Unit 10-12 Flashcards
General rule for priority of liens
First to record, first to right
Exceptions:
Real estate taxes
Special assessments
When would a superior prior lien give a junior lien priority and what is his called?
Subordination
And when someone is refinancing
(And probably when there was enough equity where they’re not worried about losing money)
What are the two types of real estate taxes?
Ad valorem (aka general) And Special assessment (aka improvement)
Ad valorem means according to value (of property)
Special assessment is for specific areas and for the people who will use the improvement (aka new sidewalks in GLP)
Explain mill
A way to express the tax rate which is used for the tax levy which is used to collect property taxes.
1/1,000 of a dollar or $.001
A tax rate of .032, or 3.2%, could be expressed as 32 mills or $3.20 per $100 of assessed value or $32 per $1000 of assessed value
An example of this on your tax bill:
Property assessed at $160,000
Tax rate is 30 mills or 3%
Tax bill will be $4800 ($160,000 x 0.03)
Equalization
To correct inequalities in statewide tax assessments using a formula that promotes uniformity
We do not use this in CT
Rights of redemption
Collecting delinquent property taxes two ways:
Equitable
and
Statutory
E comes before S
Equitable is redeeming before a tax sale
Statutory is redeeming after tax sale
Other liens
Mortgage, mechanics,….IRS, bail bond.
General or specific liens
The two types differ bc general affects ALL the debtors property; specific only identified property
What is a tax sale
A way to enforce tax liens from a delinquent taxpayer
If no one bids, property can be forfeited to state
Purchaser will receive CERTIFICATE OF SALE, gaining the right to take possession
Debtor will get SATISFACTION OF JUDGEMENT
Lis pendens
In a judgement and while lawsuit is pending regarding a general lien–
A lis pendens is filed to give notice of the future lien and it establishes priority
After notification, a WRIT OF ATTACHMENT can be sought to seize the property to prevent debtor from attempting to transfer
WRIT OF EXECUTION is the actual seizing of property
List of specific liens vs general
G: Judgements, estate/inheritance taxes, decedent’s debts, corporate franchise debts, irs taxes
Sp: vendors lien, mechanics lien, mortgage, real estate tax lien, special assessments/utilities
Does a real estate tax lien need to be recorded?
No
4 ways a lien is created
V- voluntary (ex: mortgage)
I - involuntary (IRS)
S - statutory (real estate tax)
E - equitable (debtor’s delinquincies)
Consideration
Offered by one party, accepted by another as an inducement to act
Deemed “good and valuable” between the parties
Valid vs Void vs Voidable vs Unenforceable
Valid - has all elements, enforceable, binding
Void - lacks one or all elements, no legal force, was never a legal
contract
Voidable - may be rescinded by one or more of the parties
[Ex. mentally ill, under duress, under the influence,
misrepresentation, intent to defraud, minor]
Unenforceable - has legal elements but is only enforceable between
the parties [ex. Oral agreement for the sale of real estate]
Unenforceable means you can’t sue
An oral agreement for the sale of real estate is non-enforcable - T/F?
True
Land contract
Buyer obtains possession; seller remains legal title until terms are satisfied
Statute of frauds
When a contract must be in writing to be enforceable
Contracts must:
- be voluntary
- be made by legally competent parties
- have (legal) consideration [which means it must have value for one party and legal sufficiency to support the contract]
- legal act [cant be illegal]
Bilateral
Two parties; two promises
Example: exclusive-right-to-sell
Unilateral
One sided agreement
Ex. An Option
(Or a wanted poster or bonus for top-selling agent)
Executed vs executory contracts
Executed - all parties have fulfilled their promises
Executory - one or both still have an act to perform
At closings, executory contracts become executed
Express vs implied
Written/oral vs demonstrated/acted
Assignment
Substitution of parties
Make an ass out of yourself at parties
Novation
Substitution of a new contract
Counter offer
New offer, rejects old
Acceptance
If seller agrees to an offer exactly as it is made AND the buyer is made aware of its acceptance – it is accepted
Binder
A shortened version of a sales contract
Which will later be drawn up by an attorney after acceptance
Sometimes used when details are too complicated
Earnest money deposits
A -customary- check provided by the buyer when making an offer to be used as a deposit - not a requirement
Broker puts it in an escrow account
Amount determined between parties and is used for:
Discouraging buyer from defaulting
Encouraging seller to take it off market
Cover any expenses if buyer defaults
Other names for LAND CONTRACTS:
- contract for deed
- bond for title
- installment contract
- land sales contract
- articles for agreement for warranty deed
Contingencies
Additional conditions that must be satisfied before contract is enforceable
They must include:
- what needs to be done
- in what time frame
- who is paying for costs involved
Example of an OPTION
Lease to buy
Amendment vs addendum
Amendment is a change to an existing contract
[ex. Modifying the dates]. Must be initialed/signed
Addendum is not a change but an added provision. [ex splitting the cost of repairs found in home inspection]. Essentially a new contract that must be signed by all parties but nothing has changed from the original
What is a land contract
When seller/vendor keeps title
Buyer/vendee takes possession
Buyer get equitable title, gives down payment, makes monthly payments, pays real estate taxes, insurance, repairs & upkeep. At a certain length of time, the buyer will relieves title after enough payments and terms have been satisfied
The interest held by a buyer during the time between the signing of a sales contract and the transfer of title is known as Equitable Title –
T/F?
True
An option agreement is a unilateral contract – T/F??
True
Revocation (to revoke)
Cancel or withdraw rights/offer
Liquidated damages
An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract
Equitable title
When the buyer/vendee has given monies required but doesn’t have the actual legal title in hand yet
Land / installment vs option
Holds title, blah, blah vs lease to buy
