Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
We have an unusual experience with our house hunting trip in NY state. Make an offer on a house and it entered into a 3 days attorney review and listing agent informed us that another buyer is bidding on the house. We increased our offer and entered into contract. A couple of days later, our attorney informed us that there is a IRS tax lien on the house and asked for preliminary HUD from seller's attorney to determine the amount of tax owe. It has been 3 weeks since then and we are still waiting for HUD statement. Is there any penalty on the seller ? There was no disclosure that the house has a Lien on it when we make an offer on the house. Is entering a contract a lose term in that buyer/ seller can back off any time without penalty? Anyone has any similar experience?
IRS tax liens do not go away. They stay on the property until they are paid off, accruing additional interest as they go along.
Read your sales contract. Somewhere in it, you should be able to find wording indicating that the seller will deliver a clear and free title. Right now he can't.
Discuss with your attorney how you want to proceed. and what your options are. This is not going to go away, nor is it going to be resolved quickly and smoothly. No lender will give you a mortgage until this is resolved.
Your attorney can advise you if can withdraw your offer, rewrite a new offer contingent upon all liens being paid, or if it's even worth the effort to try to do so.
Your attorney has to find out the amount of the lien, then he and the seller's attorney have to contact the IRS and see if they are willing to negotiate with the seller to get the house sold to try to pay off the lien. The IRS would want to see the contract, your pre-approval letter to see if you can indeed buy the house. Then they may or may not be willing to negotiate the lien. Depending on how much the lien is, there may not even be enough equity in the house to pay it off. A long drawn out process for sure.
How badly do you want this house and how long are you willing to wait for it also have to be considered.
In WA any leans against a property are paid during the closing process. If the lean is more than the settlement value the IRS may look to see if this is truly a third party sale, if it is they can lean the taxpayer's other assets.
We've successfully had federal tax liens removed from properties we purchased at auction, and at tax sale. Never had to do one for a normal sale, as they've all been dealt with either through closing proceeds, or as a condition of closing. So you may be able to get the IRS to remove them in exchange for the IRS getting any available proceeds from the sale (meaning if the seller was going to get money, that money goes to the IRS instead). If it is a short sale, that is more complicated.
State tax liens are more difficult to get removed in my state, but that will vary from state to state.
Walk away. Do not buy a home with a tax lien on it. Our title search discovered a $142,000 NY State tax lien on a home we were buying just five days before closing. The sellers knew about it all along, but failed to disclose it. They had no intention of satisfying the lien before closing and wanted us to rent the house until they could do so, but wouldn't even offer up an end date. When we declined, their attorney intimated we would not get our earnest money back. Well, after some quite nasty New-York-style language and threats that I relayed to him through my attorney, we had our check in two days.
We end up renting elsewhere for a year and then buying a home that is now generating a far larger profit at sale than the one with the lien.
Thank you all. We are definitely not able to afford the long wait since this deals with both IRS and NY state lien. Walking away seem to be the best option we have. Now we are back in the market looking for a house.
We've successfully had federal tax liens removed from properties we purchased at auction, and at tax sale. Never had to do one for a normal sale, as they've all been dealt with either through closing proceeds, or as a condition of closing. So you may be able to get the IRS to remove them in exchange for the IRS getting any available proceeds from the sale (meaning if the seller was going to get money, that money goes to the IRS instead). If it is a short sale, that is more complicated.
State tax liens are more difficult to get removed in my state, but that will vary from state to state.
This is an old thread, but I have a question for you. My neighbor's property is going up for auction. I took a look at buying it but found it had an IRS tax lien among others. So, I walked from that, but was looking at bidding at it on the auction. You mentioned that you are able to discharge an IRS lien after auction. What is the magic there? Just call the IRS after auction purchase? Or did you have to lawyer up?
It's a really messy title with multiple liens but I was hoping to grab it at auction because it adds to our land and would really make our property nice, so I have time and am very interested.
Gryphonsclaw, I'm not familiar with IRS liens, but I do know that when a property goes through the foreclosure process, all prior liens are typically wiped clean if the sale isnt' enough to satisfy them. If there are enough proceeds, then the first mortgage is paid off, then all the subordinate liens are taken care of.
I bought one that had an IRS lien and the only thing they made us do is keep the house for six months and then it was off. That was many years ago.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
