Unit 15 Real Estate Taxes and Liens

Question 1

What is a lien?

Answer 1

A charge or a claim against a person’s property made to enforce the payment of money.

Question 2

What are the 4 types of liens (VISE)?

Answer 2

Voluntary Lien
Involuntary Lien
Statutory Lien
Equitable Lien

Question 3

What is a voluntary lien?

Answer 3

An intentional lien created by the property owners actions.

Question 4

What is an involuntary lien?

Answer 4

A lien created by law, and may be either statuary or equitable.

Question 5

What is a statutory lien?

Answer 5

Created by statute.

Question 6

What is an equitable lien?

Answer 6

Created by common law.

Question 7

What are the two classifications of liens?

Answer 7

General and Specific.

Question 8

What is a general lien?

Answer 8

Affect all property both real and personal.

Question 9

What is a specific lien?

Answer 9

Based on security of specific property and affect only that particular property.

Question 10

What does a lien do?

Answer 10

It runs with the lien?

Question 11

What is the priority of liens?

Answer 11

The order in which claims against the property will be satisfied.

Question 12

What are subordination agreements?

Answer 12

Written agreements between lien holders to change the priority of lien.

Question 13

What are the two types of real estate taxes?

Answer 13

General Real Estate Tax (ad valorem)

Special Assessment/improvement Tax

Question 14

What is a general real estate tax?

Answer 14

aka Ad Valorem, based on the value of the property being taxed and specific involuntary, and statutory liens.

Question 15

Who is exempt from general taxes?

Answer 15

Cites, municipal organizations, state and federal governments, religious and charitable organizations, hospitals, and educational institutions.

Question 16

What is an assessement?

Answer 16

The official valuation process for tax purposes.

Question 17

What is the equalization factor?

Answer 17

A tool to correct inequalities in assessments.

Question 18

What is the tax rate?

Answer 18

The tax rate is determined by the budget. Can be expressed as mill. 1/1000 of a dollar.

Question 19

How is a tax lien enforced?

Answer 19

The government sells the property to recover the taxes owed in a tax sale.

Question 20

What is equitable right of redemption?

Answer 20

The ability of the property owner to redeem his property by paying all that is owed prior to sale.

Question 21

What is a special assessment?

Answer 21

Taxes that are charged on real estate to fund public improvements to the property. Property owners in the improvement area are required to pay for the improvements.

Question 22

What is a mortgage lien?

Answer 22

aka Deed of trust. A voluntary lien on real estate given to a lender by a borrower as security for a real estate loan.

Question 23

What is a mechanics lien?

Answer 23

A specific involuntary lien that gives security to persons or companies that perform labor or furnish material to improve real property.

Question 24

What is required in a mechanics lien?

Answer 24

A contract.

A notice of lien in public record.

Question 25

What is a judgement?

Answer 25

A decree issued by a court.

Question 26

How does a judgement liens priority get established?

Answer 26

Date the judgement was entered. Date the judgement was filed in the recorders office. Date a writ of execution was issued.

Question 27

What is lis pendens?

Answer 27

A notice of possible future lien. Establishes priority.

Question 28

What is an attachment?

Answer 28

A court order against the property of another person that directs the police to seize or take control of a property. Court remains custody of the property.

Question 29

What is the estate tax?

Answer 29

Aka the inheritance tax. Encumbers a deceased persons real and personal property.

Question 30

What is a federal tax lien?

Answer 30

A lien filed by the IRS, to pay federal taxes. It is a general, involuntary, and statutory lien.

Question 31

How are tax rates determined for real estate?

Answer 31

Governments: 1-Create a budget. 2-Appropriate funds. 3-Develop a tax rate.

Question 32

What is a mil?

Answer 32

1/1000 of a dollar, or .0001.

Question 33

What is a mill per dollar ratio?

Answer 33

Dollars per hundred, or in dollars per thousand. Tax rate of .032 or 3.2% or 32 mills. $32 per thousand.

Question 34

What is the statuary right of redemption?

Answer 34

The right of the homeowner to redeem the property after a tax sale.

Question 35

What is a vendor's lien?

Answer 35

A lien belonging to the vendor for the unpaid purchase price of the property.