Unencumbered (Assets) - Explained
What is an Unencumbered Asset?
Written by Jason Gordon
Updated at April 6th, 2023
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What is Unencumbered?
An asset is unencumbered when it is clear of any debt, liens, or claims. Conversely, when a property is encumbered, it means it is not free of financial liability or debt.
An asset may be encumbered if it is subject to any legal claim, such as when it is pleged as collateral for a loan, when it is the subject a legal action (lis pendens filed), or when there is a tax lien, judgment lien, mechanic's lien, or materialman's lien filed against it.
An asset that is unencumbered can be easily sold to a buyer or transferred to another party.
Back To: COMMERCIAL LAW: CONTRACTS, PAYMENTS, SECURITY INTERESTS, & BANKRUPTCY
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