Short Sale: Removing an IRS Tax Lien from a property

are you there Knolly?  any answers to the question above about the ruined house and the income tax lein?  My advise is to ALWAYS have a title search before a purchase. The attourney should have let these people know about the many different types of leins that could be attached that wont show up till a title search- which happens once a sale tries to go through-by that time, the IRS knows if the buyers want the house bad enough, they probable wont remove the lein since they will get their $ at the closing of escrow.

Thanks for the info.  On 11/18/2009, we opened a 30-day escrow.  Our loan has been approved today and we're well in our way to getting the house.  However, we recently learned that the seller was audited in the begining of November and have a Income tax lien coming up on the house which we are in escrow for.   From your previous posting, I can see the any liens that have been filed previously would be taken care of by the escrow process but what about ones that is in the work as we speak?   Is that true IRS has up to 90 days after the close of escrow to file their lien?  What happens then?  Do we, buyers, have to go through removing this lien? 

You're help would be greatly appreciated...

Kacey in San Clemente, CA

I forgot to say that the house we are buying is also a short sale.

I'm not sure how short sales work. But I do know, that once the IRS sticks a lien to a property-good luck getting it removed!!!!!!!!!!! We ended up having to pay the $12,000. tax lein that stuck to the property because of the lady who was buying it from us. It was originally less but interest was tacked on. the attrny who handled the forclosure slipped up and did'nt advise us.  The IRS told us that they were supposed to be notified in a forclosure. Who on earth would know that you have to tell the IRS as soon as you forclose a property you were selling to someone??  And who is responsigle to notify them???? the IRS couldn't even tell us.  Any way, this is a different scenerio, but you should MAKE SURE YOUR TAIL IS COVERED, AND THAT WHOEVER YOU ARE TALKING TO-KNOWS WHAT THEY ARE TALKING ABOUT!!!!  Good Luck!

I forgot to mention that we did not know there was a lein on the property until after we sunk 50k into fixing all the damage and had a buyer, so in the buying process it came up in the title search. since the IRS knew we had a sale-of course they're not going to remove the lein, they'll get their money! But if we had known at the forclosure that the lein was there, and the IRS would know the sad state the house was in and how much she owed us in back payments alone, they probably would have removed it at that time, since more was owed than the house was worth.

Thank you sooooo much for your quick yet precise advice.  I will run it by a RE attorney soon.

Have this problem. Got a tax deed in IL. Title company that did prep work for the tax deed did not find the IRS liens (even though our order specifically asked for all liens and judgments).So, IRS was not served in the tax deed case. Normally, IRS has 120 days after the last date of redemption to repay. They usually don't. Tax deed was recorded in 2009. IRS liens were recorded in 2006.

Gave to attorney to handle. He has done this before with tax deeds. It is a little different since a property tax lien has priority over mortgages. I gave him the relevant Section of the IRC (6235), but it is better when the letter comes from a law office. We'll see what happens.

We are the interested buyers trying to purchase short sale home that has a IRS tax lien. We offered full asking price $340,000 only to be countered that we must pay an additional $30,000 cash on top of $340,000 to pay off seller's IRS tax lien. The seller's agent said they will not accept any offers that don't include the $30,000 cash on top of the listed price of $340,000. We informed the seller's agent about the option for lien removal when we learned that information from title specialist. They are not interested. This property is in preforeclosure and set to go up for auction in 1 week from today, apparently one day after the foreclosure is offical. We were told we can not deal with the bank as they are not the owners yet. If it goes for auction it will be full cash only which will put the house out of reach for us. This seems wrong that we have to pay $30,00 cash and it seems like the bank would want to be informed that they are losing $30,000 on a property that has a $560,000 first and a $90,000 second. We'd be okay with financing $370,000 we just don't want to put $30,000 cash down on top of our down payment, not to mention paying off someone else's IRS debt. This seems so wrong. Any suggestions?

Hi!

I'm not a realtor but I'm buying a short sale that has a $9500 IRS lien against it. Here's the problem, the IRS has "lost or misplaced" the submitted paperwork numerous times to get the lien removed sine there really is no equity to tag on to with this property (we submitted all the proof via inspector reports). Even with our wonderful realtor and her broker going to the IRS offices and hand delivering, they keep losing it. We should of closed on the house last week but the bank has extended another 30 days to see if this issue will get resolved. I'm very nervous about this because of the way the IRS is handling this. What else can my realtor and broker do to get the IRS to cooperate, stop using lost paperwork excuses and get a firecracker under their butts? I mean, it's bad enough that there is no one person assigned to the file, so each time the realtor and/or broker calls them, it is someone different and the info has to be told over and over and over again.

From a buyers point of view who is trying to buy a home (we are not investors), it's very upsetting and frustrating. Any additional ideas would greatly be appreciated. We are not giving up, we just need some outside ideas.

Thanks for reading.

hi, 

I have clients who are selling a house not upside down and IRS is putting a lien on it for taxes but after paying off the loan, back property taxes and commission nothing is left; what happens then, they don't have any other property other than their cars? does IRS put lien on something else? 

Can someone maybe help me out. I have a similar situation. We are contract pending on a short sale. When they did the title search they discovered an IRS lien of about 200K. We were told that the buyer has spoken to the IRS and picked up paperwork to submit. The title agency provided all the paperwork to show that he is not getting any cash in this deal. We were told it should not take more then 30 to 60 days for the IRS to release the lien so we can purchase?