encumbrance

encumbrance definition - business

encumbrance

  1. A liability on real property. For example, a mortgage encumbers title to real estate because the lender has an interest in the property. Compare unencumbered.
  2. A commitment within an organization to use funds for a specific purpose. Thus, a college may encumber funds for later payment to cover expenses associated with a faculty member's trip to recruit new professors.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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