What is a lien?

A lien is defined as a financial encumbrance on property, which means it is a legal right or interest that a lender or creditor has in the property, granted until a debt or obligation is satisfied. This encumbrance serves as a form of security for the repayment of a debt, making it an essential concept in real estate transactions.

When a lien exists on a property, it can affect the owner's ability to sell or refinance the property, as the debt must be resolved before clear ownership can be transferred. Liens can arise from various sources, such as mortgages, unpaid property taxes, or unpaid services that have been rendered to the property. Understanding liens is crucial for buyers and sellers of real estate, as they can impact the marketability and value of the property involved in a transaction.

The other options do not accurately describe a lien: property insurance pertains to financial protection against loss or damage, a contractual agreement for property sale refers to the terms of a sale rather than a financial obligation, and an assessment of property value involves determining the market worth of the property rather than a claim against it.