Liens/Types of Liens

Question 1

A lien is an encumbrance is a…

Answer 1

Claim or charge against the property to provide security for a debt or obligation. The lien allows the creditor to sell the property to be sold by court order to satisfy the debt in case of default. May lower property value but does not stop transfer of title to another person. However liens are usually settled before closing as a condition of sale

Question 2

The party holding the lien is called the…

Answer 2

Lienor

Question 3

The party who has the property encumbered is called

Answer 3

Lienee

Question 4

Liens can be classified by how they affect property specific or general and how they are created voluntary or involuntary. Specific vs general lien

Answer 4

A general lien is a claim against ALL OF A PERSONS PROPERTY both real and personal judgements or IRS Liens. A specific lien is a claim against a specific property either real or personal NEVER BOTH like auto loans or a mortgage, a mechanics lien, or real estate taxes.

Question 5

Voluntary vs involuntary liens

Answer 5

Voluntary lean is made with the owners control ie a mortgage lien to buy r.e. Involuntary lien can be statutory (by law) or equitable (by courts to ensure fairness) and are created by law and does not require owners consent local governments are granted real estate tax liens on properties in their jurisdictions to enforce the collection of taxes

Question 6

Liens are created in three ways

Answer 6

Contractual- by party agreement (car loan, home loan). Statutory- by law. Equitable- by the courts to ensure fairness (i.e. Uninsured driver crashes into your car)

Question 7

General involuntary liens there are 3 types (testQ)

Answer 7

Judgement, debts of decedent (dead relative), income taxes (IRS)

Question 8

What type of lien can be either voluntary or involuntary? TestQ

Answer 8

Real estate special assessment are always SPECIFIC BUT can be either involuntary if government initiates OR voluntary if homeowners initiates improvements

Question 9

Real estate ad valorem are specific and

Answer 9

Involuntary

Question 10

A mortgage lien is specific and

Answer 10

Voluntary. Lenders usually insist on a first lean meaning their liens have priority over all other liens except property taxes

Question 11

Deed of trust aka trust deed is specific and

Answer 11

Voluntary

Question 12

Judgement liens are general and (test Q: only way you can have judgement is through court and only way to end is to obtain a satisfaction of judgement. a writ of attachment to a deed retains custody of a property title during a court case)

Answer 12

Involuntary. Judgements are. Decree issued by the court at the conclusion of a law suit. $ amount judgements are called money judgements. After a judgement has been issued a court will issue a writ of execution instructing the sheriff to sell debtors property to pay

Question 13

Mechanics liens ( for goods and services) are specific

Answer 13

And involuntary. Rules vary state to state. Generally it’s priority depends on the date the lien “attaches.” In Alabama has to be filed in 3 months. Paying the general contractor may not relieve the sub contractors or suppliers

Question 14

Debts of decedent are general and

Answer 14

Answer:
Involuntary. These are liens against a deceased persons estate by creditors, state or federal for estate or inheritance taxes. Cleared In probate proceedings and superior to any rights of the estate heirs

Question 15

Municipal liens are specific and

Answer 15

Answer:

Involuntary. A local municipality may place liens on property to satisfy unpaid utility bills

Question 16

Bail bond is specific and

Answer 16

Answer:

Voluntary

Question 17

Income tax (state of federal) are general and

Answer 17

Answer:

Involuntary. Placed on property for taxes owed. Effective for ten years

Question 18

Priority of liens: when two or more liens exist on a property that must be sold to satisfy one or more of the liens the priority of liens are given money from the sale of the property are (TESTQ:)

Answer 18

Answer:

Tax liens, special assessments, then liens by date they are recorded (test may say 1st recorded mortgage)

Question 19

Subordination agreement is Test Q:

Answer 19

Answer:
A lien holder may want to to make it subordinate like a land lien will want to be subordinate to a home building lien bc it will enhance the value of the property ( test may say the loan subordinates blah blah blah)

