Liens/Types of Liens Flashcards
A lien is an encumbrance is a…
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
The party holding the lien is called the…
Lienor
The party who has the property encumbered is called
Lienee
Liens can be classified by how they affect property specific or general and how they are created voluntary or involuntary. Specific vs general lien
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.
Voluntary vs involuntary liens
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
Liens are created in three ways
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)
General involuntary liens there are 3 types (testQ)
Judgement, debts of decedent (dead relative), income taxes (IRS)
What type of lien can be either voluntary or involuntary? TestQ
Real estate special assessment are always SPECIFIC BUT can be either involuntary if government initiates OR voluntary if homeowners initiates improvements
Real estate ad valorem are specific and
Involuntary
A mortgage lien is specific and
Voluntary. Lenders usually insist on a first lean meaning their liens have priority over all other liens except property taxes
Deed of trust aka trust deed is specific and
Voluntary
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)
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
Mechanics liens ( for goods and services) are specific
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
Debts of decedent are general and
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
Municipal liens are specific and
Answer:
Involuntary. A local municipality may place liens on property to satisfy unpaid utility bills
Bail bond is specific and
Answer:
Voluntary
Income tax (state of federal) are general and
Answer:
Involuntary. Placed on property for taxes owed. Effective for ten years
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:
Tax liens, special assessments, then liens by date they are recorded (test may say 1st recorded mortgage)
Subordination agreement is Test Q:
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)
A charge against property for debt or obligation of the property owner
Answer:
Lien
A lien that applies to all of persons property
Answer:
General lien
Lien Created by law either by statute or by the court
Answer:
Involuntary lien
A written agreement between lien holders to change priority of their liens
Answer:
Subordination agreement
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:
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
Ad valorem means and is used to find the tax rate
Answer:
Assessed value of properties. Taxes are based on the governments needs/ budget.property owners can challenge/ appeal the assessed amount to lower taxes
Enforcement of tax liens for a tax to be valid it must be
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)
Tax sale: if the taxes on a property has not been paid the court must render a
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.
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:
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
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:
1/10 of a cent or $.001(so $50,000x50mills (0.001x50=0.05)=$2,500)
The right to issue special assessment bills to property owners is done through special assessment
Answer:
Warrants
The borrowers right to redeem the property after foreclosure sale
Answer:
Statutory redemption rights
A real estate tax based on the value of property
Answer:
Ad valorem
A value placed on r.e. To calculate the amount of tax
Answer:
Assessment
Special r.e. Tax for improvements that benefit property owners
Answer:
Special assessment
A borrowers right to redeem the property prior to a foreclosure sale
Answer:
Equitable
Used to adjust property assessments so that they are equitable
Answer:
Equalizer
Lis pendens (pending litigation) (“lawsuit pending”) against a property. Is. A pubic
Answer:
Notice that legal action is pending NOT A WRIT OF ATTACHMENT
What is the difference between lis pendens and writ of attachment
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
What type of lien is the owner obtains a loan using the real estate as security
Answer:
Mortgage lien
What type of lien is filed if a plaintiff wins a $100,000 lawsuit against the property owner
Answer:
Judgement lien
Decree used by the court at the conclusion of a lawsuit
Answer:
Judgement
