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IL-Chap 10

Real Estate Taxes and Other Liens

Lien charge against a property to enforce payment of money
Encumbrance a charge or claim that attaches to real property and lessens its value or impairs its use.
Voluntary Lien created intentionally by property owner's action, such as a mortgage lien.
Involuntary Lien is a matter of choice and created by law.
Statutory Lien created by statute. Real estate tax lien is an involuntary statutory lien.
Equitable Lien created by court to ensure payment of a judgment as well as by agreement
Four ways to create Lien Voluntary-created intentionally by owners action-mortgage lien. Involuntary-created by law. Statutory-created by statute. Equitable-created by a court to ensure payment of debt.
General Lien affect both real and personal property of debtor. Includes judgments, taxes, decedent's debts & IRS.
Priority of Liens refers to order in which claims against the property are satisfied. First to record, first in right. Based on date they are recorded.
Subordination Agreements written agreements between lienholders to change priority of mortgage, judgment and other liens.
General Real Estate Taxes (called Valorem taxes)-is superior to all other liens. "according to value" Based on value of the property being taxed. Property taxes pay for a wide range of government services and programs.
Homestead exemption reduces the assessed value of a property subject to taxes.
Assessment Official valuation process to place value on home for tax purposes. Assessed value is based on sales prices of comparable properties.
In IL real property is assessed 33-1/3% of fair market value IL Revnue Act includes buildings, structures, improvements and any other permanent fixture attached to land.
Equalization Factor Is used to achieve uniformity. Applied to raise or lower assessment in a particular district or county.
Proposed expense / Total assessed property values = Tax rate Appropriation-way of taxing body authorizes the expenditure of funds and provides sources of the funding. Amount to be raised from general real estate tax is through a tax levy.
Tax Levy-formal action taken to impose the tax. General real estate taxes are payable in 2 installments in the year after they are levied. (i.e. paid in arrears)
Tax Sale Property owners fails to pay taxes. Court order allows only the sale of tax lien, not the property itself.
Forfeiture Sale No bids at tax sale. Property goes to the state.
Scavenger sale If taxes are not redeemed within 2 years, county may go through process to sell at tax sale to lowest bidder.
Special Assessment taxes levied on real estate to fund public improvements to the property. Are specific and statutory. Can be voluntary or involuntary.
Special Service Areas=SSA special taxing districts established in municipalities by ordinance at request of developer of new housing subdivision to pass on costs of streets, landscaping, etc to homeowners in SSA.
Mortgage Lien-voluntary lien, first mortgage lien Mechanics Lien-involuntary lien - give security to companies that perform labor or materials to improve property.
Judgment - general, involuntary, equitable lien is an order by court that settles and defines the rights and obligations of the parties to a lawsuit.
Writ of attachment court retains custody of the property until the suit concludes.
Estate and Inheritance Liens = general, statutory, involuntary liens Municipal Liens = specific, equitable, involuntary liens
Corporation Franchise Tax Lien = general, statutory, involuntary lien IRS Lien = failure to pay federal taxes. General, statutory, involuntary lien
Created by: Denise Setchel