What is a "property lien"?

A property lien represents a legal right or interest that a lender holds in someone else's property. This occurs when a borrower takes out a loan and the lender seeks security for the loan in the form of collateral, which is often the real property itself. By placing a lien on the property, the lender ensures that they have a claim against the property in the event that the borrower defaults on the loan. This means that the lender can potentially take possession of or force the sale of the property to satisfy the outstanding debt.

The concept of a lien is fundamental in real estate financing because it establishes the lender's priority in a borrower's property. If the borrower fails to make payments, the lien allows the lender to recover their investment, which underscores the importance of understanding property liens in real estate transactions.