, or other capital or annual sum; and "encumbrancer" (產權負擔人) has a meaning corresponding with that of "encumbrance" and includes every person entitled to the benefit of an encumbrance, or to require payment and discharge thereof".

It is also a term used by colleges and universities to describe limitations placed on a student's account due to late payment, late registration, or other reasons stated by the institution. An encumbrance can prohibit students from registering for classes, affect the release of their transcripts, or delay the reception of their diplomas.

In management accounting, encumbrance is a management tool used to reflect commitments in the accounting system and attempt to prevent overspending. Encumbrances allow organizations to recognize future commitments of resources prior to an actual expenditure. The term is frequently used in fund accounting, especially among governmental entities.

An example of Intellectual property encumbrance is "encumbered code", software that cannot be freely distributed due to intellectual property rights.

In certain parts of the world, such as India, an Encumbrance Certificate is issued prior to the sale of a home in order to ascertain whether the title of the home is free and clear.

This is the transfer of ownership rights to property belonging to the debtor (the pledger) to the creditor (the pledgee) to secure the repayment of some debt or obligation and for the mutual benefit of both parties. This term is also used to denote property that serves as security. A pledge is a type of security interest. A pledge is the pignus of Roman law, from which much of modern European law on this matter originated; however, it is generally a feature even of the most basic legal systems. A pledge of movable property is known as a pawn.

In the European Union, the Capital Requirements Regulation (CRR) governs credit institutions' obligations to report encumbrances. Article 100 of the CRR requires banks to report in aggregate the amount of REPO transactions, securities lending operations, and all forms of asset encumbrances. Furthermore, Article 433 of the CRR contains provisions on the disclosure of unencumbered assets.