Chapter 15 Flashcards
Generally, in a court-ordered sale, which of these is paid first?
a. First mortgage
b. Mechanics’ liens
c. Child support liens
d. Real estate taxes
d. Real estate taxes
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d. Real estate taxes do not have to be recorded to be effective, and they are usually given priority over all other liens.
Which of these is an example of a specific, voluntary lien?
a. Decedent’s debts
b. Internal Revenue Service liens
c. Mortgage lien
d. Corporate franchise liens
c. Mortgage lien
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c. A mortgage lien is a specific, voluntary lien.
The millage breakout for ad valorem taxes is library: 0.5; school: 1; school debt service: 0.5; community college: 1; vocational school: 0.5; and all others: 5. If the property is assessed at $165,000, how much is the tax bill?
a. $1,200.25
b. $1,402.50
c. $1,405.75
d. $1,800.50
b. $1,402.50
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b. The tax bill is $1,402.50:
0.5 + 1 + 0.5 + 1 + 0.5 + 5 = 8.5 mills or $0.0085 per dollar of valuation
$165,000 × 0.0085 = $1,402.50.
All of these are liens against real property EXCEPT
a. a mortgage.
b. real estate taxes.
c. lis pendens.
d. home improvement loan of a deceased property owner.
c. lis pendens.
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c. A lis pendens is only the notice of a possible future lien. However, if it becomes a lien, the priority is established by the date and time that the lis pendens was originally filed.
Which of these characteristics applies to a real estate tax lien?
a. Specific, involuntary lien
b. Specific, voluntary lien
c. General, involuntary lien
d. General, voluntary lien
a. Specific, involuntary lien
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A real estate tax is levied on an individual property; few would argue that individuals choose to have the tax levied, hence, an involuntary lien.
Which of these would permit a law enforcement officer to seize and sell a debtor’s property?
a. Lis pendens
b. Satisfaction of judgment
c. Writ of execution
d. Writ of attachment
c. Writ of execution
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c. A writ of execution directs the sheriff to seize and sell as much of the debtor’s property as necessary to pay both the debt and the expenses of the sale.
Which of these is a general, statutory, and involuntary lien on both real and personal property?
a. Federal tax lien
b. Mechanic’s lien
c. Special assessment
d. Consumer loan lien
a. Federal tax lien
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a. An Internal Revenue Service lien is a general lien against the real and personal property owned by the delinquent taxpayer.
In February, a homeowner signed an agreement with a general contractor to have a bathroom converted to a sauna, but the homeowner never paid for the work. The homeowner stopped making mortgage payments in June. The owner is two years delinquent in property taxes to the county. The state gives mechanics’ liens priority. If all these creditors obtain judgments against the owner in November, what will be the priority of their liens (first to last)?
a. Contractor → mortgage company → county
b. County → mortgage company → contractor
c. Contractor → county → mortgage company
d. County → contractor → mortgage company
d. County → contractor → mortgage company
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The priority is taxes, mechanic’s lien, and then first mortgage. Although the mortgage was filed first, property taxes always have first priority, and the state has given second priority to mechanic’s liens.
A town wants to construct new concrete curbs in a residential neighborhood. How will the town most likely raise the money necessary for the improvement?
a. Ad valorem tax
b. Special assessment
c. Equalized assessment
d. Utility lien
b. Special assessment
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b. The town will most likely levy a special assessment against the benefiting properties to pay for the new concrete curbs.
All of these liens must be recorded to be effective EXCEPT
a. money judgment.
b. mechanic’s lien.
c. real estate tax lien.
d. voluntary lien.
c. real estate tax lien.
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c. Real estate tax liens do not have to be recorded to be effective, and they always take precedence over all other liens. Because of this, the lender may require that a borrower pay 1/12 of the estimated annual taxes each month as part of the loan payment; the money is placed by the lender in an escrow account so that the lender can pay the taxes when due. Unpaid taxes take priority over mortgage liens.
The market value of an undeveloped parcel is $40,000. Its assessed value is 40% of market value, and properties in this county are subject to an equalization factor of 1.50. If the tax rate is $4 per $100, what is the amount of the tax owed on the property?
a. $480
b. $960
c. $1,080
d. $1,800
b. $960
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b. The tax owned on the property is $960: $40,000 × 40% × 1.5 ÷ 100 × 4 = $960.
To give notice of a potential claim against a property and to establish priority, a creditor may file
a. a lis pendens.
b. an attachment.
c. a general lien.
d. a specific lien.
a. a lis pendens.
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a. A lis pendens is a notice of a possible future lien. If it becomes an actual lien, the effective date of the lien is the date and time that the lis pendens was filed.
A homeowner considered having a new garage built and talked about the project with a contractor. In April, while the homeowner was on vacation, the contractor began building the garage according to the discussed specifications. Work was complete by the end of May. In June, the homeowner returned from vacation and refused to pay for the garage. The contractor decided to file a mechanic’s lien in July. Is the contractor entitled to a lien?
a. Yes, because the garage was constructed according to the homeowner’s specifications.
b. Yes, because the garage is not a part of an owner-occupied residence.
c. No, because notice of the lien should have been filed in May, when the work was
completed.
d. No, because there was no express or implied contract between the homeowner and the contractor.
d. No, because there was no express or implied contract between the homeowner and the contractor.
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d. Because the contractor was in no way given authority to act, he has no right to file a mechanic’s lien.
