What is created when real estate is pledged as security for a loan?

When real estate is pledged as security for a loan, a lien is created. A lien serves as a legal claim against the property, which gives the lender certain rights over it. This means that if the borrower defaults on the loan, the lender has the ability to take possession of the property through foreclosure to satisfy the debt.

The nature of a lien is such that it attaches to the property itself, making it an important legal instrument in real estate financing. By establishing a lien, lenders ensure that their investment is protected and have a way to recoup their losses in case of non-payment.

In contrast, an easement involves granting someone the right to use a portion of the property for a specific purpose, rather than securing a loan. A trust, while it can relate to property, primarily concerns the management and control of assets rather than acting as security for a loan. A claim is a more general term that suggests some right to a property or a demand for payment but does not specifically refer to the secured rights that a lien provides.