Unit 13 Taxes & Liens

Question 1

Define ad valorem tax

Answer 1

A tax levied according to value, generally used to refer to real estate tax. Also called the general tax. 225

Question 2

Define assessment equalization factor

Answer 2

A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The ad valorem tax would be based on this adjusted value. An equalization factor may be applied to raise or lower assessments in a particular district or county. 226

Question 3

Define equitable lien

Answer 3

A lien imposed on property by statute—a tax lien, for example—in contrast to an equitable lien, which arises out of common law. 222

Question 4

Define equitable right of redemption

Answer 4

The right of a defaulted property owner to recover the property before its sale by paying the appropriate fees and charges. 227

Question 5

Define estate tax

Answer 5

Federal tax on a decedent’s real and personal property. 230

Question 6

Define general lien

Answer 6

The right of a creditor to have all of a debtor’s property—both real and personal—sold to satisfy a debt. 223

Question 7

Define general real estate tax

Answer 7

A tax that is made up of the taxes levied on the real estate by government agencies and municipalities. 225

Question 8

Define inheritance taxes

Answer 8

State-imposed taxes on a decedent’s real and personal property. 230

Question 9

Define involuntary lien

Answer 9

A lien placed on property without the consent of the property owner. 222

Question 10

Define judgment

Answer 10

The formal decision of a court upon the respective rights and claims of the parties to an action or suit. After a judgment has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant. 55

Question 11

Define mechanic’s lien

Answer 11

A statutory lien created in favor of contractors, laborers, material suppliers, and others who have performed work or furnished materials in the erection or repair of a building. 228

Question 12

Define mill One-tenth of one cent.

Answer 12

Some states use a mill rate to compute real estate taxes; for example, a rate of 52 mills would indicate a tax of $0.052 for each dollar of assessed valuation of a property. 226

Question 13

Define mortgage lien

Answer 13

A lien or charge on the property of a mortgagor that secures the underlying debt obligation. 228

Question 14

Define special assessment

Answer 14

A tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or sewer. 227

Question 15

Define specific lien

Answer 15

A lien affecting or attaching only to a certain, identified parcel of land or piece of property. 223

Question 16

Define statutory lien

Answer 16

A lien imposed on property by statute—a tax lien, for example—in contrast to an equitable lien, which arises out of common law. 222

Question 17

Define statutory right of redemption

Answer 17

The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges. 227

Question 18

Define subordination agreement

Answer 18

A written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances. 224

Question 19

Define tax lien

Answer 19

A charge against property, created by operation of law. Tax liens and assessments take priority over all other liens. 222

Question 20

Define tax sale

Answer 20

A court-ordered sale of real property to raise money to cover delinquent taxes. 227

Question 21

Define vendor’s lien

Answer 21

A lien that belongs to a vendor for the unpaid purchase price of land, where the vendor has not taken any other lien or security beyond the personal obligation of the purchaser. 223

Question 22

Define voluntary lien

Answer 22

A lien placed on property with the knowledge and consent of the property owner. 222

Question 23

Define writ of attachment

Answer 23

A document ordered by the court to have a sheriff enter a leased property to give possession back to the owner. 230

Question 24

True of False Every lien is an encumbrance but not every encumbrance is a lien.

Answer 24

True