Which of the following is an example of a title defect?

A title defect refers to any issue that affects the ownership of a property, making it less secure or potentially problematic for the current or future owners. Liens, claims, or encumbrances directly impact the title because they can give others legal rights over the property, potentially hindering the owner's ability to sell or fully utilize their asset. For instance, if there is a lien on the property due to unpaid taxes or debts, it can affect the owner's rights to the property until the issue is resolved.

The other options, while they might relate to property issues, do not directly constitute title defects. Property value depreciation pertains to market conditions rather than legal ownership issues. Legal disputes regarding property borders may affect use but do not inherently alter the title itself in the same essential way that liens or encumbrances do. Unauthorized modifications may lead to zoning or compliance issues but do not affect the legality of the title as liens or claims do. Thus, the presence of liens, claims, or encumbrances is a clear and direct manifestation of a title defect.