Incumbrance, more commonly spelled as encumbrance, is a lien or claim on real estate. Examples of an incumbrance may include tax liens, deeds of trust, mechanic's lien, timber or water rights, easements, etc. It can also be defined as the burden on a property and can affect property's value.
Incumbrance may diminish the value on real estate, but can't prevent the transfer of title. It is treated as contingent liability, payroll commitment, contract, legal penalty, tax payable, purchases order, etc., and charged to appropriate account.