Escrow & Title
In New York, a 'tax lien' on a property is created when:
AA mortgage is recorded
BProperty taxes are assessed but unpaid, creating a statutory lien in favor of the municipality✓ Correct
CThe property is sold
DThe owner files for bankruptcy
Explanation
When property taxes become due and remain unpaid in New York, a tax lien arises by operation of law in favor of the taxing authority. Tax liens generally have priority over most other liens and encumbrances.
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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.
EncumbranceAny claim, lien, charge, or liability attached to real property that affects its value or limits its use.
Abstract of TitleA condensed history of a property's title, summarizing all recorded documents and encumbrances affecting it from the earliest record to the present.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
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