Which term defines an encumbrance?

Which term defines an encumbrance?

• A. Down payment in a property
• B. Total sum of money invested in a property
• C. Structure or improvement on the property
• D. Limitation attached to the property

Answer: (D)

An encumbrance is best defined as a limitation attached to a property. This can include various claims, liens, or restrictions that affect the property’s ownership or use. Examples of encumbrances can be easements, which allow others to use a portion of the property for specific purposes, or mortgage liens that a lender may place on the property as security for a loan. These limitations can impact a property’s value, the owner's rights, or the ability to sell the property freely. The other choices do not accurately encompass what an encumbrance is. For instance, a down payment relates specifically to the portion of purchase price paid upfront when buying real estate, not a limitation or claim on the property itself. The total sum of money invested in a property refers to the overall financial commitment made by the owner, which does not imply any restrictions or limitations. Lastly, a structure or improvement on the property deals with physical changes to the land and does not necessarily relate to claims or limitations on the property’s use.

An encumbrance is best defined as a limitation attached to a property. This can include various claims, liens, or restrictions that affect the property’s ownership or use. Examples of encumbrances can be easements, which allow others to use a portion of the property for specific purposes, or mortgage liens that a lender may place on the property as security for a loan. These limitations can impact a property’s value, the owner's rights, or the ability to sell the property freely.

The other choices do not accurately encompass what an encumbrance is. For instance, a down payment relates specifically to the portion of purchase price paid upfront when buying real estate, not a limitation or claim on the property itself. The total sum of money invested in a property refers to the overall financial commitment made by the owner, which does not imply any restrictions or limitations. Lastly, a structure or improvement on the property deals with physical changes to the land and does not necessarily relate to claims or limitations on the property’s use.