Taxes and Liens Flashcards
(27 cards)
Lien
a claim of a creditor or taxing authority against the real property of a debtor that is
used as security to ensure repayment of the debt.
What device is a lien?
an encumbrance that transfers with it (runs with the land) and lessens its value or impairs its use because it binds all successive owners until paid and cleared.
If a debtor defaults in payment of a debt secured by property,
the lienholder can force the sale of the property, or acquire title.
General Lien
affects all of a debtor’s property, both real and personal;
Specific Lien
affects only identified property.
Voluntary Lien Creation
, if it is created by action of the property owner, such as a
mortgage
Involuntary Lien Creation
, if it is created without the property owner’s express permission
Statutory Lien Creation
permitted by statute
Equitable Lien Creation
granted by a court
Which liens take priority over order?
real estate taxes and special assessments
Subordination Agreement
between lienholders can be used to change
the order of priority.
Real estate taxes
ad valorem taxes based on the value of the property taxed.
Property Assessments (valuations)
conducted by county or township tax assessors or
appraisers.
Assessed value is generally based on sales prices of comparable properties.
Equalization factor
may be applied to correct inequalities in statewide tax assessments.
Mills
The tax rate for each taxing body is computed separately and may be expressed in mills.
A mill is 1/1000 of a dollar, or $0.001. There are 10 mills to a penny.
Mills may be shown as
dollars per hundred or thousand dollars of assessed value.
Delinquent Taxes
collected through a tax sale following statutory notice requirements.
Special Assessments
levied and create a lien on property that benefits from public
improvements, such as properties located in a local improvement district (LID), and are
always specific and statutory, but may be voluntary or involuntary, and are usually paid in
annual installments over a period of years.
Mortgage Lien
a voluntary lien given to a lender by a borrower as security for a real estate
loan. The lien takes effect when the lender records the documents in the county where the
property is located
First mortgage lien
when recorded, has priority over
other liens (except for tax liens); subsequent liens are junior liens
Mechanics lien
specific, involuntary lien that gives a security interest in real property
to persons or companies that perform labor or furnish material to improve the property. A
mechanic’s lien is filed when an owner has not fully paid for work or the general contractor
has been compensated but has not paid subcontractors or suppliers of materials.
Judgement
decree issued by a court, is a general, involuntary, equitable lien on both real
and personal property owned by a debtor and must be filed in every county in which the
judgment debtor owns property.
Lis Pendis.
While a lawsuit is pending, a lis pendens can be filed to give notice of an action pending
relating to the title or possession of real property and establish priority of the claimant.
Writ of Attachment
can be sought from the court to authorize the sheriff to seize the property that
the debtor may attempt to transfer
Writ of Execution
can be obtained from the court to enforce a judgment.
Estate and Inheretance Tax Liens
general, statutory, involuntary liens that encumber a
deceased person’s real and personal property and are normally paid or cleared in a probate
proceeding
