California Real Estate Practice Exam

Which of the following is an encumbrance?

1. Freehold estate

2. Homestead

3. Lease agreement

4. Recorded subdivision map

The correct answer is: Freehold estate

An encumbrance refers to a claim, lien, charge, or liability attached to and binding upon real property. Among the choices provided, a lease agreement fits this definition because it grants the lessee a right to use and occupy the property for a specified period while creating a claim against the property that remains in effect regardless of the ownership. This means the property owner must adhere to the terms of the lease, making it a restriction on the owner's rights. In contrast, a freehold estate represents ownership interest in real property that is typically not encumbered and does not restrict the owner's rights. A homestead is a legal designation that certain properties may receive, which can offer some protection against creditors but does not itself constitute a claim against the property. A recorded subdivision map details the layout of subdivided land but doesn’t impose any claims or restrictions in the way an encumbrance does.