Texas Crammer Practice Exam

Which of the following would be considered an encumbrance against a property?

1. Property taxes

2. Homeowners insurance

3. Title insurance

4. Real estate appraisal

The correct answer is: Property taxes

An encumbrance refers to a claim or liability against a property that may affect its use or transfer. Among the options provided, property taxes are classified as an encumbrance because they represent a legal obligation that the property owner must pay to the government. This obligation can lead to a lien against the property if not paid, which can restrict the owner's ability to sell or refinance the property until the taxes are settled. In contrast, homeowners insurance and title insurance serve different purposes: homeowners insurance provides protection for the property and its owner against damage and liability, while title insurance protects against losses from disputes over property ownership. Both of these insurances do not impose a claim against the property in the same way that property taxes do. A real estate appraisal assesses the value of a property but does not impose any claims or obligations; thus, it does not constitute an encumbrance either.