What term refers to a charge or encumbrance on property?

The correct term that refers to a charge or encumbrance on property is "lien." A lien is a legal right or interest that a lender has in the borrower's property, granted until the debt obligation is satisfied. When a lien is placed on a property, it means that the property serves as collateral for the debts, and creditors can take legal actions to collect their dues, including seizing the property if necessary.

Understanding the concept of a lien is essential, especially in the context of personal lines insurance, because it directly impacts a property owner's financial responsibilities and the ability to transfer or sell the property. For instance, if a property has a lien against it, the owner may not be able to sell the property without first settling the debt tied to that lien.

In contrast, while a mortgage is a specific type of lien that involves real estate transactions and obligations related to borrowing, the broader term that encompasses multiple forms of financial claims against a property is "lien." Other terms, such as "encumbrance" or "liability," refer to different concepts related to property but do not specifically indicate a legal claim as a lien does. A lien represents a direct financial interest that affects ownership rights.