Massachusetts Real Estate License Practice Test

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Study for the Massachusetts Real Estate License Test. Prepare with multiple choice questions and explanations. Ace your exam with comprehensive practice!

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What does the term encumbrance refer to in real estate?

Insurance against damage to property
A legal claim against a property that may affect its transfer
A type of lease agreement
A loan secured by property

The correct answer is: A legal claim against a property that may affect its transfer

The definition of encumbrance in real estate primarily relates to a legal claim or liability attached to a property. This claim may affect the property's ability to be transferred or its marketability. Encumbrances can take various forms, such as liens, easements, and restrictions, which could impose certain obligations on the property owner or restrict the use of the property in some manner. It is essential for buyers and sellers to be aware of any encumbrances that may exist, as they can impact property value and the ease of transferring ownership. In contrast, options like insurance against damage focus on protection rather than legal claims, while a type of lease agreement pertains specifically to rental agreements and not broader legal claims on a property. A loan secured by property is a specific type of encumbrance (mortgage), but it doesn't encompass all possible encumbrances like easements or other liens that could exist on a property. Thus, the comprehensive understanding of encumbrance as a legal claim that may hinder property transfer aligns well with the correct answer.