Real Estate Unit 15-Real Estate Taxes and Other Liens

There are many different types of liens. One way that liens are classified is by how they are created -A voluntary lien is created intentionally by the property owner's action, such as when someone takes out a mortgage loan. -An involuntary lien is not a matter of choice. it is created by law and may be either 1-statutory or 2-equitable

-A statutory lien is created by statute, or written law. A real estate tax lien, for example, is an involuntary, statutory lien. -An equitable lien arises out of common law, or law based on legal precedents. A court-ordered judgment that requires a debtor to pay the balance on a delinquent charge would create an involuntary, equitable lien

The four ways to create a lien-VISE

-Voluntary -Involuntary -Statutory -Equitable

A judgment is a decree issued by a court. When the decree establishes the amount a debtor owes and provides for money to be awarded, it is called a money judgment

A judgment is a general, involuntary, equitable lien on both real and personal property owned by the debtor

There is often a considerable delay between the time a lawsuit is filed and the time final judgment is rendered. When any suit that affects title to or possession of real estate is filed, a special notice, known as a lis pendens is recorded.

A lis pendens is not itself a lien, but rather notice of a possible future lien.

LEARN THIS!!The tax rate may be stated in a number of ways. In many areas, it is expressed in mills. A mill is 1/1000 of a dollar, or $0.001. The tax rate may be expressed as a mills-per-dollar ratio—for instance, in dollars per hundred or in dollars per thousand. A tax rate of 0.032, or 3.2%, could be expressed as 32 mills, or $3.20 per $100 of assessed value or $32 per $1,000 of assessed value.

A mill = $.001

Liens may also be classified according to the type of property involved: -General liens affect all the property, both real and personal, of a debtor. This includes judgments, estate and inheritance taxes, decedent's debts, corporate franchise taxes, and Internal Revenue Service taxes -Specific liens are secured by specific property and affect only that particular property. Specific liens on real estate include vendors' liens, mechanics' liens, mortgage liens, real estate tax liens, and liens for special assessments and utilities.

A vendor's lien is a lien belonging to the vendor (seller) for the unpaid purchase price of the property, when the vendor has not taken any other lien or security, such as a mortgage, beyond the personal obligation of the purchaser. Vendors' liens in real estate are uncommon and arise out of the use of owner financing to sell property.

To enforce a judgment, what must the creditor obtain

A writ of execution from the court

There are two types of real estate taxes: -general real estate taxes -special assessments or improvement taxes

Both are levied against specific parcels of property and automatically become liens on those properties.

A special assessment is a tax charged on real estate to fund public improvements to the property, and it creates a lien for the amount of the assessment on the property. Property owners in the improvement area are required to pay for the improvements because their properties benefit directly from them.

For example, the construction of paved streets, curbs, gutters, sidewalks, storm sewers, or street lighting increases the value of properties that benefit from them

Priority of liens refers to which of the following?

Order in which liens will be paid if property is sold to satisfy a debt

A mortgage for the unpaid purchase price that belongs to the seller of real estate is

a vendor's lien.

General real estate taxes levied for the operation of the government are

ad valorem taxes.

encumbrance

any charge or claim that attaches to real property and lessens its value

involuntary lien

created by law and can be statutory or equitable

The right of a defaulted taxpayer to recover property before its sale for unpaid taxes is

equitable right of redemption

Delinquent taxes can be collected through a tax sale following statutory notice requirements. The taxpayer usually has equitable right of redemption any time before a tax sale. The state may allow a statutory right of redemption following a tax sale. If there are no bidders at the tax sale, the property may be forfeited to the state.

equitable right of redemption-before a tax sale statutory right of redemption-after a tax sale (E comes before S)

A provider of construction materials may give constructive notice of his unpaid invoices by

obtaining a mechanic's lien against the subject property

If a property owner believes an error was made in determining the assessed property value, the owner can

present the objection to a local board of appeal or review.

Real estate taxes must be valid to be enforceable. That means they must be: -charged properly -must be used for a legal purpose -must be applied equitably to all property.

tax liens usually are given priority over all other liens against a property.

Real estate taxes that are delinquent for the period specified in state law can be collected through

tax sale of the property

Real estate taxes that are delinquent for the period specified in state law can be collected through

tax sale of the property.

What would permit a law enforcement officer to seize and sell a debtor's property?

writ of execution. A writ of execution directs the sheriff to seize and sell as much of the debtor's property as necessary to pay both the debt and the expenses of the sale.