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Even if the equity will not cover the entirely of the lien, that is not an automatic reason for the sale not to go through. It's just going to take more work trying to reach a resolution to the problem. No damages have been incurred...yet.
It's my understanding that an IRS lien may not prevent buying the home with a clear title. The IRS will often remove a lien during sale in exchange for payment at closing, other assets of the seller, etc. So, until they are asked and refuse to remove the lien, the lien itself is not preventing a person from purchasing nor is it going to cause the new owner a problem after closing. Only if the IRS refuse to remove the lien did the buyer suffer harm from the lien and may have recourse for monetary damages. Until that point, it's just grounds to cancel the sale and get earnest money back but probably not grounds to claim monetary damages for surveys and other out of pocket expenses.
The only way the IRS will take the lien off the house is if they are paid. The current owner can pay them anyway he likes, through equity in the profits, cash he has somewhere or a combination of both. Until that happens, any and all equity when the house is sold goes to the lien holder which is IRS. They won't play second fiddle to a new mortgage holder. They get paid first. Without that, no new loan on the house can be issued. That's my understanding, and I've had some personal experience.
Another thing I find interesting about this, is that the current owner may have thought he was going to get away with selling the house and probably thinking the lien for almost half a million dollars was just going to stay on the house after he sold it, screwing the new owner. That sounds like an attempt at least to commit fraud if this is the case.
That sounds like an attempt at least to commit fraud if this is the case.
Or......he failed to pay taxes on his business income and they attached the house. I've seen that before. Its possible he didnt know they attached the house.
Or......he failed to pay taxes on his business income and they attached the house. I've seen that before. Its possible he didnt know they attached the house.
Not true. The IRS sends you notification of this when they place the lien. Anyone that owes the IRS that much money will be well aware of every step the IRS takes. Besides that, if the current owner of the house had a credit check done on himself for any reason it would show there as well.
It's going to be hard to get money spent. What makes anyone think they could get compensation with the IRS in line? That's the purpose of these searches, to stop a sale from going through without the lienholder being paid. The OP really needs an attorney, but before you do.....is it really worth paying someone $250 an hour to recover $1000? You can get in line for compensation, but it will be after the IRS. Get a release and move on.
It's going to be hard to get money spent. What makes anyone think they could get compensation with the IRS in line? That's the purpose of these searches, to stop a sale from going through without the lienholder being paid. The OP really needs an attorney, but before you do.....is it really worth paying someone $250 an hour to recover $1000? You can get in line for compensation, but it will be after the IRS. Get a release and move on.
I agree. Unless the owner pays off the IRS one way or another, this house will not be sold now or in the future. It's time to move on.
The only way the IRS will take the lien off the house is if they are paid
Not true. The IRS is willing to drop their lien so it can be sold even though they may not get a penny from the sale. It's all based on asking them and them determining the property or seller meets federal guidelines. You never know if they will or won't (unless the lien is defective) unless the seller applies.
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