What is a lien?

A lien is fundamentally defined as a legal right or interest that a lender has in the borrower's property, typically as security for the repayment of a loan or debt. This means that if the borrower fails to repay the debt, the lender may have the authority to take possession of the property to satisfy the outstanding obligation. Liens are important in the context of securing loans for properties such as homes or vehicles, as they give lenders assurance that there is a tangible asset backing the loan. The presence of a lien can also affect the borrower's ability to sell or refinance that property until the lien is resolved, highlighting its significance in lending and finance.

Other options mentioned do not pertain to the concept of a lien. Credit scores are numerical representations of a borrower's creditworthiness, financial statements are formal records detailing a company’s financial activities, and government bonds are investment instruments used to finance government spending and are unrelated to property rights or security interests. Understanding the nature of liens is essential for those involved in real estate and finance, as they represent a crucial aspect of collateral in securing loans.