IRS liens at auction - Posted by djr-NV

Posted by Shack on October 01, 1999 at 04:54:41:

The following applies to GA. We are not a trust deed state but it probably is semilar, but check.

  1. Looks like whoever did the search prior to putting the trust deed on the property didn’t have the title searched properly. The title you receive at the auction is no better than the title the holder of the lien has. Don’t ever assume their title is good.
  2. I would contact the Attorney handling the sale. It’s up to him to conduct the forclosure properly, IE give the IRS proper notice. All they have to do is send notice to them certified mail, return receipt requested and keep the green card but this must be done to start the 120 day clock running. Get him to issue a title policy on it if you were to be the successful bidder at the sale. He’s already done title to it.
    3)Depends on the price of the property and difficulty of the length of the search. Min. $100 and up. UNLESS YOU ARE A PRO DON’T TRUST YOUR ABILITY TO DO A SEARCH. It’s OK to do a preliminary search yourself but before your right a check get title insurance.
  3. Call the attorney doing the sale beforehand and ask if he can write an owners title insurance policy when he xfers the property to you.

Good Luck in the future. Your smart to ask before you leap.


IRS liens at auction - Posted by djr-NV

Posted by djr-NV on October 01, 1999 at 03:35:41:


I went to my first trustee auction yesterday to see how they work. While I was
there I spoke to some bidders about a certain property I was tracking that was
going to auction that day. In my title research I determined that there are significant
IRS liens on the property. I thought that the liens would be erased after 120 days if
the IRS didn’t exercise redemption, so I was thinking that they were not that big of a deal. But I was told that this would not be a good
property to bid on since the buyer would end up having to pay for these liens. One
guy told me that these liens come with the property since they were filed even
before the property was purchased by the owner. I asked the crier if the IRS had
been notified of the default (since I read here that that improper notification can also cause problems) but he said he didn’t know. I spoke to him after the austion and he also told me that the buyer would be buying the liens (he was an attorny for what that’s worth) I am new to all of this and am
trying to get my feet wet. One thing I have picked up on this site is that I should learn
what I am doing before I jump in and start bidding at auction (which is what I’ve
been trying to do). I thought I had all this stuff figured out, but at this point I feel like I took a step backward. BTW- the
auction on that particular property was postponed at the last minute.

1.) Is it possible to have an IRS lein senior to the 1st trust deed?

2.) How do you determine if the IRS has been notified- I tried calling the number of
the trustee, but I just get a recording giving dates and times of sales.

3.) How much does an average professional title search cost? ( At this point I lost faith in my abilities to determine clarity of title)

4.) When is the best time to get title insurance on a property that you are interested
in bidding on?

I’m sure some of these questions are really basic or even moronic, but please be
patient. Like the man said “Explain it to me like I was a three year old.”

Thank you for taking the time to help.


Re: IRS liens at auction - Posted by Irwin

Posted by Irwin on October 01, 1999 at 08:49:31:

While it doesn’t happen very often, it’s possible that the (what was thought to be) first mortgage ends up being junior to the fed liens because they were overlooked when the loan was made. These liens would NOT be released by the 120 day IRS lien release statute. That’s why they would have to be paid by the new owner. It also might depend on who the liens were against, i.e. a former owner of the property, or the current owner, and whether or not the concept of “purchase money mortgage” applies in your jurisdiction.
But that’s very technical legal stuff that’s usually argued between title companies and lienholders. You can’t make such determinations in your own mind. Even with legal advice, you’d be skating on thin ice, and the best thing to do is avoid the situation altogether. If it looks squirrelly, leave it to the pros to bid on. When you’re a pro, (in about 5 years) you can dive into those too.
I commend you for the way you’re going about this. Watch and learn first. Then watch and learn some more.
It’s also recommended to have a good lawyer you can run things by. If you are going to be in this business you’ll need one more than you might think, because lessons learned from not having enough (or correct) info can be very costly.