Which term defines an encumbrance?

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.