What term describes a claim on the property of another as security for a debt?

What term describes a claim on the property of another as security for a debt?

• A. Lein
• B. Loan
• C. Mortgage
• D. Title

Answer: (A)

The correct term that describes a claim on the property of another as security for a debt is "lien." A lien provides the creditor with a legal right or interest in the property of the debtor, which allows the creditor to claim the property under certain conditions, typically when the debtor fails to meet the obligations outlined in the debt agreement. This can be crucial in situations where the debtor defaults, as the creditor may then initiate legal actions to recover the owed amount by potentially forcing a sale of the secured property. In contrast, a loan is simply the sum of money borrowed that is expected to be paid back with interest but does not imply ownership claims on property. A mortgage is a specific type of lien that pertains to real estate, wherein the property itself acts as collateral for the loan. Title refers to legal ownership of property but does not convey any security interest related to debts. Understanding these distinctions is important in grasping the concept of financial security and property rights within the context of business and legal transactions.

The correct term that describes a claim on the property of another as security for a debt is "lien." A lien provides the creditor with a legal right or interest in the property of the debtor, which allows the creditor to claim the property under certain conditions, typically when the debtor fails to meet the obligations outlined in the debt agreement. This can be crucial in situations where the debtor defaults, as the creditor may then initiate legal actions to recover the owed amount by potentially forcing a sale of the secured property.

In contrast, a loan is simply the sum of money borrowed that is expected to be paid back with interest but does not imply ownership claims on property. A mortgage is a specific type of lien that pertains to real estate, wherein the property itself acts as collateral for the loan. Title refers to legal ownership of property but does not convey any security interest related to debts. Understanding these distinctions is important in grasping the concept of financial security and property rights within the context of business and legal transactions.