An asset or property that is free and clear of any encumbrances such as creditor claims or liens. An unencumbered asset is much easier to sell or transfer than one with an encumbrance. Examples of typical unencumbered assets are a house without any mortgage or other lien on it, a car where the automobile loan has been paid off or stocks purchased in a cash account, rather than a margin account.

For the majority of consumers, especially young couples and recent graduates, high-value assets such as real estate and cars are unlikely to be unencumbered, since these purchases are generally financed with debt. Over time, as the mortgage or car loan is paid off, these assets become unencumbered. A title search is a key part of the due diligence process for a buyer of real estate or a used car to check if the asset is indeed unencumbered or has outstanding liens.

Investment dictionary. . 2012.

Look at other dictionaries:

  • unencumbered — index exempt, free (relieved from a burden), immune, independent, unbound, unrestrained (not in custody) Burton s Legal Thesaurus. William C. Burton …   Law dictionary

  • unencumbered — (adj.) 1722, from UN (Cf. un ) (1) not + pp. of ENCUMBER (Cf. encumber) …   Etymology dictionary

  • unencumbered — ► ADJECTIVE ▪ not having any burden or impediment …   English terms dictionary

  • unencumbered — [spelling only] …   English World dictionary

  • unencumbered — UK [ˌʌnɪnˈkʌmbə(r)d] / US [ˌʌnɪnˈkʌmbərd] adjective without responsibilities or problems She liked to live free and unencumbered by marriage …   English dictionary

  • unencumbered — Without any impediments, e.g., an unencumbered title to property …   Black's law dictionary

  • unencumbered — adjective Date: 1722 free of encumbrance …   New Collegiate Dictionary

  • unencumbered — adj. * * * …   Universalium

  • unencumbered — adjective a) not burdened with worries, cares or responsibilities b) free of encumbrance …   Wiktionary

  • unencumbered — Property that is not subject to any claims by creditors. For example, securities bought with cash instead of on margin and homes with mortgages paid off. Bloomberg Financial Dictionary …   Financial and business terms

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