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My wife and I are purchasing a home. Upon conducting the title search, the seller's title agency discovered a federal tax lien against the previous owner in the amount of 80K. The previous owners were foreclosed on and the property was sold a couple years ago to the current owner (who was not aware of the lien).
We are now just one week from closing (our lease on our current place is up in two weeks), and all I can reasonably gather from my agent is that the title company did not want to postpone the closing date and are working on the title issue. They in turn sent me (via my agent) a commitment to do an owner's insurance policy, which has a note in it acknowleding the tax lien against the previos owners.
I ended up speaking with the seller's title agent, who attempted to make it clear to me that the lien is against the previous owners and that the polcy would require the seller's underwriter (not me as the new buyer) to defend any potential defense action against the IRS, if the IRS was ever to come after the title. I have not seen the title yet but apparently this lien will show up when a search is done against previous owners of the property.
Here are my questions:
1) Are there situations where a lien can be insured against and the buyer's lender will let the closing go thru?
2) I am reasonably sure the seller is not taking any action to clear the lien (in the hope that it expires automaticlly in 8 years), but why then are my title company and the seller's title company moving ahead with the closing? Wouldn't they assume my bank will need the lien settled?
I spoke with my loan processor and she confirmed for me that any lien on the title will need to be cleared by the seller at closing. I am concerned that this deal is going to fall apart, however, my title agency as well as the seller's title agency seem to act as if the owner's insurance policy will eliminate my risk. And neither party seems to concerned about my lender not letting the closing go thru.
Am I missing something here? Is there some sort of "workaround" in play that I am simply not understanding? I am very frustrated and concerned that somehow the buck is being passed to me...
Am I missing something here? Is there some sort of "workaround" in play that I am simply not understanding? I am very frustrated and concerned that somehow the buck is being passed to me...[/quote]
I agree , you are inheriting a problem.
Don't be so sure about 20 years and a judgement expiring.
1st point as I recall , a lein can sit around for many years and then when a judgement is issued thatswhen you start counting the 20 years for expiration.
Many judgements/leins appear if they are going to expire and days before expiration action is taken !!
Here is in interesting link about the IRS refiling a tax lein.
I'm completely confused as to why there are two title companies involved. Either way, the current home owner should have a title policy in place, which means the title company will probably have to fork over the money to pay off the lien to give clear title as they should have required it removed previously.
It is the current owner's fault for not doing his due dilligence or purchasing a title policy when he purchased the home. He inherited the problem and now wants to pass it to you. You can't close without this issue being addressed and cleared up.
Thank you all for the comments so far. I finally saw the title policy today and the current underwriter (who is on the hook for the lien) is proposing that they insure over it. But I'm not sure that is a satisfactory solution for my bank or for me.
were are currently looking and wanting to buy a home it is 28,000 we offered 20,000 cash and the man told us that he has a mortgage out on the home for 29000 and that my husband could go to the bank with him so that he could get a loan out on his motorcycle to pay for the rest of the money, because he says the house is a hassle and in the long run it would be better for him just to come out of pocket now. we have seen the papers from the mortgage company and tomorrow will be going to the bank with him to get the loan for his bike and his mortgage company is in tenn and were in sc so we have to wire the money in or something and then title will be mailed and signed over to my husband. how does this situation sound and how should we go about it
Find a Real estate lawyer and ask them. Have you thought about title insurance? How do you know there are no other liens against the property?
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