Modern Real Estate Practice in Illinois Chapter 10: Real Estate Taxes and Other Liens

© 2008 Dearborn Real Estate Education Liens A lien is a charge or claim against property that is made to enforce the payment of money

© 2008 Dearborn Real Estate Education Liens Types of Liens –Voluntary created intentionally by the property owner’s action –Involuntary created by law –Statutory Lien »Created by statute –Equitable Lien »created when parties agree in writing that a property will be held as security for a debt or other obligation

© 2008 Dearborn Real Estate Education Liens Types of Liens –General affect all the property, both real and personal, of a debtor –Specific secured by and affects only one specific parcel of real property

© 2008 Dearborn Real Estate Education Effects of Liens on Title Priority of liens –General rule: “first to record, first in right.” Date of recording determines priority. Subordination agreements

© 2008 Dearborn Real Estate Education Real Estate Tax Liens General Tax (Ad Valorem Tax): –Ad Valorem taxes are based on the value of the property being taxed. –Exemptions from general tax: Various municipal organizations Cities and counties State and federal governments Religious and charitable organizations Hospitals Educational institutes

© 2008 Dearborn Real Estate Education Real Estate Tax Liens Owner occupied Illinois Property Tax Concessions: –Homeowner’s exemption –Senior Citizen’s Homestead exemption –Senior Citizen’s Assessment Freeze Homestead exemption –Homestead Improvement exemption

© 2008 Dearborn Real Estate Education Real Estate Tax Liens Assessment Equalization Budgets and Tax Rates Appropriation

© 2008 Dearborn Real Estate Education Real Estate Tax Liens Enforcement of Tax Liens –Annual sale –Forfeiture sale –Scavenger sale Special Assessments (Improvement Taxes) Special Service Areas (SSAs) –Special taxing districts in municipalities; pass on costs of streets, landscaping, waterlines and sewer systems to homeowners who reside within the SSA.

© 2008 Dearborn Real Estate Education Other Liens on Real Property Mortgage Liens (Deed of Trust Liens) Mechanics’ Liens Judgments –Lis pendens –Attachments Estate and Inheritance Tax Liens

© 2008 Dearborn Real Estate Education Other Liens on Real Property Liens for municipal utilities Bail bond lien Corporation Franchise Tax Lien IRS Tax Lien