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