Liens

Tax Liens (3 Major Types)

-Ad valorem property tax liens -Special assessment property tax liens -Federal income tax liens

General Vs. specific (General)

A general lien is one that attaches to ALL property owned by the lienee. Examples of general liens include: -Federal income tax lien - a statutory lien which can occur when federal income taxes are not paid. -Judgement Lien - a statutory lien which results from court action brought against the lienee. -Deficiency judgement lien - a statutory lien which results when the proceeds from a foreclosure sale are insufficient to satisfy the outstanding indebtedness.

Transfer of Encumbered Title

A lien is an encumbrance on the title to the real property to which it attaches. To transfer the title, the lien must either be: satisfied, or assumed by the person to whom the title is being transferred. (the grantee).

Mechanics Lien

A mechanics lein is for the protection of those people who supply labor or materials in the construction or improvement of buildings. If the labor or materials are not paid for, the person supplying them has the right to place a lien against the property for which the labor or materials were supplied. To enforce a claim against a mechanics lien, a linear must file a lawsuit in court. In order to give notice of his/her claim and to protect his/her lien for expiration while the suit is pending, the lienor may file a notice of "lis pendens" in the public records.

Mortgage Liens

A mortgage lien is created when a property owner borrow moneys using the property as collateral. The property is used as security by the lender for the repayment of the loan. The lien is the instrument through which the lender's interest in the property is secured.

General Vs. specific (Specific)

A specific lien attaches only to a specific property identified in the lien. Examples of specific liens include: -Property tax lien when taxes are not paid. -Mortgage lien when a mortgage is used in financing. -Mechanic's lien when work done is not paid for. Specific liens are also called SPECIAL liens.

Ad Valorem Tax Liens

An ad valorem tax lien is created when someone fails to pay the ad valorem taxes that are due on a property Ad valorem taxes are the taxes normally referred to as "property taxes" that are assessed according to the value of the property.

Special Assessment Tax Liens

Are property taxes assessed on certain properties only, to pay for improvements for those properties. An example would be a special assessment tax to pay for putting street lights in a neighborhood at their request. When special assessment taxes are assessed, a tax lien is placed on the property. When the taxes are paid, the lien is removed.

Deficiency Judgement Lien

Arises when a property is foreclosed on and sold to satisfy the debt. If the proceeds from the sale of the property are not sufficient to satisfy the outstanding balance on the debt, the mortgagee may obtain a DEFICIENCY JUDGEMENT. This judgement serves as a lien on all of the mortgagor's assets. If the mortgagor fails to pay the remaining balance on the property, the lien is enforced like any other judgement lien. The mortgagor's property, both real and personal, can be sold to pay off the remaining balance.

Federal Income Tax Liens

Federal Income tax Liens arise when federal income taxes are not paid. These liens apply to ALL property, both real and personal, of the lienee.

What are the types of liens

Mortgage Liens Tax Liens Mechanic's Liens Judgement Liens Deficiency Judgement Liens

Exceptions to race statutes

Real property tax liens take priority over all other liens on a given property, regardless of when they were recorded. Both ad valorem tax liens and special assessment tax liens have priority over all other types of liens (but ad valorem tax liens have priority over special assessment tax liens.) NOTE: Federal income tax liens DO NOT have any special priority. They take priority on the date of their recordation just like any other lien other than a property tax lien. The second exception to the race statutes are mechanics liens. -A mechanics lien takes priority on the basis of when: the work began, or the materials were delivered. NOT the date the mechanics lien was recorded.

Voluntary vs. involuntary

Voluntary liens are liens created by agreement of the parties. An example would be a mortgage lien. Involuntary liens are created by the operation of law. Examples would include: -A tax lien from failure to pay property taxes -A mechanics lien for failure to pay for work done. -A judgement lien or a deficiency judgement lien. -Involuntary liens are also called statutory liens.

2 ways in which liens can be categorized

Voluntary vs. involuntary General vs. specific

Judgement Lien

When a person wins a lawsuit against another person in court to receive monetary damages, the person winning the suit is awarded a judgement. When the judgement is recorded in the public records, it becomes a JUDGEMENT LIEN against all the property, both real and personal, of the defendant (the loser of the lawsuit). If the lienee (the loser of the suit) does not voluntarily pay the amount of the damages awarded by the court, the court will issue a WRIT OF EXECUTION which directs the sheriff to sell enough of the lineee's property to pay the damages and the cost of the sale.

Priority of Liens

When two or more liens exist, it becomes important to determine the priority of liens. In most states, priority is determined by RACE STATUTES. (This refers to being the first to arrive, not ones genealogy) In general, race statutes give priority on the basis of the DATE OF RECORDATION of a lien in the public records. The first to be recorded has priority. There are two exceptions to this rule which will be covered next.

Lien

is a legal hold or claim which: one person has upon the property of another. is used as security for a debt.

Lienor

is a person who has a right of lien upon the property of another.

Lienee

is a person whose property is subject to a lien.