A vendor's lien is used in connection with which arrangement?

• A. Purchase money mortgage
• B. Tax lien
• C. Lease
• D. Quick claim

Answer: (A)

A vendor's lien is a security interest held by the seller to secure the buyer’s payment of the purchase price. It comes into play when the seller provides financing for the sale, so the buyer doesn’t pay the full amount upfront. Because the seller is effectively the lender, the property itself serves as collateral, and the seller can retain a lien until the debt is satisfied. This arrangement is known as a purchase money mortgage, where the financing is provided by the seller as part of the sale.

This is different from a tax lien, which is a claim by the government for unpaid taxes; from a lease, which is merely a rental agreement and does not create a security interest in the property; and from a quit claim deed, which transfers whatever interest the seller has without creating a lien to secure payment. The vendor's lien specifically aligns with the seller-financed, purchase money mortgage scenario.