IRS Lein on Foreclosed Property

[beachboy40]

What is the name of your state? Alabama

I am interested in buying a house that is in pre-foreclosure proceedings. The owner
is a realtor does not live in this property and has several condo's etc in foreclosure. It has not been advertised to be auctioned on the courthouse steps yet but the owner told us it was imminant.

In researching the county records for deed and mortgages I found that a couple
of weeks ago, an IRS lein was placed on all assets of the owner. I think the owner
is too deeply in debt to have a chance to pay the back taxes ($150,000).

The mortgage on the house is well above what I consider current market value of
the house.

My questions are:
1. Can the property be sold by the mortgage holder and is the lein still attached
to all properties to be disposed of?
2. Would it be wrong to attend the auction and bid up to my limit?
3. Or if the mortgage company buys at auction above my bid, and I make an offer
and they accept the loss, could they deliver me a clear deed.

Thank you.

[nextwife]

The FC wipes the IRS lien off the property.

[beachboy40]

Originally Posted by nextwife

The FC wipes the IRS lien off the property.

I want to make sure I understand correctly. I saw another answer, I believe by
SeniorJudge that said the IRS always gets their money, did that mean from the
origional owner or from the sale? Or is thier lein simply wiped away as any
other lein is.

Thanks.

[FlyingRon]

The IRS has some preferred rights. By default they are senior to everything else regardless of the date of their lien. They can subordinate their lien to the first, but it's not a guarantee. Furhter, they have redemption rights that other lien holders may not have.

Be very, very careful when working with a property with IRS liens.

[LindaP777]

FlyingRon is correct.
I bought a house here in Ohio years ago at the sheriff's sale that had a Federal Lien on it. Prior to purchasing the house, I did my homework. I first started by calling the local IRS office and explained the situation. I was told the foreclosure did not wipe out the debt and the IRS had a right to redeem the property for 3 months (or was it 4 months???? I forget.) Anyway, he also told me that he had worked for the IRS for 17 years and during that time the IRS had never redeemed a house in Ohio in all of that time (not enough money in it - keep in mind, they would then have to try to sell it to get their money out of it and the IRS is not in business to own houses). They do have the right, however, to buy the house for whatever you paid for it, so you would not want to under go massive upgrades until the redemption period was over.
I bought the house, waited out the redemption period, then fixed it up and sold it. If you can wait it out, you can get a good deal, too.

[rowdyonegh]

Hi, I had a follow up question to the previous response (of the guy that bought in Ohio)

I did some searching today and found a house that also has a federal tax lien on it, for 25,000 dollar. Also was told the same thing about the redemption and that they have never done so in ohio from the guy at the IRS. My question is, I was told even, after the IRS redemption period, the lien still stays on the property. At this point they can't take the house from you, but they can they leave the lien on the property, that prevents you from selling the house, or getting any kind of home equity line of credit on it or what not.

I was wondering, when you sold yours - did you sell it on a land contract, or did the buyers get a loan. I would wonder how they got a loan, since a bank will not lend money for property that has an IRS lien on it.

Any help here is appreciated. I was told that the lien will basically expire and you can file for a Certificate of Release after 10 years.

Glenn

[Indiana Filer]

Originally Posted by rowdyonegh

Hi, I had a follow up question to the previous response (of the guy that bought in Ohio)


Glenn

Glenn, the practice on this forum is for new questions to be in their own threads, instead of linked on to previous questions. It keeps confusion down between the original question and the new question.

So, if you start your own threads, the mortgage experts will be along shortly to give advice.

[LindaP777]

Originally Posted by rowdyonegh

Hi, I had a follow up question to the previous response (of the guy that bought in Ohio)

Ahhh, that guy was a "girl".

Originally Posted by rowdyonegh

My question is, I was told even, after the IRS redemption period, the lien still stays on the property. At this point they can't take the house from you, but they can they leave the lien on the property, that prevents you from selling the house, or getting any kind of home equity line of credit on it or what not.

Not true. I sold the house, free and clear.

Originally Posted by rowdyonegh

I was wondering, when you sold yours - did you sell it on a land contract, or did the buyers get a loan. I would wonder how they got a loan, since a bank will not lend money for property that has an IRS lien on it.

My buyers got a loan, when they bought the house from me (she was an attorney). Not only that, but I got a loan from my lender to buy the house from the sheriff's sale. Surely my bank wouldn't have loaned me the money, if they thought it was a problem.

Originally Posted by rowdyonegh

Any help here is appreciated. I was told that the lien will basically expire and you can file for a Certificate of Release after 10 years.

Not true. Like I said, I sold the house free and clear.