Real Estate Taxes and Other Liens

These flashcards cover vocabulary and key concepts regarding real estate taxes, categories of liens, and the legal mechanisms for enforcing and redeeming property debts.

Lien

A charge or claim against a person's property made to enforce the payment of money.

Encumbrance

Any charge or claim that attaches to real property and lessens its value or impairs its use, which transfers along with the property upon conveyance.

Mortgage lien

A specific, voluntary security interest in real estate given to a lender by a borrower to ensure the repayment of a debt.

General lien

A lien that affects all the property, both real and personal, of a debtor, such as judgments or IRS taxes.

Specific lien

A lien secured by and affecting only a particular parcel of property, such as a mechanic's lien or real estate tax lien.

Vendor's lien

A lien belonging to the seller for the unpaid purchase price of the property, typically arising from owner financing.

Voluntary lien

A lien created intentionally by the property owner's action, such as taking out a mortgage loan.

Involuntary lien

A lien created by law rather than choice, which may be either statutory or equitable.

Statutory lien

A lien created by statute, such as a real estate tax lien, which exists without any action by the property owner.

Equitable lien

A lien arising out of common law, often resulting from a court-ordered judgment for a debt.

Priority of liens

The order in which claims against a property will be satisfied if the property is sold, generally established by the date of recording.

Subordination agreement

A written agreement between lienholders where a superior or prior lienholder agrees to permit a later lienholder’s interest to take precedence.

Ad valorem tax

A general real estate tax based on the value of the property being taxed, meaning "according to value."

Assessment

The official valuation process of real estate for tax purposes conducted by county or township assessors or appraisers.

Assessment equalization factor

A factor applied to raise or lower property assessments in a particular district to achieve statewide uniformity.

Mill

A unit of tax rate equal to $\frac{1}{1000}$ of a dollar, or $\$0.001$. There are $10$ mills in a penny.

Tax sale

A public sale of property held to collect delinquent real estate taxes, interest, and penalties after a court judgment.

Statutory right of redemption

The right of a defaulted owner to redeem property after a tax sale by paying the collected amount, interest, and charges within a period set by law.

Equitable right of redemption

The right of a delinquent taxpayer to redeem property any time before a tax sale by paying the taxes plus interest and court costs.

Special assessment

A tax charged on real estate to fund public improvements like paved streets or sewers that directly benefit the property.

Local improvement district (LID)

A specific geographical area formed by property owners to fund capital improvements through taxation.

Mechanic's lien

A specific, involuntary lien that provides security for persons or companies performing labor or furnishing materials to improve real property.

Notice of nonresponsibility

A document a property owner can record and post to relieve themselves of responsibility for improvements on the property they did not order.

Judgment

A court decree that establishes a debt and creates a general, involuntary, equitable lien on the debtor's real and personal property.

Writ of execution

A court order directing the sheriff to seize and sell enough of a debtor's property to pay a debt and the expenses of the sale.

Lis pendens

A recorded notice of a pending lawsuit that affects title to or possession of real estate, signifying a potential future lien.

Writ of attachment

A court order to seize or take control of a defendant's property to ensure security for a potential judgment while a suit is being decided.

Estate and inheritance tax liens

General, statutory, involuntary liens that encumber the real and personal property of a deceased person.

Corporation franchise tax lien

A general, statutory, involuntary lien on all property owned by a corporation as a condition of allowing it to do business in the state.

IRS tax lien

A general, statutory, involuntary lien resulting from a failure to pay federal taxes; its priority is based on the date of filing.