10.5 Liens
Under Texas Law public or nonprofit ownership of the property is not subject to Taxation. This is a 4 step procedure...
(1) Property Valuation (2) Protest Period (3) Adoption of a Tax Right (4)Collection of the Tax
Between January 1st and April 30th of each year the appraisal district in each county of Texas ,processes applications for Tax exemptions including agricultural, Homestead, appraisals ,other Tax reliefs and property renditions. Which are reports of owners on Real /Personal property The Central Appraisal District (CAD) makes value determinations (Tax appraisals) for all taxable properties in its boundaries.
**Appraisals for Tax purposes are different from appraisals for Lending purposes, and Re-financing purposes.**
Tax Liens ; § Gov. Taxes Real estate, if those are not paid. They have the right to Tax Liens for the nonpayment of the property Taxes. § It is easy for the Gov. to levied Taxes because the location of Real Estate is immovable.(Top Priority) Real Estate Taxes are in 2 different camps:
1)Advalorem Taxes -Per Value 2) Special Assessment Taxes- Improvement Taxes
The 3 Popular Tax Exemptions :
1)Homestead Exemption (Tax Exemptions) 2)65 Exemption 3)Disability Exemption
When a home/any type of Real Estate Purchased is purchased and theirs a mortgage in place ,the Lien o he property is created by a Deed of Trust.
> Deed of Trust is the Power of Sale Provision. The Power of Sale revision permits the trustee who is named in the Deed of Trust to sale the property in the benefit of the beneficiary (Mortgage Company). **This is considered a Public Sale, Which is a non-judicial foreclosure sale not conducted by the courts or the supervisions of the courts.** A creditor must institute some form of legal action for the court to order the Real Estate sold for full or partial satisfaction of the debt.
Tax deferral 65 year old home owners and up, if they have any delinquent if they have any Taxes due on the home they live in. the home owner can defer the payment of taxes as long as they own and live in the home . **This does not get rid of the taxes. It only post pone the Tax liability but it does not cancel it** Any ;
> Exemption tax >Penal interest ' >Attorney fees -At the time of the deferral goes with it , they a preserved and has an interest attach to them of 8 % until they are paid off . >Any new Taxes are not subjected to the 8% rate but when the Homeowner (or Spouse) sells the home or moves away . All of the saved Taxes and Interest is due within 181 Days.
What is a Lien?
>A Lien is a charge against property that provides security for some type of debt. >All Liens are considered an encumbrance for the property. >This does not constitutes any type of ownership in the Real Estate but the interest that Lien , it gives that Lien Holder the right to force the sale of the property or confiscate the property if the owner defaults on the debt.(Outside of the Homestead laws).
Disabled Homeowners has benefits that are similar to the 65 Deferral
>Tax Ceiling Freeze >Portability Freeze > Tax Deferral > Installment payments The transfer of these benefits to a surviving spouse with a disability homeowner involved must be determined by each Appraisal District .
The Tax Ceiling Freeze
>The Homeowner property has a Tax Ceiling calculation for the School Taxes. >The School Taxes cant increase as long as the Homeowner own/lives in the home and does not improve the home, other than routine maintenance and repairs . -As values goes up the 65 year old with the exemption in place ,who has only maintained the home . Will not see their value go up like the neighboring property's .
The Appraisal Districts Property Tax Records online , show;
>The current Appraised Value. >The Sales History >The Separate Values for the Land and the Building . >The Actual Legal Description. > The Taxes on each property contained within the district . >(Districts once contained sketches of the property in the interest of safety appraisal districts are no longer permitted to post on the interest any Photographs or Sketches of Floor Plans of residential properties.)
Homestead Exemptions : An Exemption in Taxation = Discount on property Taxes
>□ If a District has a 3 % Tax rate on a $100,000 property. The property will be subject to a $3,000 Annual Property Tax. "Say they got an $10,000 Exemption " **This does not mean $ Amount off of taxes.** The Assessed Value (Tax Appraisal Value) of $100,000 will be reduced of $10,000.Making the Tax Rate value $90,000 become the basis. The property tax will then be $2,700.
