Unit 10 - Real Estate Taxes and Other Liens

Question 1

Appropriation

Answer 1

The way a taxing body actually authorizes the expenditure of funds and provides for the sources of the funding.

Question 2

Collateral

Answer 2

Something having value that is given to secure repayment of a debt.

Question 3

Encumbrance

Answer 3

Anything (for example, a mortgage, tax, or judgment lien; an easement; a restriction on the use of the land) that may diminish the value or use and enjoyment of a property.

Question 4

Equalization Factor

Answer 4

A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The ad valorem tax is based on this adjusted value.

Question 5

Equitable Lien

Answer 5

A lien that arises out of common law.

Question 6

Estate Taxes

Answer 6

Federal taxes on a decedent’s real and personal property.

Question 7

General Lien

Answer 7

The right of a creditor to have all of a debtor’s property (both real and personal) sold to satisfy a debt.

Question 8

General Real Estate Tax

Answer 8

A tax levied according to value, generally used to refer to real estate tax. Also called an ad valorem tax.

Question 9

Inheritance Taxes

Answer 9

State-imposed taxes on a decedent’s real and personal property.

Question 10

Involuntary Lien

Answer 10

A lien placed on property without the consent of the property owner.

Question 11

Judgment

Answer 11

The formal decision of a court on the respective rights and claims of the parties to an action or suit. After a judgment has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant. Judgment liens are effective in Illinois for seven years and may be renewed for another seven-year term.

Question 12

Lien

Answer 12

A right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by means of a court sale.

Question 13

Lien Waiver

Answer 13

Collected by the landowner from each contractor and subcontractor to create a continuing record that all lien claimants have released their lien rights.

Question 14

Lis Pendens

Answer 14

A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or federal court.

Question 15

Mechanic’s Lien

Answer 15

A statutory lien created in favor of contractors, laborers, and materialmen who have performed work or furnished materials in the erection or repair of a building.

In Illinois - if a landowner knows of work being done on the property and does not object or disclaim responsibility, a mechanic’s lien may be created.

Question 16

Mortgage Lien

Answer 16

A lien or charge on the property of a mortgagor that secures the underlying debt obligations.

Question 17

Special Assessment

Answer 17

A tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or sewer.

Question 18

Specific Lien

Answer 18

A lien affecting or attaching only to a certain, specific parcel of land or piece of property.

Question 19

Statutory Lien

Answer 19

A lien imposed on property by statute (for example, a tax lien).

Question 20

Subordination Agreement

Answer 20

A written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances.

Question 21

Tax Deed

Answer 21

An instrument given to a purchaser after the expiration of the redemption rights. See also certificate of sale.

Question 22

Tax Lien

Answer 22

A charge against property, created by operation of law. Tax liens and assessments take priority over all other liens.

Question 23

Tax Sale

Answer 23

A court-ordered sale of real property to raise money to cover delinquent taxes.

Question 24

Voluntary Lien

Answer 24

A lien placed on property with the knowledge and consent of the property owner.

Question 25

Writ Of Attachment

Answer 25

To prevent a debtor from conveying title to such previously unsecured real estate while a court suit is being decided, a creditor may seek a writ of attachment, by which the court retains custody of the property until the suit concludes.

Question 26

The amount of homeowner exemption in Illinois

Answer 26

$6k ($7K in Cook County)

Question 27

Amount of senior citizen (65+) homestead exemption.

Answer 27

reduction by 5k

Question 28

What does the home improvement exemption allow?

Answer 28

Allows any Illinois homeowner who has recently improved her home, to forestall an increase in the home’s overall assessed value for up to four years. This exemption is available up to an improvement value of $75,000.

Question 29

Equation for calculating real estate taxes.

Answer 29

Assessed value × equalization factor – exemptions × tax rate = annual tax

Question 30

How often is real estate reassessed in Illinois?

Answer 30

Any given parcel receives a full reassessment on a quadrennial (four-year) basis, as mandated by the state, though in Cook county this reassessment is triennial (every three years).

Question 31

Budgets and tax rates equation

Answer 31

Proposed expense ÷ total assessed property values = tax rate

Question 32

Which liens are always paid first?

Answer 32

tax liens and special assessment liens

Question 33

ad valorem taxes

Answer 33

Also called general real estate taxes. Latin for ‘according to value’