What is a lien?

A lien is defined as a legal right or interest that a lender has in a borrower's property, which is granted until the borrower satisfies the debt obligation. This means that the lender is given a claim to the property to secure the repayment of a loan. If the borrower fails to meet their payment obligations, the lender can take legal action to enforce the lien, potentially allowing them to seize the property to satisfy the debt.

Liens serve as a crucial mechanism in finance and real estate, as they protect the interests of lenders and ensure that they have a legal claim to the assets in question. This legal framework provides a level of security for lenders, as the lien gives them rights to the property until the borrower repays the debt in full.

Understanding lien terminology is essential for anyone working in title insurance or real estate, as liens can significantly impact property transactions, ownership rights, and the ability to transfer property to others.