Can I reducing the amount of a tax lien?

[InRealEstateSolutions.com]

I have a great rehab property that would be great deal if I can buy it. However after a preliminary title search, I came across an IRS lein for more than what I would buy it for.

The seller agreed to sell at my verbal offer price but didn't know about the lien until I pulled it up later that day. Somehow I missed it the first time around b/f I made the verbal (no contract yet or anything).

The seller (daughter of incapacitated title holder, with a power of atty) would love to sell me the property and just get rid of it, but now can't.

What are my options for reducing the lien amount? I've heard people talk about just getting it released, but I can't imagine the IRS would just say "You owe us money, and we have lien on this house, but now we'll just let it go."

Would they allow a reduction of the lien amount equal to that of the sales price? E.g. $20k original lien, sales price $15k, new lien amount, $5k??

Uh.. I guess that doesn't make sense because w/o the house, what would the lien be against?

[InRealEstateSolutions.com]

Yea, I definitely wouldn't do this by myself. I will not advise the sellers, but maybe suggest ideas that they can discuss w/a more knowledgeable tax person. I figure the quicker they get this resolved, the quicker I can buy the property.

There is no mortgage, it's owned outright, except for this year's delinquent property taxes (less than sales) price.

So what happens during that redemption period and what happens if it runs out?

[haynesm]

REF: Post about IRS tax lien

I don’t know much about IRS tax liens. However, I did buy a property that had an IRS tax lien on it. It was a county delinquent tax sale property that I did not get at the sale; some other jerk got it, not this jerk. Long story short. I managed to acquire the property out from under the other jerk and he informed me that there was an IRS tax lien on the property and I wouldn’t want the property. I go to the court house and read the recorded Federal tax lien form 668(Y) Rev. 10-93.

Low and Behold. Right there in the middle of the form it had the following notice. Apparently no one had seen this notice on the form or at least wasn’t saying anything about it.
* * * * * * * *
IMPORTANT RELEASE IFORMATION: For each assessment listed below, unless notice of lien is refiled by the date given in column (e), this noticed shall, on the day following such date, operate as a certificate of release as defined in IRC 6325.
* * * * * * * * *

Not sure I really understand all this jumbo mumbo but it looks like to me the IRS is giving a release to the lien on date in column (e) if not refiled. There were two Federal Tax liens, one for 5,200+ and one for 9,900+. The IRS tax periods started in 1986 and 1989. The IRS date of assessment was 1989 for both liens. The last date for refiling was 1999. I purchased property in 2002. 26 months after last date for IRS to refile. Am I lucky or just being hung out to dry? I purchased house for 4K, put about 1K into fix up and have rented it ever since. So if IRS comes and gets it all I have done is get 350 month rent for 5 years. House only worth about 55K and rent around here is low.

DON’T GIVE UP YET

[InRealEstateSolutions.com]

Great info!!!

I checked the doc, and the date on this lien is June, 2013.

[Bill H]

Tim:

I think you got your data incorrect....you posted.

"If they are willing to sell it to you for what is owed on the first mortgage, one option is to get them to notify the IRS of a pending sale and the amount. Then start the clock running on the redemption period."

As I read this he will have bought the property with the IRS lien intact. This would move the IRS into first position and they, in my expereince, have been reluctant to give up that position.

And, he could not get title insurance with the IRS lien still there.

The way I read your post is that this is a normal purchase and sale agreement and it will not trigger a release or start the clock running on the redemption period for the IRS lien.

Only and involuntary sale, foreclosure, tax sale, etc., will do that and they must be senior to the IRS Lien.

Good Luck,
Bill H

[Bill H]

Hasynesm...You just ran into th government actually doing it job correctly. IRS liens have a 10 year lifespan and like they said...if they do not refile within the 10 year time limit it is released.

You are safe.

Good Luck,
Bill H

PS: The "Paperwork Reduction Act" actually worked..

[haynesm]

Thanks Bill H.
I was wondering about that. I took out a loan on the property the other day and when the bank told me the title search came back clean I was a little surprised. Thought sure I would have some explaining to do. Guess now i can put the property up for sale.