Unit 15 Flashcards
1
Q
Lien
A
a charge or claim against a person’s property made to enforce the payment of money
2
Q
security
A
something of value that the borrower promises to give the lender if the borrower fails to repay the debt; collateral
3
Q
Mortgage lien
A
when the lender’s security is in the form of the real estate
4
Q
Are all liens encumbrances?
A
yes
5
Q
Are all encumbrances lien?
A
no
6
Q
4 ways to create a lien
A
- Voluntary
- Involuntary
- Staturoty
- Equitable
7
Q
Voluntary Lien
A
created intentionally by the property owner’s action
8
Q
Involuntary Lien
A
not a matter of choice; created by law
9
Q
Types of involuntary lien
A
- Statutory
2. Equitable
10
Q
Statutory lien
A
created by statute, state law says it must be paid
11
Q
Equitable lien
A
arises out of common law; should be paid but might be other ways to work it out
12
Q
Tax lien
A
involuntary statutory lien; exists without any action by the property owner
13
Q
General Liens
A
affect all the property, both real and personal, of a debtor
14
Q
When does a lien attach to real property?
A
at the moment it is filed and recorded
15
Q
When does a lien attach to personal property?
A
when personal property is seized
16
Q
What do general liens include?
A
judgements, estate and inheritance taxes, decendent’s debts, corporate franchise taxes, IRS taxes
17
Q
Specific Liens
A
secured by specific property and affect only that particular property
18
Q
Specific liens on real estate
A
vendors’ liens, mechanics’ liens, mortgage liens, real estate tax liens, liens for special assessments and utilities
19
Q
Vendor’s lien
A
lien belonging to the vendor (seller) for the unpaid purchase price of the property, when the vendor has not taken any other lien or security beyond the personal obligation of the purchaser
20
Q
Effect of lien on title
A
title can still pass over to buyer with lien on title
21
Q
Release of lien
A
title is cleared of lien by lienholder
22
Q
Runs with the land
A
passes with title
23
Q
Do liens run with the land?
A
yes
24
Q
Priority of liens
A
the order which claims against a proeprty will be satisfied if the property is sold by the debtor
25
What is the general rule for priority of liens?
first to record, first in right (priority)
26
Junior lien
one that comes after a ealier lien
27
Subordination agreements
written agreements between lienholders ot change the priority of mortgage, judgement and other liens
28
How are liens different from other encumbrances?
they're financial or monetary in nature and attach to the property becuase of a debt
29
How are foreclosed liens paid?
from the proceeds of the sale
30
Types of real estate taxes
1. general real estate taxes
| 2. special assessements or improvement taxes
31
What takes priority over all liens no matter when they are recorded?
real estate taxes & special assessments
32
Ad Valorem Tax name
general real estate tax
33
Ad Valorem Tax
based on teh value of the property being taxed and are specific, involuntary, statutory liens
34
Properties excempt from general taxes
cities, municipal organizations, state and federal governments, religious and charitable organizations, hospitals, educational institutitions
35
what do you pay real estate taxes on?
assessed value
36
How do you calculate annual tax bill?
assessed vlue * tax rate
37
Assessment Equalization Factor
used when it is necessary to correct inequalities in statewide tax assessements to achieve uniformity
38
How to use equalization factor
[assessed value * (1+equalization factor%)] * Tax rate
39
How to get a tax rate
1. make a budget by each taxing district
2. Appropriation
3. Tax Levy
4. Tax Rate
40
Appropriation
a taxing body authorizes the expenditure of funds and provides for the sources of funding
41
How are tax rates expressed?
1. $ per $100
2. $ per $1000
3. Mills
42
Mill rate
a way of expressing a tax rate in $ per $1000
43
Due dates for taxes are set how?
by statute
44
Equitable right of redemption
the delinquent taxpayer may redeem the property any time before the tax sale
45
How to exercise equitable right of redemption
by paying the delinquent taxes plus interest and charges
46
What is government's power over real estate owners?
right to impose taxes to pay for their functions
47
Who has priority over previously recorded liens?
annual taxes levied on real estate
48
What does ad valorem mean?
according to value
49
Why are real estate property taxes favored sources of revenue for local governments?
real estate cannot be hidden and is relatively easy to value
50
What do property taxes pay for?
states; counties; cities, towns, boroughs, and villages; school districts; drainage districts; hospital districts; water districts; sanitary districts; transporation districts; parks, forest preserves, and recreation districts
51
Assessment
official real estate valuation process where real estate is valued for tax purposes by county or township assessors or appraisers
52
What is assessment value based on?
sales price of comparable properties
53
What does a budget cover?
the financial requirements of the taxing body for the coming fiscal year, including an estimate of all expenditures for the year
54
Appropriation
a taxing body authorizes the expenditure of funds and provides for the sources of the funding; oftens involves adoption of an ordinance or passage of law for specific terms of the proposed taxation
55
Tax levy
formal action taken to impose a tax, usually by a vote of the taxing district's governing body
56
What real estate taxes are enforceable
valid taxes meaning they are charged properly, used for legal purposes, applied equitably to all property
57
How are Real Estate Taxes that have been delinquent for a statutory period collected?
