What is a tax lien?

A tax lien is a legal claim established by a government entity against a property when the property owner fails to pay their taxes. This means that the government has a right to take possession of the property or sell it in order to settle the tax debt. Tax liens serve as a security interest for governments, ensuring that they can recover unpaid taxes. They can affect the property owner's credit score and ability to sell the property, as potential buyers may be deterred by the existence of the lien. This concept is crucial for understanding how tax obligations can impact property ownership and transactions in real estate.

The other options are not related to tax liens. The second choice refers to documents defining buyer rights in real estate transactions, which is a different legal concept. The third option describes penalties related to mortgage payments, while the fourth choice involves insurance, neither of which pertain to the government claims associated with unpaid taxes.