How does a lien differ from an encumbrance?

A lien serves a specific purpose in securing payment for a debt, which means it is a claim placed on a property to ensure that a debt is settled. When a lien is in place, it directly impacts the owner's ability to sell or refinance the property since the debt must be resolved before the title can be transferred to another party. This makes the lien a critical tool for creditors to enforce their rights.

On the other hand, an encumbrance refers to any claim, liability, or restriction on a property that can affect its title, including but not limited to liens. Encumbrances can include easements (rights of way), leases, or other restrictions that may affect the property's value or use. They do not necessarily secure payment but can act to limit the owner's rights over the property. Therefore, while all liens are encumbrances, not all encumbrances are liens, highlighting the distinction between the two terms.

This understanding is essential because it connects to broader concepts in property law – recognizing how varying forms of claims affect ownership and the marketability of a property.