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I found a seller who wants to sell a small piece of property. However he has a federal tax lien that won't be covered by the sell price. The seller is currently on a repayment plan with the IRS and has assured me that the IRS would allow for the sale and just take all profits after taxes and Realtor fees. When I was a lender I thought that you couldn't sell or refinance any property with a tax lien unless the sale/refinance completely paid off the lien. Any of you dealt with this before?
I found a seller who wants to sell a small piece of property. However he has a federal tax lien that won't be covered by the sell price. The seller is currently on a repayment plan with the IRS and has assured me that the IRS would allow for the sale and just take all profits after taxes and Realtor fees. When I was a lender I thought that you couldn't sell or refinance any property with a tax lien unless the sale/refinance completely paid off the lien. Any of you dealt with this before?
Tax liens take position over mortgages. They must be paid off when the title transfers. I do not know of any lenders that will refi with an IRS lien. Your client should plan on paying it off or negotiating a reduced payment. Good luck!
I think this is missunderstood here. The tax lean will take what money is paid on the property with the other leanholders getting the ballance or the boot. If there is not enough to pay off the tax man, he will take what he's got and release the house from the lean for the sale. The lean on the person is still in effect and will follow him until it's paid.
Sorry folks..an IRS tax lien is just another lien. Takes position based on time and does not over-ride earleir debt. The confusion is caused by local and state tax liens which may take a position superior to other debt.
The IRS will release a lien under certain circumstances. But they are sloppy about it. You will not be able to finance a place until the tax lien (and all other liens) are released.
I had to go through this with a seller of a home I had listed who didn't know there was a tax lien on his house until we got an offer on it and then it showed up on title. There was not enough $$ to pay off the IRS and the mortgage, so I went through a formal application process with the IRS to ask them to remove the lien from the property. THey needed 2 appraisals to verify the purchase price was legitimate along with a letter from the seller explaining why he was selling and why he didn't have the $$ to pay the balance of the lien. It took about 3 weeks to get through the process but the IRS did approve the release of the lien. I'm pretty sure it still follows the seller's credit bureau, but at least it's not on the house any more. Go to the IRS website for the complete approval process - they have specific rules you have to follow to get it done. Good luck.
Wow. Thank you! I've learned something tonight. I love these boards.
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