What is a lien?

A lien is fundamentally a legal claim against a property that serves to secure payment of a debt. When a lien is placed on a property, it means that the lender or creditor has a legal right to possess or take action against that property if the debt is not settled. This mechanism provides assurance to lenders, allowing them to recover funds through the property's value if the borrower defaults on their obligation.

This concept is crucial in real estate transactions and property law, as it determines the priority of claims against the property. For example, if a homeowner fails to pay their mortgage, the bank holding the mortgage lien has the right to initiate foreclosure proceedings on the property.

The other options refer to different concepts unrelated to the definition of a lien. Property insurance pertains to protection against various types of damage or loss to property. A tax imposed on real estate transactions relates to taxes that may be due when properties are bought or sold, such as transfer taxes. Finally, a lease agreement pertains to the relationship between landlords and tenants, establishing terms for property rental rather than any financial claim against the property. Thus, the most accurate definition of a lien is indeed a legal claim against a property to secure payment of a debt.