Real Estate Set 8

When suing to collect a debt, the steps are:

1) Filing of a lis pendens (notice a suit is pending). 2) Attachment, if needed, to hold the subject property. 3) Court issues a judgment. 4) Writ of execution allows collection of debt.

Define a general lien:

A general lien is one that encumbers all of the real and personal property owned by the debtor, both property owned when the lien is recorded, and all property acquired in the future.

Define a lien:

A lien is a monetary claim by one person (creditor) against the property of another (debtor) whereby the debtor's property is made security for the payment of a debt. This legal right may allow the creditor to have the debt satisfied by forcing the sale of the property of the debtor.

Define a voluntary lien:

A voluntary lien is one which requires the owner's consent in order to be recorded.

An owner may be protected by dealing only with contractors who are

Adequately bonded.

Define an attachment lien:

An attachment lien grants the court custody of a specific property to prevent the owner from transferring ownership while a suit for monetary damages is being decided.

A mechanic's lien exists for the protection of those who:

Furnish labor or materials used in the construction, improvement, repair, or maintenance of real property.

Define an involuntary lien:

If the law permits the recording of a lien without the owner's consent it is called an involuntary lien.

Ad valorem taxes are levied on:

Individual properties according to their value.

When levied against a property, ad valorem taxes and special assessments become:

Involuntary liens.

A special assessment tax is a real property tax and if unpaid:

It would become a specific lien on the property.

When a plaintiff (creditor) seeks a monetary award for damages, the plaintiff must enter a_____ against the defendant (debtor).

Lawsuit. If the plaintiff wins the lawsuit, the court will award a judgment and establish the indebtedness.

Define a specific lien:

One secured by a specific parcel of real estate, regardless of how many parcels the debtor may own.

An attachment lien is an involuntary, specific lien, and is the ONE lien which will:

Prevent sale or other conveyance of the subject property until the lien has been removed.

Examples of specific liens include:

Property taxes, mortgages, vendor's lien, mechanic's lien, vendee's lien, and attachment lien.

Due to the considerable amount of time before a judgment is rendered, a lis pendens may be recorded against the debtors property. The recording of the lis pendens action gives:

Public notice of a pending lawsuit.

To be effective against all property of a debtor, a general lien must be:

Recorded and enforced in all counties in which the debtor owns property.

Liens are classified as either:

Specific or general.

Mortgage liens are voluntary, _______ liens.

Specific.

Property tax liens are involuntary, ______ liens.

Specific.

The purpose of this tax is to fund the general operations of:

State, city, and county governments.

Although the owner may have paid the general contractor, a _____ can file a mechanic's lien against the owner's property if they have not been paid by the contractor.

Subcontractor.

The effective date of a mechanic's lien varies, depending on state law. Some states allow liens to be effective the date the work or material was ordered, regardless of:

The date it was filed. In other states the effective date is either the date construction began or materials were supplied, the date of completion, or the date the lien was recorded.

True or false: A mechanic's lien will expire if necessary action is not taken.

True.

True or false: The vendee's lien has priority over subsequent recorded liens.

True.

Ad valorem taxes are levied on individual properties according to their:

Value.

In a typical transaction involving the sale of real estate, the purchaser and seller enter into a sales contract. If the seller defaults, the purchaser then has a ________ for the amount of the deposit plus title related expenses.

Vendees lien.

A mortgage lien exists when:

a real estate owner pledges one specific property to the lender as security for the repayment of a loan.

Define a mechanics lien:

a specific lien levied by someone who provided labor or materials to a construction job and who claims that pay was not received.

A purchaser who buys property on which improvements have recently been made should also take precautions to avoid:

a subcontractor filing a mechanic's lien.

Real estate provides local governments with their main source of revenue through:

ad valorem taxes and special assessments.

Equitable liens arise from:

common law and are usually voluntary.

Once a notice of completion is filed and the owner fails to pay the claim, a mechanic's lien can then be:

filed against the property.

If not paid, taxes become:

first priority liens regardless of when other liens were recorded. It is for this reason that mortgage lenders often require the property owner to establish an escrow account for the monthly payment (called impounds) of property taxes.

In order for a lien holder to establish an enforceable claim, they must properly record in the county records the:

instrument which grants a security interest in a particular property.

A lis pendens gives:

legal notice, when recorded, that a suit is pending.

Generally a mechanic's lien expires within:

one or two years from the date it was filed, unless a suit for money owed is commenced.

The date of recording will usually serve to establish priority of lien rights when proceeds from the sale are paid to creditors. As an exception to this legal procedure, property tax liens always have priority over:

previously recorded liens.

In some real estate transactions the seller finances part of the purchaser's equity over several years. As security for the payments the purchaser gives the seller a:

purchase money mortgage which becomes a vendor's lien.

Because existing liens are a liability for the new owner, a purchaser should have an attorney:

search the public records to determine what liens are filed against the property being purchased.

The right to file a mechanic's lien is granted by:

state law; therefore, requirements for establishing, filing, and enforcing claims vary from state to state.

Court action must be taken to foreclose the involuntary mechanic's lien within:

the time allowed by law.

General liens result from:

Judgments, federal and state income taxes, and a decedent's debts.

Statutory liens arise from:

legislative acts and are usually involuntary.

What else can an owner do to be protected from liens besides dealing only with contractors who are adequately bonded?

1) Owner might make payments directly to sub-contractors 2) Owner might withhold payment to a general contractor until signed releases (waivers of lien rights) are received from sub-contractors 3) Owner might make checks jointly payable to the general contractor and to sub-contractors.

When a lawsuit is filed to seek enforcement in order to prevent the expiration of a mechanic's lien and to give notice of their claim against a specific property, a creditor may file a

Lis pendens.

The effective date of a mechanics lien is critical because:

it establishes the priority of the mechanic's lien over subsequent claims if the property is sold at foreclosure.

Unless satisfied before transfer of ownership (closing), existing liens become a:

liability for the new owner.

Mechanic's liens may be filed only for labor and materials, never for:

miscellaneous expenses such as travel or telephone expenses.

Special assessments are:

taxes levied only against certain properties to pay for improvements which are specifically intended to benefit the encumbered properties.