Unit 13 - Real Estate Taxes & Other Liens

Tax Lien

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

Lien

A charge of claim against a person's property made to enforce the payment of money. A financial encumbrance that attaches to (runs with) the property and binds successive owners. It is released when paid or settled and the holder files a release.

Writ of Attachment

A court order against the property of another person that directs the sheriff or other officer of the court to seize or take control of the property. It becomes an involuntary, specific & statutory lien.

Tax Sale

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

Judgement

A decree issued by a court, is an involuntary, general, equitable lien on both real & personal property owned by a debtor and must be filed in every county in which the judgment debtor owns property.

Vendor's Lien

A lien belonging to the vendor (seller) for the unpaid purchase price of the property (i.e. owner financing).

Voluntary Lien

A lien created intentionally by the property owner's actions (i.e. mortgage loan or bail bond).

Junior Lien

A lien that comes after an earlier lien.

Statutory Right of Redemption

A period of redemption after a tax sale.

Equitable Right of Redemption

A period of redemption before a tax sale.

Special Assessment

A tax charged on real estate to fund public improvements to the property (i.e. street paving, curbs, speed bumps)

General Lien

A type of lien that affects all property, both real and personal property.

Equitable Lien

A type of lien that arises out of common law and is imposed by a court order.

Statutory Lien

A type of lien that is defined by written law.

Involuntary Lien

A type of lien that is not a matter of choice; it is created by law and may be either statutory or equitable.

Specific Lien

A type of lien that only applies to real property.

IRS Tax Lien

A type of lien that results from failure to pay federal taxes. Priority is based on the filing date and does not supersede previously filed liens.

Mortgage Lien

A voluntary lien on real estate given to a lender by a borrower as security for a real estate loan.

Not all encumbrances are liens

All liens are encumbrances but...

Mechanic's Lien

An involuntary, specific lien that gives security to persons or companies that perform labor or furnish material to improve real property. The priority date is established when construction began or materials were furnished. Takes priority over mortgage liens.

Encumbrance

Anything that affects or limits the title of the property

Writ of Execution

Directs the sheriff to seize and sell as much of the debtor's property as is necessary to pay both the debt and the expenses of the sale.

Hospitals; Schools, Cities; Churches (i.e. not for profit)

Exemptions from General Real Estate Tax

Mills, which = 1/1000 of a dollar i.e. 32 mills = $32 per $1,000

How a tax rate is stated...In..

Inheritance Tax

Involuntary, General, Statutory liens that encumber a deceased person's real and personal property (also known as estate tax).

Estate Tax

Involuntary, General, Statutory liens that encumber a deceased person's real and personal property (also known as inheritance tax).

State Law

Priority of a Mechanic's lien is based on:

Satisfied

Synonym for Paid

Ad Valorem or Sheriff's Lien

Synonyms for General Real Estate Tax

Ad Valorem Tax

Tax based on the value of the property being taxed.

General Real Estate Tax

Tax based on the value of the property being taxed.

Voluntary; Specific or General; Statutory or Equitable

Test for: Bail Bond Lien

Involuntary; General; Statutory

Test for: Corporation Franchise Lien

Involuntary; General; Statutory

Test for: Estate Taxes/Inheritance Tax Lien

Involuntary; General, Statutory

Test for: Federal Income Tax Lien

Involuntary; General; Equitable

Test for: Judgment Lien

Involuntary; Specific; Statutory

Test for: Mechanic's Lien

Voluntary; Specific; Equitable

Test for: Mortgage/Deed of Trust Lien

Involuntary; Specific; Statutory

Test for: Municipal Utility Lien

Involuntary; Specific, Statutory

Test for: Real Estate Tax Lien

Involuntary or Voluntary; Specific; Statutory

Test for: Special Assessment Lien

Tax Levy

The formal action taken to impose a tax, usually by a vote of the taxing district's governing body.

Assessment

The official valuation process of real estate; assessor assigns market value.

Priority of Liens

The order in which claims against the property will be satisfied if the property is sold by the debtor. Usually first to record, first in right.

Notice of Nonresponsibility

This is used by landlords with tenants who do improvements to the property that they do not want to be liable for.

Assessment Equalization Factor

This is used to correct inequalities in statewide tax assessments to achieve uniformity.

Lis Pendons

Trouble ahead. A notice that could become a lien in the future (at which time it would be backdated to when it was recorded.)

General Real Estate Taxes & Special Assessment (or Improvement Taxes)

Two types of real estate taxes

Judgments; Estate & Inheritance Taxes; Decedent's Debts; Corporate Franchise Taxes; & IRS Taxes

Types of General Liens

Real Estate (to include Vendors' Liens); Mechanics' Liens; Mortgage Liens; Real Estate Tax Liens; & Liens for Special Assessments & Utilities

Types of Specific Liens

Real estate tax liens & special assessments (then municipal utilities and mechanic's liens)

What types of liens always take precedence (regardless of priority)?

Money Judgement

When a judgment (decree) issued by a court establishes the amount a debtor owes and provides for money to be awarded.

When the personal property is seized

When does a lien attach itself to personal property?

The moment it is filed & recorded by the lender in the county where the property is located.

When does a lien attach itself to real property?

Satisfaction of Judgment

When real property is sold to satisfy a debt, the debtor should demand a legal document called: (also known as satisfaction piece).

Security

When someone borrows money, the lender generally requires some form of this (also known as collateral).

Appropriation

When the taxing body authorizes the expenditure of funds and provides for the sources of funding.

It involves a debtor-creditor relationship

Which is true about a Mortgage Lien and a Judgment Lien?

Seniors; homeowners; veterans, people with disabilities

Who possibly can see a reduction in real estate taxes?

Subordination Agreement

Written agreements between lienholders to change the priority of liens. A holder of a superior or prior lien agrees to permit a later lienholder's interest to take precedence.