Deck 5: Real Estate, Taxes and Other Liens

Question 1

A lien is a claim placed on real property as a way to recover payment for a debt owed by the property owne.

Answer 1

True

Question 2

All liens are automatically released in bankruptcy.

Answer 2

False

Question 3

The most cost-effective improvement in a remodel might be:

A) adding a swimming pool.
B) adding a huge amount of landscaping.
C) updating the master bathroom.
D) converting the garage to a family room.

Answer 3

updating the master bathroom.

Question 4

General liens include:

A) property tax liens.
B) federal tax liens.
C) mechanics liens.
D) mortgage liens.

Question 5

Liens created by operation of law might include:

A) mechanics liens.
B) tax liens.
C) judgment liens.
D) all of above.

Question 6

The bankruptcy chapter that is called liquidation is:

A) Chapter 7.
B) Chapter 13.
C) Chapter 306.
D) Chapter 11.

Question 7

A completion bond:

A) insures that all workers and materials are compensated.
B) insures that the house is completed on time.
C) insures that the house is completed according to the construction documents.
D) pays the general contractor if the owner fails to do so.

Question 8

A judgment lien is:

A) a lien against a specific piece of property.
B) a lien that is always the result of unpaid debt for a piece of property.
C) a claim placed against both personal and real property.
D) none of the above.

Question 9

An encumbrance may include:

A) a lien against a piece of property.
B) an easement across a piece of property.
C) a debt owned by the property owner for work done on the property.
D) all of the above.

Question 10

A senior lien:

A) can be a general lien.
B) can be a specific lien.
C) is recorded before any other liens are recorded against a specific piece of property.
D) all of the above.

Question 11

A contract lien is:

A) a voluntary lien to which the parties have agreed.
B) a lien created by operation of law.
C) a tax lien.
D) an involuntary lien.

Question 12

Property tax liens:

A) attach to all real property owned by the delinquent taxpayer.
B) attach to all personal property of the delinquent taxpayer.
C) attach only to the real property for the which the tax was due.
D) attach personally to the individual delinquent taxpayer.

Question 13

An IRS lien attaches to:

A) all the real property the taxpayer currently owns.
B) only real property in the state in which the taxpayer lives.
C) all real property that the owner has now or may own in the future.
D) none of the above.

Question 14

Who can file a mechanics lien?

A) General contractors
B) Subcontractors
C) Businesses that supply materials for remodel or construction
D) All of the above

Question 15

A general rule of thumb about remodeling might be:

A) once a contract is in place, you know exactly how much the project will cost.
B) it will take longer and cost more than you thought.
C) remodeling is always cost effective.
D) it is required by law that you vacate the premises during a remodel.

Question 16

Bob purchases a vacant lot in Swellville. He borrows money for the purchase cost from his bank, and the deed of trust is recorded at the county courthouse. Next he decides to build a house on the lot. He hires an architect who he neglects to pay, and the architect files a mechanics lien. Bob also borrows money to build the house from his credit union and that deed of trust is filed. During construction, things get a little tight for Bob, so he stops making payments on the note to the credit union, which then files for foreclosure. Bob, realizing he is in way over his head, moves to parts unknown. All his creditors claim his property. In what order will his creditors get paid, and why in that order?

Question 17

In attempting to add value by remodeling parts of your home, what are the two keys to being cost effective?

Question 18

In remodeling kitchens and bathrooms, what are the most cost-effective improvements?

Question 19

What is the major difference between a contractual lien and a lien created by operation of law?

Question 20

What are the two categories of bankruptcy?

Question 21

How are property taxes calculated? What is an exemption? Name three exemptions. What happens if you don't pay property taxes? Discuss tax foreclosures.

Question 22

Discuss the ways that a homeowner can protect himself or herself against a dishonest contractor. Of the 11 ways mentioned in the text, name and discuss at least 8.