What does an encumbrance refer to in property context?

In the context of property, an encumbrance refers to a claim or liability against a property that may affect its value or use. This can include various forms of claims, such as mortgages, liens, easements, or other financial obligations that are attached to the property. An encumbrance does not prevent the sale of the property but may impose conditions or limitations on its use.

Understanding encumbrances is critical for both buyers and sellers because they can significantly impact the financial and legal aspects of property ownership. For instance, a mortgage is an encumbrance that must be paid off before the property can be sold free and clear. Similarly, easements may allow others to access part of the property, which can influence the owner's plans for development or use.

The other options do not accurately capture the definition of an encumbrance in real estate. A final settlement of property sale relates to the conclusion of a transaction, a real estate agent's fee refers to compensation for services rendered in facilitating sales, and a tax assessment pertains to the valuation of a property for taxation purposes, none of which denote a claim or liability affecting the property itself.