Unit 7: Real Estate Taxes and Liens Quiz

The property owners on whose land the city recently installed sidewalks will pay for these sidewalks through A) a special assessment. B) an ad valorem tax. C) monthly billings. D) a municipal utility lien.

A) a special assessment. Special assessments are special taxes levied to fund public improvements that benefit the property; such taxes can pay for the installation of paved streets, curbs, gutters, sidewalks, storm sewers, and street lighting.

Which of the following is classified as a general lien? A. Judgement B. Bail Bond lien C. a utility lien D. a mechanic's lien

A. Judgement. A judgment is a decree issued by a court that becomes a general, involuntary lien on both real and personal property owned by the debtor.

Taxes levied for the operation of the government are called A) improvement taxes. B) ad valorem taxes. C) special assessments. D) assessment taxes.

B) ad valorem taxes. General real estate taxes are levied and assessed according to the value of the property subject to taxation. Ad valorem is the Latin term for according to value.

A lien on real estate made to secure payment for specific municipal improvements to a parcel of real estate is

B. A special assessment

What type of lien is a court-ordered judgment entered against the real property owned by the debtor requiring the debtor to pay the balance on a delinquent charge account? A) Voluntary lien B) Statutory lien C) Equitable lien D) Mechanic's lien

C) Equitable lien. An equitable lien arises out of common law. A court-ordered judgment that requires a debtor to pay the balance on a delinquent charge account would be an involuntary, equitable lien on the debtor's real estate.

A lumber company that furnished materials ordered by the property owner was not paid for the materials. What recourse is available to the lumber company in Pennsylvania? A) File a lis pendens as soon as the material is delivered B) No recourse C) File a mechanic's lien within six months after the work was completed D) File a mechanic's lien within one year of date of delivery

C) File a mechanic's lien within six months after the work was completed. Under the Pennsylvania Mechanic's Lien Law, a contractor or subcontractor can file a claim with the court of common pleas in the county in which the property is located within six months after the work is completed (entitlement to a lien is subject to certain exceptions and compliance with procedures for serving notice on the property owner).

In what time frame, if any, is a Pennsylvania contractor permitted to file a mechanic's lien? A) Anytime before the transfer of title B) Up to one year after beginning the work C) Within six months of completing the work D) Within six months of starting the work

C) Within six months of completing the work. Under the Pennsylvania Mechanic's Lien Law, a contractor or subcontractor can file a claim with the court of common pleas in the county in which the property is located within six months after the work is completed.

A seller sold a buyer a parcel of real estate. Title has passed, but to date the buyer has not paid the purchase price in full, as originally agreed. To force payment, the seller should seek A) a lis pendens. B) a mechanic's lien. C) a judgment. D)an attachment.

C) a judgment. The seller of the real estate can sue the purchaser in court. If the suit is successful, the court issues a decree establishing the amount the debtor owes and provides for money to be awarded. This decree is known as a money judgment.

A general contractor will soon file a suit against a homeowner for nonpayment. The contractor just learned that the homeowner has listed the property for sale with a real estate broker. In this situation, to protect the contractor's interest, the contractor's attorney will use A) an assessment. B) a buyer's lien. C) a lis pendens. D) a seller's lien.

C) a lis pendens. The general contractor would protect his interest or claim by recording a notice of lis pendens (litigation pending). This serves as notice of a possible future lien against the property.

What is an example of a voluntary lien? A) Real estate tax lien B) Judgment lien C) Special assessment lien D) Mortgage lien

D) Mortgage lien. The owner of the property who borrows money voluntarily uses the property as collateral.

A mechanic's lien claim arises when a general 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)have personal property of the owner sold to satisfy the lien. C)record a notice of the lien. D)record a notice of the lien and file a court suit within the time required by state law.

D) record a notice of the lien and file a court suit within the time required by state law. In Pennsylvania, a contractor can record a notice of the lien and enforce the lien by court action (a foreclosure) to collect the debt from the sale of the real estate.

Which of the following may become a lien on real estate? A. An encroachment B. A restrictive covenant C. An easement D. Domestic support order

D. Domestic support order. Domestic support liens are involuntary liens that may be filed on all real estate owned by a person who has overdue child support obligations. Lien priority is determined by the date that each support payment (which makes up the lien) becomes overdue.

In disbursing funds from a foreclosure sale, the highest priority is usually to be given to A. a mortgage dated last year B. a judgement rendered the day before foreclosure C. a mechanic's lien for work started before the mortgage was made D. real estate taxes due

D. real estate taxes due. If a property is sold at a foreclosure proceeding, outstanding real estate taxes and special assessments will be paid first. Tax liens take priority over other liens.

Priority of liens refers to which of the following? a. Dates liens are filed for record; the lien with the earliest recording date will always take priority over other liens b. Order in which liens will be paid if property is sold to satisfy a debt c. Order in which a debtor assumes responsibility for payment of obligations 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

Which of the following BEST refers to the type of lien that affects all real and personal property of a debtor? a. Voluntary lien b. Specific lien c. Involuntary lien d. General lien

d. General lien

How To Calculate Millage Rate

divide the number of mills by 1,000 to calculate the mill rate (which is also the property tax rate).

A specific parcel of real estate has a market value of $180,000 and is assessed for tax purposes at 25% of market value. The tax rate for the county in which the property is located is 30 mills. The tax bill will be A) $1,350. B) $900. C) $450. D) $650.

A) $1,350. Market value ($180,000) times the tax ratio (25%) equals the assessed value ($45,000). A tax rate of 30 mills is expressed as 0.030. Therefore, $45,000 × 0.030 equals a tax bill of $1,350.

Which of the following is most likely subject to real estate taxes? A) An apartment building B) A public golf course C) A medical research facility D) A community church

A) An apartment building. In Pennsylvania, the general theory is that property used for certain public purposes is tax exempt. Apartment buildings owned by private individuals or entities are generally not exempt from real estate taxes.

Pennsylvania law requires counties and municipal governments to adopt budgets and to set tax rates on a A) January-to-December calendar year. B) August-to-September calendar year. C) July-to-June fiscal year. D) April 16-to-April 15 calendar year.

A) January-to-December calendar year. Pennsylvania law requires counties and municipal governments to adopt budgets and set tax rates on a January-to-December calendar year. Most school districts in Pennsylvania, however, are required to prepare budgets and set tax rates on a fiscal year that begins July 1.

What encumbrance against real property is ALWAYS monetary? A) Tax lien B) Encroachment C) Easement in gross D)Easement appurtenant

A) Tax lien. A lien is a charge or claim against a person's property made to enforce the payment of money. Easements and encroachments affect the use but are not monetary.

When a company furnishes materials for the construction of a house and is subsequently not paid, it may file A) a mechanic's lien. B) an estoppel certificate. C) a lis pendens. D) a deficiency judgment.

A) a mechanic's lien. A mechanic's lien is available to contractors, subcontractors, architects, equipment lessors, surveyors, laborers, and others when the owner has not fully paid for the work or when the general contractor has been compensated but has not paid the subcontractors or suppliers of materials.