An encumbrance is a claim against a property by a party that is not the owner. It can impact the transferability of the property and restrict its free use until the encumbrance is lifted. Encumbrances can be classified in several ways, including financial or non-financial. Some common types of encumbrances include mortgages, easements, and property tax liens. Encumbrances can also apply to personal property, and the term is used in accounting to refer to restricted funds inside an account that are reserved for a specific liability. Encumbrances are important in determining how much funds are available as a projected expense planning tool. They serve as a reminder to budget managers or fund holders that funds have been committed and to preserve enough funds to pay for the good or service when it is eventually delivered.