Florida Building Contractor Business/Finance Practice Exam

What term describes the legal right to keep possession of property until a debt owed by the owner is discharged?

1. Privilege

2. Liability

3. Lien

4. Encumbrance

The correct answer is: Lien

The correct term that describes the legal right to keep possession of property until a debt owed by the owner is discharged is "Lien." A lien serves as a claim or legal right against an asset that is typically granted to a creditor. In the context of property, it ensures that the creditor can retain a secured interest in the property and can take necessary steps, such as selling the property, to recover the debt if the owner fails to pay. This mechanism is essential in both residential and commercial real estate transactions, as it protects the financial interests of lenders and service providers by providing a way to secure payment. Though terms like privilege, liability, and encumbrance are relevant in the context of property rights and financial obligations, they do not specifically encapsulate the concept of retaining possession until a debt is settled. A privilege may refer to a special right or advantage conferred on a person, liability relates to a person's legal responsibilities or debts, and encumbrance broadly refers to any claim or liability attached to a property, which may not necessarily provide the same legal rights to retain possession as a lien does.