UNIT 10: Real Estate Taxes and Liens

What is a Lien?

A charge or claim against a property that is created to enforce the payment of money

What is a Security/Collateral?

Something of value that the borrower promises to return back to the lender if the borrower fails to repay the debt

What is an Encumbrance?

Any charger or claim that attaches to real property and lessens its value or impairs its use

What is a voluntary lien?

A lien created intentionally by the property owner(s)

What is an involuntary lien?

A lien created by the law, not by the owners choice

What is a statutory lien?

A lien created by the statute

What is an equitable lien?

A lien created by the court to ensure the payment of a judgement as well as by agreement

What is a general lien?

A claim against a person and all of that person's property

What is a specific lien?

A claim that is secured by specific property and only affects that particular property

What is a subordination agreement?

Written agreements between lienholders to change the priority of mortgage, judgement and other types of liens

What are general real estate taxes?

Based on the value of the property being taxed. They are specific, involuntary and statutory liens typically charged by various government agencies including states, counties, cities, towns, villages, school districts, drainage, districts, water districts, sanitary districts, parks, forests, natural preserves and other public use districts

What is Appropriation?

The way a taxing body actually authorizes the expenditure of funds and provides for the sources of the funding

What is an annual sale?

If the taxes on a property have not been paid by the due date of the second installment, the county colector can enforce the tax lien and request a circuit order of tax sales. The court allows only the sale of the tax lien, not the property in itself

What is a forfeiture sale?

If there are no bids on a property at the annual tax sale, the property is confiscated to the state, but has no legit affect on the title. Redemption of the property is possible after forfeiture

What is a scavenger sale?

If the taxes have not been paid on a property for two years or more, the property may be sold as a scavenger sale

What is a special assessment?

Taxes levied on real estate to fund for public improvements of the property. Examples include newly paved streets, curbs, gutters, sidewalks or street lighting

What is a mortgage lien/deed of trust lien?

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

What is a mechanics lien?

A specific, involuntary lien that gives secuirty to a person or a company that perform labor work or furnish material to improve a real property. This occurs when the property owner has not fully paid for the labor or when the contractor or company has been compensated but has not paid the subcontractors or material suppliers

What is a lien waiver?

Should be collected by the landowner from each contractor and subcontractor to create a continuing record that all lien claimants have released their lien rights

What is a judgement?

An order issued by a court that settles and defines the rights and obligations of the parties to a lawsuit

What is a lis pendens?

Any lawsuit or special notice that is filed that directly affects a title to real estate. It is not a lien but rather a notice of a possible future lien

What is a writ of attachment?

A process or rule from a court that prevents a debtor from conveying title to previously unsecured real estate