How are estimated property taxes typically categorized on a title report?

Estimated property taxes are categorized as encumbrances on a title report because they represent a financial obligation that affects the property's title. Encumbrances are claims, liens, or liabilities against the property and can hinder the owner's ability to sell or transfer ownership until they are settled. Property taxes fall into this category as they are essentially a lien on the property for unpaid taxes.

This distinction is important in real estate as potential buyers need to be aware of any outstanding taxes that could impact their ownership or lead to the tax authority placing a lien on the property. Recognizing property taxes as encumbrances helps in understanding the financial responsibilities tied to the property.

In contrast, deductibles, liabilities, and assets involve different financial classifications that do not specifically pertain to the liabilities or claims against a property’s title in the context provided by a title report.