Chapter 5 - Liens Flashcards
Lien
Monetary charge or claim against a property. Used to ensure repayment of borrowed money.
Encumbrance
Any charge or claim that attaches to real property and lessens its value or impairs use. (Such as a lien)
Types of liens
A. Voluntary lien (such as a mortgage loan)
B. Involuntary lien
1. Statutory lien (such as property tax)
2. Equitable lien (Created by a court to ensure payment
of a judgement)
Property type lien classifications
- General lien (applies to all property, real and personal. Such as IRS or lawsuit)
- Specific lien (mechanics’, mortgage, real estate tax, personal property such security on a car loan)
Priority of liens
First to record, first to right.
What are two types of real estate taxes?
- General real estate taxes (ad valorem “according to value” taxes)
- Special assessments (or improvement taxes)
Ad valorem
Latin meaning “According to value”
Assessment
Official valuation process for determining value (for tax purposes).
How is value assessment caluculated? (for taxes)
[[[Market value $ * Assessed value %] * Equalization factor X.X] * $5 per] / $100 of value
1000 mills equates to?
$1.00 USD (move decimal 3 spots to the left)
What is the tax on real estate?
$5 per $100 of value
In Illinois when are real estate taxes due and payable?
They are paid in arrears, the following year.
In Illinois real estate taxes are broken into two installments that are due when?
June 1st and September 1st
If a property owner fails to pay taxes, how will the state sell the property?
- At the Annual tax sale
- At a forfiture sale
- At a scavenger sale
What type of lien is a “Mechanics’ lien”?
Specific, involuntary lien. It gives architects, subcontractors, etc. security to perform labor or furnish material to improve real property.
When is a “Mechanics’ lien” filed?
When owner has not fully paid for the work of contactors, etc., or when the general contractor has been compensated but not paid subcontractors.
How long do contractors have to file a mechanics’ lien for paid bills?
Up to 4 months after the work is completed.
A “judgement” by the court for both real and person property is what type of lien?
General, involuntary, equitable lien.
What does the term “lis pendins” mean? (liens)
Lawsuit pending
Attachments
Means a creditor has of encumbering unsecured real estate through the court while lawsuit is pending.
Commercial real estate broker lien
Can be used by sponsoring brokers in the event they aren’t compensated for their services.
Which governing body is able to issue an “equitable lien”?
The court.
What value is the tax assessment value based on?
Sale prices of comparable properties.
What is the assessed percentage for tax purposes in most of Illinois?
33.3%
How long after a job is completed can a mechanics lien be filed?
4 months
