Posted by River City on May 31, 2005 at 06:18:15:
Do the sellers intend to pay the IRS lien with the sales proceeds at closing? Does the contract state that they will convey clear title to you at closing? If so, make sure that your title policy indicates that clear title is being transferred to you at closing and that there are no exceptions. Your closing agent can give you a copy of your title policy or binder prior to closing. Also make sure your closing agent (hopefully attorney in this case) understands what you expect from this closing, which is a clear title policy. If there is anything in the title policy that you do not understand, call the title company that issues the policy and ask them questions.
Purchase&Sale Signed - Now an IRS Lein - Posted by Bob
Posted by Bob on May 29, 2005 at 19:31:29:
I hope someone can offer some advise.
I signed a P&S for a property in MA in March. The sellers were a couple of months away from bank forclosure and wanted to sell while they could still come out ahead. We had a closing date of April 26th. The Title V inspection failed. The sellers didn’t have the funds available to get the perk testing and filing done. The sellers agent finally paid to get the process rolling.
I was waiting on Town approval on the septic plans which was to happen Friday. On Friday, I took a call from my Agent who informed me that the IRS notified the sellers of their intention to file a lein on the property.
Meanwhile, the Town approved the Septic System plans and the work could likely be done in a week. We can close as soon as final inspection of the system is completed.
It appears the Sellers knew about the IRS threat 2 weeks ago and told nobody. In addition, they signed an extension on Wed. after finding this out.
Questions:
Do I have a chance of getting this house now that the IRS is involved?
If I don’t back out of the contract, what could happen?
What is the Seller’s responsibility if they have to back out of the contract?
Thanks in Advance for any help.
Bob
Purchase&Sale Signed - Now an IRS Lein - Posted by Bill H
Posted by Bill H on June 01, 2005 at 15:09:02:
River City gave you some very good advice…to try to explain it a bit more, let’s look at it:
Do I have a chance of getting this house now that the IRS is involved?
Yes, the IRS does not want the house…they want the lien paid.
If I don’t back out of the contract, what could happen?
If you take the house and the lien is not paid…it becomes your responsibility. Do as River City said…LOOK before you LEAP…do not accept it with the lien remaining.
What is the Seller’s responsibility if they have to back out of the contract?
Do not know what your contract says but normally if they cannot deliver CLEAN and CLEAR title they will have to return you earnest money and possibly any damages you might have suffered.
I’d be a bit skeptical of the deal if they do not remove the lien in the escrow. The IRS, having given them notice, can be very difficult about the lien and say it attached…you have now been “Constructively Notified” and are aware of it.
Make it go away in escrow.
On the other hand: If the deal is good enough…and…the lien is small enough…negotiate a LOWER price and you pay the lien…again DO IT in the escrow.
Good Luck,
Bill H