Property Ownership
What is 'property tax lien' and why does it have super-priority in Delaware?
AProperty tax liens only apply to commercial properties
BProperty tax liens take priority over virtually all other liens, including first mortgages, because state and local governments grant this priority to ensure tax collection✓ Correct
CProperty tax liens are junior to all mortgage liens
DProperty tax liens are only collected through civil lawsuit
Explanation
Property tax liens in Delaware have super-priority, meaning they are paid before all other liens (including first mortgages) in a foreclosure sale. This ensures government tax revenue is protected and is one reason lenders maintain tax escrow accounts.
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Key Terms to Know
Lien
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Transfer TaxA tax imposed by state or local governments when real property ownership is transferred, typically based on the sale price.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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