SHORT SALES AND IRS LIENS
This being my first blog entry, I figured to talk about something simple.
In my law practice we see a lot of short sales. Indeed, we offer a service to Realtors and Sellers to process their short sale material with the lenders (without the downward pressure and lowball influence from an investor handling the process). I have worked statewide with lenders - visting their loss mitigation departments and sitting in on committee meetings. Knowing the process is key knowledge to improving the percent of short sale lender approval.
Now that you have the approval, what other bug will kill the deal. There are plenty still to come. Today we will address a likely culprit - an IRS lien for unpaid taxes.
The IRS lien can only be avoided if the lien was filed after the mortgage was recorded or if the mortgage money (all of it) was used to purchase the property (a "purchase money mortgage"). And the avoidance only takes place in a foreclosure.
If you are doing a short sale, you are looking straight in the eye of the IRS. The solution is that you are doing a short sale because of no equity and the homeowner is selling without getting any cash. There are procedures to get a release of the lien of the IRS from the house (not a satisfaction of the lien - just a release). The procedure is to contact the local IRS regional office and be prepared to offer up the same information as to the banks - and if you already have a bank short sale authorization that will be a plus.
The problem is that the IRS can take a month or longer to process the request. Hint - WALK the request into the regional office, wait an hour or so and then walk out with the lien waiver. Easier said than done. Fortunately for my practice, we have the regional office across the street and a lawyer in my office is a tax attorney and works with the people over there regularly. It's a pain (and I hate paying the extra freight) but getting the lien release is another step in the short sale process.
Any of you have any experiences you want to post?
Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A., WEST PALM BEACH, FLORIDA, RPZ99@FLORIDA-COUNSEL.COM FLORDA BAR BOARD CERTIFIED REAL ESTATE ATTORNEY
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Thanks for that tip of walking it over to their office! This will save a TON OF TIME. The IRS really drags their feet when it comes to releasing a lien from a property. We had one come very close to killing a deal on us. We had a buyer lined up to assign the property to, and because they had taken so long, the End Buyer had become pretty impatient. In the end, the deal closed because he was getting one hell of a deal and would've been a fool to turn it down..:)
Thanks again,
Rich