Unit 15: Quiz - real estate taxes and other liens

Which statement MOST accurately describes special assessment liens? A. They are general liens. B. They are paid on a monthly basis. C. They take priority over mechanics' liens. D. They cannot be prepaid in full without penalty.

C. They take priority over mechanics' liens. Real estate taxes and special assessments take priority over all other liens.

Which lien affects all real and personal property of a debtor? A. Specific B. Voluntary C. Involuntary D. General

D. General

A general contractor recently filed suit against a homeowner for nonpayment. The contractor now learns that the homeowner has listed the property for sale with a real estate professional. In this situation, which of the following will the contractor's attorney use to protect the contractor's interest? A. Seller's lien B. Buyer's lien C. Assessment D. Lis pendens

D. Lis pendens A recorded lis pendens— a notice of action pending—warns any potential purchaser that a property is subject to a pending legal action. Such a notice might prompt a buyer to consider very.

Which of the following is a specific, involuntary, statutory lien? A. Real estate tax lien B. Income tax lien C. Estate tax lien D. Judgment lien

A. Real estate tax lien A real estate tax lien is always on a specific piece of realty; it happens without permission of the property owner and so is involuntary; it is created by statute. Therefore, it is specific, involuntary, and statutory.

Which statement is TRUE of both a mortgage lien and a judgment lien? A. It must be entered by the court. B. It involves a debtor-creditor relationship. C. It is a general lien. D. It is an involuntary lien.

B. It involves a debtor-creditor relationship. Both involve a debtor-creditor relationship. A mortgage lien is specific, not general, and is voluntary and entered by the lender. The lien is executed by legal action upon default of the borrower.

Priority of liens refers to which of the following? A. Order in which a debtor assumes responsibility for payment of obligations B. Order in which liens will be paid if property is sold to satisfy a debt C. Dates liens are filed for record D. Fact that specific liens have greater priority than general liens

B. Order in which liens will be paid if property is sold to satisfy a debt Priority of liens refers to the order in which claims against a property will be paid off. In general, the rule for priority of liens is "first come, first served," but there are some exceptions, such as taxes and assessments.

Which lien usually would be given highest priority in disbursing funds from a foreclosure sale? A. Mortgage dated last year B. Real estate taxes due C. Mechanic's lien for work started before the mortgage was made D. Judgment rendered the day before foreclosure

B. Real estate taxes due Unpaid real estate taxes take priority when property is liquidated at a foreclosure sale. They are a statutory lien with priority over liens created by contract, such as mortgages

A lien on real estate made to secure payment for a specific municipal improvement project is which of the following? A. Mechanic's lien B. Special assessment lien C. Ad valorem D. Utility lien

B. Special assessment lien

Which of the following creates a lien on real estate? A. Easement running with the land B. Unpaid mortgage loan C. License D. Encroachment

B. Unpaid mortgage loan

General real estate taxes levied for the operation of the government are A. assessment taxes. B. ad valorem taxes. C. special taxes. D. improvement taxes.

B. ad valorem taxes. Confusingly, the general real estate tax—the ad valorem tax—creates a specific lien. The word general, in this context, distinguishes this tax from a special assessment for a specific project or neighborhood.

Which of the following is classified as a general lien? A. Mechanic's lien B. Bail bond lien C. Judgment D. Real estate taxes

C. Judgment A judgment lien is not just on some specific assets but on the assets of the debtor in general.

Which of the following is a voluntary, specific lien? A. IRS tax lien B. Mechanic's lien C. Mortgage lien D. Seller's lien

C. Mortgage Lien A mortgage lien is created voluntarily by the borrower. The borrower names specific property in the mortgage agreement that serves as security for the lender.

Which tax targets homeowners in particular? A. Personal property tax B. Franchise tax C. Real property tax D. Luxury tax

C. Real property tax The real property (ad valorem) tax falls on those who own real property, such as homeowners.

A mechanic's lien claim arises when a contractor has performed work or provided material to improve a parcel of real estate on the owner's order and the work has not been paid for. Such a contractor has a right to A. tear out the work. B. record a notice of the lien. C. record a notice of the lien and file a court suit within the time required by state law. D. have personal property of the owner sold to satisfy the lien.

C. record a notice of the lien and file a court suit within the time required by state law.

What is the annual real estate tax on a property valued at $135,000 and assessed for tax purposes at $47,250, with an equalization factor of 125%, when the tax rate is 25 mills? A. $945 B. $1,181 C. $1,418 D. $1,477

D. $1,477 Tax = assessed value × equalization factor × tax rate. The millage rate is the tax on each dollar of assessed value: 1 mill = $0.001; 25 mills = $0.025. Therefore: $47,250 × 125% = $59,062.50, and $59,062.50 × $0.025 = $1,476.56. The best answer is $1,477.

A specific parcel of real estate has a market value of $160,000 and is assessed for tax purposes at 75% of market value. The tax rate for the county in which the property is located is 40 mills. The tax bill will be A. $6,400. B. $5,000. C. $5,200. D. $4,800.

D. $4,800. mill is undefined of a dollar: $0.001. The mill rate is the tax on every dollar of the assessed value of property. A rate of 40 mills ($0.040) is applied to 75% of the $160,000 market value of the property: $160,000 × 75% = $120,000, and $120,000 × $0.040 = $4,800.

A buyer purchased a parcel of real estate. Title has passed, but to date the buyer has not paid the purchase price in full, as originally agreed. If the seller wants to force payment, which remedy is the seller entitled to seek? A. Attachment B. Mechanic's lien C. Lis pendens D. Judgment

D. Judgment The seller could seek a monetary judgment based on a vendor's (seller's) lien for unpaid portions of the purchase price not secured by a mortgage.

All of the following probably would be exempt from real estate taxes EXCEPT A. public hospitals. B. golf courses operated by the park district. C. synagogues and churches. D. apartment buildings.

D. apartment buildings.

A mechanic's lien would be available to all of the following EXCEPT A. subcontractors. B. contractors. C. surveyors. D. real estate professionals.

D. real estate professionals.

he right of a defaulted taxpayer to recover property before its sale for unpaid taxes is A. the statutory right of reinstatement. B. the equitable right of appeal. C. the statutory right of assessment. D. the equitable right of redemption.

D. the equitable right of redemption. An equitable right of redemption exists because it is only fair (equitable) that a property owner be permitted to save the property before a tax sale—or even a foreclosure sale—by paying the amount owed in full.