120,000 0.040 4,800.

Unit 15: Real Estate Taxes and Other Liens Flashcards

A specific parcel of real estate has a market value of $160,000 and is assessed for tax purposes at 75% of market value. The tax rate for the county in which the property is located is 40 mills. The tax bill will beA)$5,000.B)$5,200.C)$6,400.D)$4,800.

A mill is 1/1000 of a dollar: $0.001. The mill rate is the tax

on every dollar of the assessed value of property. A rate of 40 mills ($0.040) is applied to 75% of the $160,000 market

value of the property: $160,000 × 75% = $120,000, and

$120,000 × $0.040 = $4,800.

T or FIf improvements that were not ordered by the property owner have commenced, the property owner should execute a document called a notice of nonresponsibility to be relieved from possible mechanic's liens.T A mechanic's lien is properly classified asA)a specific lien.B)an equitable lien.C)a voluntary lien.D)a general lien.A All of the following are true statements about real estate tax liens EXCEPTA)tax liens are involuntary liens created by statute that can attach to real estate.B)tax liens have less priority than mortgage liens after a foreclosure.C)a percentage of the property's value is used and applied against a tax rate to determine the amount of tax due.D)nonpayment of taxes may give the government the power to claim an interest in the property.B Which statement is TRUE of both a mortgage lien and a judgment lien?A)It is an involuntary lien.B)It must be entered by the court.C)It involves a debtor-creditor relationship.D)It is a general lien.C The market value of an undeveloped parcel is $40,000. Its assessed value is 40% of market value, and properties in its county are subject to an equalization factor of 1.50. If the tax rate is $4 per $100, what is the amount of the tax owed on the property?A)$480B)$960C)$1,080D)$1,800 B)The answer is $960. The tax owned on the property is

$960: $40,000 × 40% × 1.5 ÷ 100 × 4 = $960.

Which of the following is a voluntary, specific lien?A)IRS tax lienB)Seller's lienC)Mechanic's lienD)Mortgage lien D voluntary lienA lien placed on property with the knowledge and consent of the property owner.An assessment equalization factor is used to achieveA)rescission.B)uniformity.C)novation.D)attachment B Priority of liens refers to which of the following?A)Order in which liens will be paid if property is sold to satisfy a debtB)Fact that specific liens have greater priority than general liensC)Order in which a debtor assumes responsibility for payment of obligationsD)Dates liens are filed for record A

JudgementThe formal decision of a court upon the respective rights and claims of the parties to an action or suit. After a judgment has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant.T or FThe general real estate tax is an ad valorem taxT A general lien affects the debtor's property,A)but is limited to only personal property.B)but is limited to only real property.C)both personal and real but excluding the debtor's primary residence.D)both real and personal.D What is the annual real estate tax on a property valued at $135,000 and assessed for tax purposes at $47,250, with an equalization factor of 125%, when the tax rate is 25 mills?A)$945B)$1,477C)$1,181D)$1,418 BThe answer is $1,477. Tax = assessed value × equalization factor × tax rate. The millage rate is the tax on

each dollar of assessed value: 1 mill = $0.001; 25 mills =

$0.025. Therefore: $47,250 × 125% = $59,062.50, and

$59,062.50 × $0.025 = $1,476.56. The best answer is

$1,477.

An encumbranceis any charge or claim that attaches to real property and lessens its value or impairs its use. An encumbrance does not necessarily prevent the transfer or conveyance of the property, but because an encumbrance is attached to the property, it transfers along with it.Special AssessmentA tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or sewer.A written agreement between lienholders to change the priority of a mortgage isA) an ad valorem agreement.B)a special assessment.C)an equitable agreement.D)a subordination agreement.D Equitable LienArises out of common law Which of the following is classified as a general lien?A)Mechanic's lienB)JudgmentC)Real estate taxesD)Bail bond lien B Which of these is a general, statutory, and involuntary lien on both real and personal property?A)Mechanic's lienB)Federal tax lienC)Consumer loan lienD)Special assessment B T or FWhen any suit that affects title to real estate is filed, a special notice, called a lis pendens, can be recorded.T T or FAn equitable lien arises out of common law. T A mortgage becomes a lien on real property whenA)the borrower signs the security instrument.B)the closing on the sale takes place.C)the borrower receives the title to the property.D)the lender records the financing documents.D A town wants to construct new concrete curbs in a residential neighborhood. How will the town most likely

raise the money necessary for the improvement?A)Special assessmentB)Equalized assessmentC)Ad valorem taxD)Utility lien A

Mortgage LienA lien or charge on the property of a mortgagor that secures the underlying debt obligation.A real estate tax lien isA)an equitable lien.B)an involuntary, statutory lien.C)a voluntary lien.D)a general lien.B General real estate taxes levied for the operation of the government areA)special taxes.B)improvement taxes.C)assessment taxes.D)ad valorem taxes.D lienA right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by means of a court sale.A property owner's real estate tax bill is computed by applying the tax rate toA)the most recent purchase price of the property.B)the assessed valuation of the property.C)the current market value of the property.D)the value of the owner's equity in the property.B mechanic's lienA statutory lien created in favor of contractors, laborers, material suppliers, and others who have performed work or furnished materials in the erection or repair of a building.All of the following probably would be exempt from real estate taxes EXCEPTA)synagogues and churches.B)golf courses operated by the park district.C)public hospitals.D)apartment buildings.D When is the first installment of a special assessment generally due?A)Whenever the property owner can afford itB)After the interest is first paid in fullC)Immediately after the assessment is approvedD)The year after the assessment is approved D What is the annual real estate tax on a property valued at $135,000 and assessed for tax purposes at $47,250, with an equalization factor of 125%, when the tax rate is 25 mills Tax = assessed value × equalization factor × tax rate. The

millage rate is the tax on each dollar of assessed value: 1

mill = $0.001; 25 mills = $0.025. Therefore: $47,250 ×

125% = $59,062.50, and $59,062.50 × $0.025 = $1,476.56.The best answer is $1,477.T or FAn involuntary lien is created by law and is statutory (not equitable).FThe answer is false. An involuntary lien is created by law and may be either statutory or equitab A bail bond lien against the real estate of a property owner who is charged with a crime that will result in a trial isA)a specific, equitable, voluntary lien.B)a specific, statutory, voluntary lien.C)a general, statutory, involuntary lien.D)a general, equitable, involuntary lien.B If there are inequalities in statewide tax assessments, some jurisdictions might applyA)for state aid.B)a VA tax.C)an equalization factor.D)a premium tax.C Tax LienA charge against property, created by operation of law. Tax liens and assessments take priority over all other liens.