Ch 10 Flashcards
(13 cards)
Lien
a charge or claim against property made to enforce the payment of money
Encumbrance
any charge or claim that attaches to real property, including liens and nonmonetary claims; lessens the value or impairs the use of the real property
Liens
may be voluntary or involuntary, statutory or equitable, and general or specific
General liens
affect all property owned by a debtor, both real and personal
- Judgement liens
- Estate and inheritance tax liens
- Debts of a deceased person ( decendent )
- Corporation franchise tax liens
- IRS tax liens
- A lien attaches to real property the moment it is filed and recorded
- A lien does not attach to personal prop until that prop is seized
Specific liens
affect only the identified prop and affect only that particular property
- Real estate tax ( ad valorem tax ) liens
- Special assessment liens
- Mortgage liens
- Trust deed liens
- Mechanic’s liens
- Utility liens ( refer to local laws )
- Bail bond liens
- Vendor’s liens
The effect of liens on title
- Liens run with the land
- Liens attach to prop, not prop owner
- Liens bind all successive owners until the lien is paid and cleared
Priority of Liens
- Order in which claims against the prop will be satisfied
- Generally, real estate taxes and special assessments take priority over all other liens
- Other liens follow in the order that they were recorded
- Subordination agreements between lien holders can change priority
General real estate or ad valorem tax
They are levied by taxing bodies as a gov power
- States and counties
- Cities, towns, boroughs, and villages
- School districts
- Drainage districts
- Hospital districts
- Water districts
- Sanitary districts
- Parks, forest preserve, and recreation districts
ad valorem
according to value;
are specific, involuntary, and statutory liens
Exemptions: tax exempt purposes
- Cities
- Various municipal organizations
- State and federal gov
- Religious and charitable orgs
- Hospitals
- Educational institutions
Mortgage liens and deed of trust liens
voluntary, specific liens used in real estate financing
Mechanic’s liens
involuntary, statutory, specific liens
- security to those who perform labor or furnish material in the improvement of real property
- must be a contract between contractor and owner
Judgement liens
involuntary, equitable, general liens
- judgement is a decree issued by court
- takes priority according to the laws of the state in which prop ( real or personal ) is located
- enforced through issuance of a writ of execution and the ultimate sale of the prop
- when prop is sold, a satisfaction of judgement should be filed
- Lis pendens ( litigation pending ) is an encumbrance that is a notice of a possible future lien on real estate
- attachments- the court retains custody of property until a lawsuit is concluded