Involuntary Lien
A Lien imposed against property without consent of an owner Ex. Taxes, ,special assessments, federal income tax liens,etc.
General Lien
A lien on all the property of a debtor. ○ Affects both Real and Personal Property. ○ These are originated from... > judgments . > State or inheritance taxes . > IRS. > Federal Judgement liens . >Debts of a deceased person.
Specific Lien
A lien that attaches to one specific property only. ○ Usually involves a particular partial of Real Estate and does not affect other property besides that on specific partial. ○ These are typically.... > Mechanics Lien >Mortgage " " > Property Tax " " >Vendor / Vendee " "
The Tax payer is required to show documentation of the disability .
A tax Payer cannot get both 65 Deferral and Disability Exemption
Subordination Agreement
An agreement by the holder of an encumbrance against real property to permit that claim to take an inferior position to other encumbrances against the property.
Voluntary Lien
Any lien placed on property with consent of , or as a result of, the voluntary act of the owner
Special Assessment Taxes - Improvement Taxes
Both are levied between specific tracks of land/ partials in specific properties and they become Liens
Advalorem Taxes-Per Value
Consist of several Taxes on Real Estate by a number agency's and facilitates such as, >School Districts > City Taxes >Utility District >Mudd Taxes >Drainage Districts >Municipal >Sanitary Districts >Hospital Districts
V.I.S.E.Equitable
Created by Common Law. A Vendors/Vendees Lien on the Owners property.
V.I.S.Statutory.E
Created by Statue . either a Federal Tax Lien, Property Tax Lien, Judgement that creates a Lien or a Mechanic ?Material Lien, Work being done on the property,Property owner fails to pay for the work done.(The Mechanic or the person supplying the Materials will go to court to have a Lien filed on the property.)
V.Voluntary.I.S.E
Created by the Licencees Action. Ex. When a purchaser taxes out a mortgage to purchase property
Change the priority of one Lien for another.
Ex. A Land owner sales land to a developer who wants to build an apartment complex but in order for the developer to get the money to build the complex the bank providing the construction loan requires first lien position.
Installment Payments
For those over 65 their Tax payments may be made into 4 equal installments without any interest penalties
*Pop Quiz* A lien on all the property of a debtor is referred to as a...?
General Lien
Tax Lien
If theirs remaining funds then it goes toward the Mortgage
Mortgage Lien
If theirs remaining funds then it goes towards other Liens.
V.I.Involuntary.S.E
Involuntary Law
Priority of Lien : Exceptions
Liens filed from the IRS, Federal Income Taxes . > IRS Liens does not have a specific priority because they are general Liens. Which applies to a person's entirety of Personal/Real property and any Real property other than the property being sold. >They are general Liens that only attach to the Tax payers equity interest ( Owners amount after all other Liens have been taken care of) in the property .
Extended Use Appraisal :Taxation.
Most CAD's use a mass appraisal system , where each property is not thoroughly investigated .They will go by information on overall size which may or may not be accurate . (Purchase money appraisal will accurately measures the property. ) - Once these mass appraisals are done , a notice of appraised value on a particular (Single Family Homestead) property must be delivered by April 1st. >For all other properties, the deadline is May 1st.
Liens distinguish their selves from other types of encumbrances because although they are attached to the property the do so because they are debts.
Other Encumbrances typically don't involve debts. Such as an Encroachment or an Easement. □ (Easement = The right for someone else to use the property//Encroachment = An improvement is built over the property line)
*Pop Quiz* The order in which liens are given legal precedence or preference is known as...?
Priority of liens
*Pop Quiz* A lien that attaches to one specific property only is referred to as a...?
