Chapter 5 - Liens

Question 1

Lien

Answer 1

Monetary charge or claim against a property. Used to ensure repayment of borrowed money.

Question 2

Encumbrance

Answer 2

Any charge or claim that attaches to real property and lessens its value or impairs use. (Such as a lien)

Question 3

Types of liens

Answer 3

A. Voluntary lien (such as a mortgage loan)
B. Involuntary lien
1. Statutory lien (such as property tax)
2. Equitable lien (Created by a court to ensure payment
of a judgement)

Question 4

Property type lien classifications

Answer 4

1. General lien (applies to all property, real and personal. Such as IRS or lawsuit)
2. Specific lien (mechanics’, mortgage, real estate tax, personal property such security on a car loan)

Question 5

Priority of liens

Answer 5

First to record, first to right.

Question 6

What are two types of real estate taxes?

Answer 6

1. General real estate taxes (ad valorem “according to value” taxes)
2. Special assessments (or improvement taxes)

Question 7

Ad valorem

Answer 7

Latin meaning “According to value”

Question 8

Assessment

Answer 8

Official valuation process for determining value (for tax purposes).

Question 9

How is value assessment caluculated? (for taxes)

Answer 9

[[[Market value $ * Assessed value %] * Equalization factor X.X] * $5 per] / $100 of value

Question 10

1000 mills equates to?

Answer 10

$1.00 USD (move decimal 3 spots to the left)

Question 11

What is the tax on real estate?

Answer 11

$5 per $100 of value

Question 12

In Illinois when are real estate taxes due and payable?

Answer 12

They are paid in arrears, the following year.

Question 13

In Illinois real estate taxes are broken into two installments that are due when?

Answer 13

June 1st and September 1st

Question 14

If a property owner fails to pay taxes, how will the state sell the property?

Answer 14

1. At the Annual tax sale
2. At a forfiture sale
3. At a scavenger sale

Question 15

What type of lien is a “Mechanics’ lien”?

Answer 15

Specific, involuntary lien. It gives architects, subcontractors, etc. security to perform labor or furnish material to improve real property.

Question 16

When is a “Mechanics’ lien” filed?

Answer 16

When owner has not fully paid for the work of contactors, etc., or when the general contractor has been compensated but not paid subcontractors.

Question 17

How long do contractors have to file a mechanics’ lien for paid bills?

Answer 17

Up to 4 months after the work is completed.

Question 18

A “judgement” by the court for both real and person property is what type of lien?

Answer 18

General, involuntary, equitable lien.

Question 19

What does the term “lis pendins” mean? (liens)

Answer 19

Lawsuit pending

Question 20

Attachments

Answer 20

Means a creditor has of encumbering unsecured real estate through the court while lawsuit is pending.

Question 21

Commercial real estate broker lien

Answer 21

Can be used by sponsoring brokers in the event they aren’t compensated for their services.

Question 22

Which governing body is able to issue an “equitable lien”?

Answer 22

The court.

Question 23

What value is the tax assessment value based on?

Answer 23

Sale prices of comparable properties.

Question 24

What is the assessed percentage for tax purposes in most of Illinois?

Answer 24

33.3%

Question 25

How long after a job is completed can a mechanics lien be filed?

Answer 25

4 months