Tx Real Estate Principles 1

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LIEN

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a charge against property that provides security for a debt. It is an encumbrance that represents an interest in ownership; it does not constitute ownership in the property. The interest gives the lienholder the right to force the sale of or confiscate the property if the owner defaults on the debt, subject to the Texas homestead laws

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VOLUNTARY LIEN

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created by the lienee's action, such as taking out a mortgage loan

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INVOLUNTARY LIEN

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created by law and is either statutory or equitable

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STATUTORY LIEN

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created by statute; federal tax liens, ad valorem tax liens, judgment liens, and mechanics' and materialmen's liens

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equitable lien

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arises out of common law

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priority of liens

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Real estate taxes and special assessments generally take priority over all other liens.

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ad velorem tax

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made up of duties levied on real estate by various governmental agencies and municipalities such as cities, towns, villages, and counties

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4 phases annual tax levy

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property valuation,
a protest period,
tax rate adoption, and
tax collection

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exemption

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removes part of the value of a home from taxation and thus lowers the tax bill

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agricultural use valuation

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the Texas Constitution requires 50 percent of a landowner's income to be from farming or ranching. Such property is appraised based on its agricultural value rather than its market value. If the property is sold or its use is changed, the land is subject to a maximum three-year rollback lien to recover the difference between taxes based on the special valuation and taxes at market value plus interest at the rate for delinquent taxes for each year

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open space valuation

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easier to qualify for than the agricultural use valuation. Except for timberland, both relate to the same type of property; however, for this special valuation, the primary source of income does not have to be farming. If the use of the subject property is changed, the land is subject to a maximum five-year tax rollback lien to recover the difference between taxes based on the special valuation and taxes at market value plus interest at 7 percent for each year. The owner who changes the use of the land is responsible for the rollback tax

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protest period

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begins after the appraisal district has sent out appraisal notices. Property owners who claim that errors were made in appraising their property or in allowing exemptions may present their objections and supporting documentation to the district appraiser's office for review. Most appraisal districts will informally review a tax protest and try to resolve the taxpayer's concerns

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appraisal review board

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an impartial panel of citizens authorized to resolve disputes between taxpayers and the appraisal district.

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certified appraisal roll

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the appraisal district gives each taxing unit a list of taxable property

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appropriation

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the action taken by each taxing body that authorizes the expenditure of funds and provides for the sources of such monies. generally involves the adoption of an ordinance or the passage of a law setting forth the specifics of the proposed taxation

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tax levy

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formal action taken to impose the tax

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tax rate

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total monies to be raised from real estate taxes for the coming fiscal year are divided by the total appraisal of all applicable real and personal property located within the jurisdiction of the taxing body

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arrears

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real estate taxes at the end of the period for which they are levied (that is, not in advance

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statutory right of redemption

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Under this redemption right, if the property is the residence homestead of the defaulted taxpayer or a mineral interest or if it is designated for agricultural use, the owner may redeem the property within two years after the purchaser's deed was recorded (for other properties, the redemption period is limited to six months)