Specific Lien
Other tax authorities may elect to grant tax exemptions to those over 65.Once the 65 year old exemption is in place Senior homeowners qualify for a number of other benefits;
Tax Ceiling Freeze
Liens have a priority of who gets paid first. (proceeds of the sale)
Tax Liens Mortgage Lien
Additional Tax Exemptions goes to a Disabled Texas Vet or the surviving spouse or the child of the disabled vet .
The Vet may receive a exemption of 100% of the appraised value of the veterans residence Homestead .
Priority of Lien
The order in which liens are given legal precedence or preference.
Surviving Spouse Benefit
The surviving Spouse of the individual who has the 65 Deferral in place . IS entitled to keep that exemption in place. For the same property IF the surviving Spouse is 65 and older when the deceased spouse died and if the surviving spouse still owns the home and lives in it.
Top priority always is Real Estate Tax Lien , even if there is a debt ,future interest or other encumbrances that existed for the Tax lien created .
This is one of the reasons why many Mortgage companies requires an Escrow account. >Mortgage companies typically have the first Lien on the property ( Must make sure Property Taxes are paid) ...... Unless a Tax Lien is filed. >If a Tax Lien is filed the Mortgage company becomes second tier.
Disability Exemption :School Districts are required to grant a $10,000 Exemption to anyone with Physical or Recognized Disability .
This is optimal to other Taxing authority but it is mandatory for School Districts
There are 4 ways to create a Lien ,V.I.S.E
V.Voluntary □ Created by the Licensees ACTION
*Pop Quiz* Which of the following acronyms describes the various ways a lien can be created....?
VISE
*Pop Quiz* Any lien placed on property w/ consent of, or as a result of , the voluntary act of the owner is referred to as a/an....?
Voluntary lien
65 Exemption
a) A person qualify for the 65 Exemption as of Jan. 1st of the year they turn 65. b) This is automatic ,if the home owner submitted their birth date on the original Homestead application. c) To reduce the home value for school taxes . School districts are required to grant a $10,000 Age Exemption in addition to a $15,000 Homestead Exemption . ◊ A 65 year old claiming a Homestead will have a $25,000 reduction of value for Tax purposes.
Homestead Exemption (Tax Exemptions)
a) Texas Law grants Homestead Tax Exemption $15,000 off of a home's Taxable property for school district taxes. ** Other Taxing districts may all for optional Homestead Tax Exemptions of varying amounts** b) To qualify for the general Homestead Exemption , a homeowner must have the following criteria : 1) They have to Own and or Live In the property. As of Jan. 1st of the following Tax year . 2) Must submit a Homestead Exemption application form to the appraisal district. Between Jan. 1st and April 30th of the Tax year (within the first year of ownership). They must submit a property of their Driver's License or State ID and a Vehicle Registration recite showing the same address as the property of for the exemption is accepted.
They also get portability with the Tax Freezes.
if another home is purchased ,Taxes Freeze for the School Taxes which can be transferred to the new home Ex. If a School Tax Freeze ceiling on an old home is $1,000 but will be $4,000 without the freeze . The new School Tax Freeze Ceiling will be only 25 %.
Appraisal Districts Property Tax records can be found online at their County, CAD or Central Appraisal Districts Websites :
} Houston : Harris county Appraisal District (HCAD.ORG) Fort BEND County Appraisal District (FBCAD.ORG)
An Exemption discounts the Taxes by removing;
□ A part of Value from the home. □ The Basis of Taxation. Which in turn , lowers the Tax bill
Advalorem Taxes-Per Value (Continued)
◊ This is for the general support or operation of the Gov. agency that receives authorization to impose the Tax. ◊ This amount of taxes collected is calculated on the appraised value being taxed. } Under Texas Law public or nonprofit ownership of the property is not subject to Taxation. - Ex. > Schools > Parks > Playgrounds >Properties owned by municipalities, state or government >Religious affiliations > Hospitals >Other educational institutions - Should a property to be Not Used for Tax exempt purposes then it will be subjected to Taxation.