What is a lien?

A lien is defined as an adverse claim against property that is utilized as collateral for a debt. This legal right allows a creditor to retain possession of a debtor's property until the debt is satisfied. It serves as a form of security for the repayment of a loan or obligation. For example, if an individual takes out a loan and offers their car as collateral, the lender can place a lien on the vehicle, which grants them a legal claim to repossess the car if the borrower fails to repay the loan.

In this context, the other options do not accurately describe the nature of a lien. A voluntary agreement between two parties relates more to contracts and agreements rather than a claim against property. Ownership transfers deal with the actual conveyance of property rights and do not address the financial backing and claims aspects represented by a lien. A contract for leasing property involves a temporary arrangement for use rather than a claim tied to a debt. Thus, option B accurately captures the essential characteristics and function of a lien in the context of financial transactions and property rights.