An encumbrance is described as?

An encumbrance refers to a claim, liability, or restriction on a property that typically impacts the owner’s ability to use or transfer the property freely. In this case, a lien is a type of encumbrance that can diminish property value because it represents a legal right or interest that a lender or creditor has in the property until the debt obligation is satisfied. This means that an existing lien must be resolved (usually paid off) before the property can be sold or otherwise transferred and, consequently, can lower the property’s market value in the eyes of potential buyers who consider the lien as a financial burden.

The other options do not accurately reflect the nature of encumbrances. A restriction that increases property value is not characteristic of encumbrances, as encumbrances typically represent limitations rather than enhancements. A contract for property sale does not capture the essence of an encumbrance, as it pertains to a transaction rather than an ongoing claim or restriction on the property. Lastly, while zoning laws involve governmental regulations that can affect property use, they are not classified as encumbrances as defined within property law. Thus, the understanding of encumbrances is critical for evaluating how they affect property ownership and marketability.