Tax Sale
58
Tax Sale
usually help according to a published notice after a court has rendered a judgement for overdue taxes, penalities and administrative costs and has ordered the property be sold
59
Who is the certificate of sale given to in a tax sale?
highest bidder
60
When is the certificate of sale given in a tax sale?
after the bidder pays the delinquent tax amount in cash
61
who holds the public sale of a property?
county sheriff or other public official
62
Does the person with a certificate of sale on a tax sale immediately receive the deed?
No
63
Statutory right of redemption
the defaulted owner can redeem the property from a tax sale by paying teh amount collected at the tax sale + interest and charges
64
Tax Deed (Sheriff's Deed)
title conveyed to the certificate of sale holder when the property is not redeemed within the statutory period
65
Special Assessment
a tax charged on teh real estate to fund public improvements to the property, and it creates a lien for the amount of the assessment on the property
66
Who pays for the special assessment?
property owners
67
How are special assessments paid for?
euqal annual installments over a period of years
68
Can property owners prepay on special assessment installemnts?
yes
69
Local Improvement District (LID)
a specific geographial area formed by a group of property owners working together to fund needed capital improvements
70
LID Taxation
a financing method available for the desing and construction of public improvements
71
Mortgage lien
a specific, voluntary lien on real estate given to a lender by a borrower as security for a real estate loan
72
When does a mortgage lien become a lien on real property?
when the lender records the documents in the COUNTY where the property is located
73
preferred lien
no other liens against the property (aside from real estate taxes) can take priority over the mortgage lien
74
Mechanic's lien
a specific, involuntary lien that gives security to persons or companies that perform labor or furnish material to improve real property
75
Who are mechanic's liens available to?
contractors, subcontractors, architects, equipment lessors, surveyors, laborers, other providors
76
When is a mechanic's lien filed?
when the owner has not fully paid for the work or when the general contractor has been compensated bu has not paid the subcontractors or suppliers of matierals
77
What is required for a contractor to receive a payment from the owner's construction loan?
lien waiver
78
who is entitled to a mechanic's lien?
person who did the work and has a contract with teh owner or the owner's authorized representative
79
What clears a property's title of a lien?
release or satisfaction of lien
80
How do mechanic's liens establish priority?
date the construction began or material were first furnished; the date the work was completed; the date the individual subcontractor's work was commenced or completed; the date the contract was signed or work was ordered; date a notice of the lien was recorded, filed, posted or served
81
Notice of nonresponsibility
relieves property owner of possible mechanics' liens from improvements that were not ordered by the property owner
82
Judgement
a decree issued by a court
83
money judgement
a decree establishes the amount a debtor owes and provides for money to be awarded
84
What type of lien is a judgement?
involuntary equitable lien on both real and personal priorty owned by the debtor
85
How is a judgement different from a mortgage
no specific parcel of real estate was given as security at the time the debt was created
86
Where must the creditor file a judgement?
in any county to which a creditor wishes to extend the lien coverage
87
writ of execution
directs the sheriff to seize and sell as much of the debtor's property as is necessary to pay both teh debt and the expenses of the sale
88
How does one enforce a judgement?
writ of execution
89
When does a judgement become a lien?
when the creditor orders the sheriff to assess the property and the charge is actually made
90
How is a judgement lien's priority estblished?
1. date the judgement was entered by the court
2. date the judgement was filed in a recorder's office
3. date a writ of execution was issued
91
Satisfaction of judgement
legal document for when real property is sold to satisfy a debt
92
What clears the record of a judgement lien?
satisfaction of judgement/satisfaction piece
93
Lis Pendens
recorded notice of a pending lawsuit that affects title to or possession of real estate
94
is a lis pendens a lien?
no, but could become one
95
What does a lis pendens do?
notifies prospective purchasers and lenders that there is a potential claim against a property and establishes priority of a later lien
96
Writ of Attachment
a court order against the property of another person that directs the sheriff or other officer of the court to seize or take control of a property
97
why would a creditor want a writ of attachment?
to prevent a debtor from conveying title to previously unsecured real estate while a court suit is being decided
98
What do most attachments arise from?
an action for payment of an unsecured debt
99
Who retains control of a property in an attachment
court until suit concludes
100
estate taxes and inheritance taxes
general, statutory, involuntary liens that encumber a decreased person's real and personal property; normally paid or cleared in probate court proceedings
101
lien for municipal utilities
municipalities have the right to impose a specific, equitable, involuntary lien on the property of an owner who refuses to pay bills for municipal utility services
102
bail bond lien
real estate owner who is charged with a crime that will result in a trial may post bail in the form of real estate rather than cash; specific, satutory, voluntary lien
103
corporation franchise tax lien
levied by state governments on corporations as a condition of allowing them to do business in the state; general, statutory, involuntary lien on all real and personal property owned by the corporation
104
IRS Tax lien
results from a person's failture to pay any portion of federal taxes; general, satutory, involuntary lien on all real and personal property held by the delinquent taxpayer
105
Priority of IRS Tax lien
date of filing or recording
