Chapter 10: Real Estate Taxes And Liens

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lien

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a charge or claim against a person's property made to enforce the payment of money; is an encumbrance on an owner's title that will transfer with property if it were to be sold/conveyed to another person

the security required from a borrower in order to repay a lender

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voluntary lien

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a lien created intentionally by the owner's own action

(i.e. taking out a mortgage loan)

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involuntary lien

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a lien created by law and is either statutory or equitable

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statutory lien

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a lien created by statute

(i.e. real estate tax)

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equitable lien

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a lien created by common law

(i.e. court-ordered judgement that requires a debtor [someone who owes a debt] to pay a charge)

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general liens

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charges that affect all property (real and personal) of a debtor

(includes judgments, estate/inheritance taxes, decedent's debts, corporate franchise taxes, IRS taxes)

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What's the difference between a lien on real property and a lien on personal property?

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A lien attaches to real property at the moment it is filed and recorded. A lien attaches to personal property only when the personal property is seized.

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specific liens

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charges that affect and attach to a certain parcel of land or particular property

(vendors' liens, mechanics liens, mortgage liens, real estate tax liens, liens for special assessments and utilities)

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vendor's lien

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a charge belonging to a vendor (or seller of a property) for the unpaid purchase price of the property, where the vendor or the seller has not taken another lien (mortgage), beyond the personal obligation of the purchaser

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How would a lien on property affect its sale?

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A lien wouldn't prevent property from being sold but it would reduce the value of real estate because liens "run with the land." Any lien that gets transferred would become the responsibility of the new owner and all successive owners thereafter until the lien is paid off.

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priority of liens

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the order in which claims against property will be satisfied

"first to record, first in right"

a lien for unpaid real estate taxes is superior to other liens in MA

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subordination agreements

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written agreements between lienholders to change the priority of mortgage, judgment and other liens

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general real estate tax

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aka ad valorem tax "according to value" tax

are based on the value of the property being taxed and are specific, involuntary, statutory liens

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What kinds of property are exempt from real estate taxes?

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land owned by cities, municipal organizations, state and federal gov'ts, religious and charitable organizations, hospitals and educational institutions

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assessment

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the process for valuating real estate for tax purposes

assessed value based on sales prices of comparable properties

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equalization factor

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used to correct inequalities in statewide tax assessments

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tax sale

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collection of delinquent real estate taxes

-in MA, delinquent taxes collected by a tax sale after they remain unpaid 2 years after they're due

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equitable right of redemption

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where a taxpayer can redeem property before a tax sale if the delinquent taxes are paid along with interest and other charges

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statutory right of redemption

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where a taxpayer or holder of a certificate of sale is able to redeem property after a tax sale if the delinquent taxes are paid along with interest and other charges

in MA, taxpayers have 6 months from the date of the tax sale to redeem property

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special assessment

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tax charged on real estate to fund public improvements to the property

-charged tax because the property owners benefit from the improvements

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mortgage lien

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deed of trust lien

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

priority of lien is 2nd, after real estate tax liens

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mechanics' lien

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involuntary lien that gives security to persons/companies that perform labor or furnish material to improve real property

filed when a owner has not fully paid for the work or when the general contractor has been compensated but has not paid his subcontractors/suppliers for materials

in MA, can refer to work done on real property

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judgment

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decree issued by a court stating the amount owed by a debtor

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writ of execution

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gives the ability to seize and sell debtor's property to pay off debt and expenses of the sale

forces debtor to pay off debts

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satisfaction of judgment

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aka satisfaction of judgment

a document that states that the debt had been satisfied through the sale of the property; clears the record of the lien

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lis pendens

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a special notice of a possible future lien

notifies prospective purchasers and lenders that there is a potential claim against property

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writ of attachment

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gives the court the ability to seize and retain custody of property that is involved in a court suit

prevents the debtor from conveying title

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estate taxes/inheritance tax liens

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general, statutory, involuntary charges that encumber a deceased person's real and personal property

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bail bond lien

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posting bail in the form of real estate and enforced if the accused fails to appear in court

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corporation franchise tax lien

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government collects franchise tax by imposing a lien on real and personal property owned by the corporation

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IRS tax lien

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charges imposed when a person fails to pay any portion of federal taxes

lien on real and personal property

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mill

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1/1000 of a dollar;
expression of tax rate as mill per dollar ratio (32 mills = $3.20 per $100 or $32 per $1000)