Chapter 13 - Real Estate Taxes and Other Liens

Question 1

***There are FOUR ways to CREATE a LIEN. You can remember them by the acronym VISE. What are they?

Answer 1

• *VOLUNTARY LIEN - a lien placed on the property with the knowledge and consent of the property owner. (such as when someone takes out a mortgage loan).
• *INVOLUNTARY LIEN - is NOT a matter of choice. It is created by law and may be either statutory or equitable.
• *STATUTORY LIEN - is created by statute or law. (like a tax lien)
• *EQUITABLE LIEN - arises out of common law. (Fairness).

Question 2

***One TYPE of LIEN is called GENERAL LIEN. What is it?

Answer 2

***GENERAL LIENS affect ALL the property, both real and personal, of a debtor. EVERYTHING we own…real and personal property.

Question 3

*** One TYPE of LIEN is called SPECIFIC LIEN. What is it?

Answer 3

*** SPECIFIC LIENS are secured by specific property and affect ONLY that particular property. Specific Liens include; VENTOR’S LIEN, MECHANICS LIENS, MORTGAGE LIEN, REAL ESTATE TAX LIENS, and LIENS FOR SPECIAL ASSESSMENTS and UTILITIES.

Question 4

***A VENDOR’s LIEN is…

Answer 4

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, such as a mortgage, beyond the personal obligation of the purchaser (owner financing).

Question 5

Once a lien is in place, it RUNS WITH THE LAND and bind all successive owners ______ the lien is paid or settled and title is ________ by the filing of a RELEASE OF LIEN by the lien holder.

Answer 5

UNTIL

CLEARED

Question 6

PRIORITY OF LIENS refers to the _________ in which claims against the property will be SATISFIED if the property is sold by the debtor.

Answer 6

ORDER

In general the rule for priority of liens is FIRST TO RECORD, FIRST IN RIGHT (priority)

Question 7

There are two types of real estate taxes. What are they?

Answer 7

1. GENERAL REAL ESTATE TAXES and

2. SPECIAL ASSESSMENTS or IMPROVEMENT TAXES

Question 8

The GENERAL REAL ESTATE TAX is an AD VALOREM TAX which is latin for?

Answer 8

ACCORDING TO VALUE. Ad valorem taxes are based on the value of the property being taxed and are specific, involuntary, statutory liens.

Question 9

Real estate valued for tax purposes by county or townships assessors or appraisers is called?

Answer 9

ASSESSMENT.
A property’s assessed value is generally based on the sales prices of comparable properties, although practices may vary.

Question 10

The tax rate may be stated in a number of ways. In many areas, it is expressed in? A ‘MILL’ is 1/1000 of a dollar, or $0.001

Answer 10

MILLS.

A ‘MILL’ is 1/1000 of a dollar, or $0.001

Question 11

Real estate taxes that have remained delinquent for the statutory period CAN be collected through a?

Answer 11

TAX SALE of the property.

Question 12

What is a STATUTORY RIGHT OF REDEMPTION?

Answer 12

A period of redemption AFTER a tax sale. If the faulted owner or the defaulted owner’s creditors redeem the property by paying the amount collected at the tax sale plus interest and charges, it’s a Statutory Right of Redemption.

Question 13

In some states, the delinquent taxpayer may redeem the property anytime BEFORE the tax sale. The taxpayer exercises a….

Answer 13

EQUITABLE RIGHT OF REDEMPTION by paying the delinquent taxes plus interest and charges.

Question 14

LIS PENDENS means what?

Answer 14

A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or a federal court.

There is often a considerable delay between the time a lawsuit is filed and the time final judgment is rendered. When any suit that affects title to or possession of real estate is filed, a special notice, known as LIS PENDENS is recorded.