What is a lien in real estate?

A lien in real estate is fundamentally understood as a legal claim against a property that must be settled before the property can be sold or transferred. When a lien is placed on a property, it indicates that there is an obligation, typically a debt, associated with that property. This means that the owner does not have clear title to the property until the lien is resolved—usually through payment of the underlying obligation. Liens can arise from various sources, such as unpaid property taxes, mortgages, or judgments from lawsuits.

Understanding this concept is crucial for real estate transactions because it signifies that any buyer of the property may inherit the obligation tied to that lien unless it is cleared beforehand. This is why clearing all liens is often a critical step in the closing process of real estate sales.

In contrast, the other options focus on different aspects of real estate that do not encapsulate the nature of a lien. For instance, property tax, while it can be a type of lien, does not describe what a lien fundamentally represents. A type of mortgage with variable interest rates describes loan characteristics but is not related to legal claims on property. Similarly, a rental agreement pertains to leasing rather than ownership or claims over property. Therefore, the definition of a lien as a legal claim