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What does "encumbrance" refer to in a title abstract?

  1. A type of property value

  2. A claim or lien against the property

  3. A declaration of ownership

  4. A surveying error

The correct answer is: A claim or lien against the property

The term "encumbrance" in a title abstract specifically refers to a claim or lien against a property. This legal concept signifies that there are limitations on the property owner's rights or an obligation that must be fulfilled, typically in the form of debt or a claim by another party. Encumbrances can include mortgages, easements, or any other limitations that affect the property’s use or transferability. Recognizing an encumbrance is crucial in property transactions, as it provides potential buyers with important information about the property’s condition and any obligations that must be addressed. This understanding plays a vital role in assessing the marketability of the property, as encumbrances can influence both its value and the potential complications in the transfer of ownership.