Question 20

A charge against property for debt or obligation of the property owner

Answer 20

Answer:

Lien

Question 21

A lien that applies to all of persons property

Answer 21

Answer:

General lien

Question 22

Lien Created by law either by statute or by the court

Answer 22

Answer:

Involuntary lien

Question 23

A written agreement between lien holders to change priority of their liens

Answer 23

Answer:

Subordination agreement

Question 24

What is the difference between an Equitable Lien and and an Statutory Lien and what is the difference between an Equitable Redemption and a Statutory Redemption (ch 5 is funnnn)

Answer 24

Answer:
An Equitable Lien is an involuntary General (all your stuff) lien like a Judgement from the court. A Statutory Lien is by law General Involuntary like taxes. AN Equitable Redemption are rights allow an owner redeem property any time before the tax sale of the property by paying back taxes. Statutory Redemption Rights buys it back after the tax sale by paying interest to the winner of tax sale, back taxes, and penalties

Question 25

Ad valorem means and is used to find the tax rate

Answer 25

Answer:
Assessed value of properties. Taxes are based on the governments needs/ budget.property owners can challenge/ appeal the assessed amount to lower taxes

Question 26

Enforcement of tax liens for a tax to be valid it must be

Answer 26

Answer:
Properly levied, for a legal purpose, and applied equitably to all properties. (Untaxable properties are schools, hospitals, church property/charitable organizations, parks, properties owned by local, state and federal government)

Question 27

Tax sale: if the taxes on a property has not been paid the court must render a

Answer 27

Answer:
1)Judgement and orders The sale of the property 2) NOTICE of sale must be published as per the law 3) at the tax sale the property is sold to recover the amount of the taxes, interest and penalties 4) the winner at the sale receives a tax certificate and eventually can get a tax deed after the redemption period.

Question 28

Some states use an EQUALIZER (a percentage turned into a decimal) after home assessments to raise or lower the assessed value of a home

Answer 28

Answer:
If there is an equalizer question just multiply the equalizer times the assessed value and get the equalized assessed value. Then the tax rate is applied to that value

Question 29

Tax rate can be expressed in several ways. usually on test expressed as percentage( $50,000x5% (or 0.05) = $2,500) , dollars per hundred of assessed value( $50,000 /100 x $5 =$2,500) mills. A Mill=

Answer 29

Answer:

1/10 of a cent or $.001(so $50,000x50mills (0.001x50=0.05)=$2,500)

Question 30

The right to issue special assessment bills to property owners is done through special assessment

Answer 30

Answer:

Warrants

Question 31

The borrowers right to redeem the property after foreclosure sale

Answer 31

Answer:

Statutory redemption rights

Question 32

A real estate tax based on the value of property

Answer 32

Answer:

Ad valorem

Question 33

A value placed on r.e. To calculate the amount of tax

Answer 33

Answer:

Assessment

Question 34

Special r.e. Tax for improvements that benefit property owners

Answer 34

Answer:

Special assessment

Question 35

A borrowers right to redeem the property prior to a foreclosure sale

Answer 35

Answer:

Equitable

Question 36

Used to adjust property assessments so that they are equitable

Answer 36

Answer:

Equalizer

Question 37

Lis pendens (pending litigation) (“lawsuit pending”) against a property. Is. A pubic

Answer 37

Answer:

Notice that legal action is pending NOT A WRIT OF ATTACHMENT

Question 38

What is the difference between lis pendens and writ of attachment

Answer 38

Answer:
Lis pendens is public notice and is prior to the start of legal action starting and writ of attachment is during the court case and attaches to the deed and stops title transfer

Question 39

What type of lien is the owner obtains a loan using the real estate as security

Answer 39

Answer:

Mortgage lien

Question 40

What type of lien is filed if a plaintiff wins a $100,000 lawsuit against the property owner

Answer 40

Answer:

Judgement lien

Question 41

Decree used by the court at the conclusion of a lawsuit

Answer 41

Answer:

Judgement