Short Sale and IRS/Govt as Lien holder - Posted by Tom

Posted by TONY on February 06, 2007 at 15:32:56:

PARTIAL RELEASE LIEN FORM

Short Sale and IRS/Govt as Lien holder - Posted by Tom

Posted by Tom on January 25, 2006 at 19:39:56:

Hi:

I have a question on what happens when I do a SS on a house
that has a IRS or United States of America Lienholder1?

I have a lead on a foreclose house with a Judgment amt of 190K.
If I say, SS it at 150K, what IRS or Govt gets?
Is the Bank gets entire 150K?
What happens to the IRS/Govt. lien?
Do the Original Owner still have to pay the dues.

Can I, as a new owner, get a clear title?
What are caveats on this kind of deals?

Any comments/advice from the experienced investors
are greatly appreciated.

Happy investing,

Tom

Re: Short Sale and IRS/Govt as Lien holder - Posted by Bill H

Posted by Bill H on January 25, 2006 at 20:48:28:

I have a lead on a foreclose house with a Judgment amt of 190K…Do you mean mortgage of 190K, value of 190K or is this judgment in addition to the mortgage?

If I say, SS it at 150K, what IRS or Govt gets?..Basically they will get nothing. HOWEVER their lien will remain in place AND the instant your purchase is recorded and the bank is paid…the IRS will move up in position. They will become first if they were second, etc. They ain’t going away until you deal with them.

Is the Bank gets entire 150K?.. Yes, but it is VERY doubtful that you will get the bank to deal with you until you satisfy the IRS.

What happens to the IRS/Govt. lien?..See above…they remain intact, in full force and effect and have now moved into first postion (if they were in second before).

Do the Original Owner still have to pay the dues. What sort of dues are you speaking of?

Can I, as a new owner, get a clear title? Yes, BUT only if you clear all the lienholders and clear the title.

What are caveats on this kind of deals? Make you deal with the bank and the IRS concurrently. Both may want to know what the other is getting.

Remember…there must be a compelling reason for the bank to do the deal…the IRS lien NOR your desire to short is are considered compelling reasons.

Good Luck,
Bill H

Partial release of lien … - Posted by DaveD (WI)

Posted by DaveD (WI) on January 25, 2006 at 19:56:48:

… subject to, of course, your successful short sale attempt! If you have success on the short sale (don’t hold your breath), the IRS “should” release for nothing. The short sale implies no equity, and the IRS won’t stand in the way. What is even more fun is to buy the first lien and foreclose off the IRS! LOL!

Re: Short Sale and IRS/Govt as Lien holder - Posted by lukeNC

Posted by lukeNC on January 25, 2006 at 19:43:29:

you’ll have to negotiate with the IRS to take a small amount to release the lien. I believe this called a compromise sale or something like that. Depending on what the taxes are owed for and the age of the lien, will determine what they do.

Its very likely they’ll take something like $2k to release the lien from the property. the ones who the money will still owe it.

A couple points - Posted by DaveD (WI)

Posted by DaveD (WI) on January 26, 2006 at 08:35:32:

Bill, the judgement amount is the number the atty gave to the court, which includes principle, lates, interest, prepaids and atty fees, of course. Your advice “Yes, but it is VERY doubtful that you will get the bank to deal with you until you satisfy the IRS” is untrue. The bank doesn’t care about the IRS because the bank is in the first postition. Whatever is left over, if anything, is irrelevant to the bank. The bank does not need the blessing of the IRS for it to act in the bank’s own best interests.

I would hope nobody in their right mind would pay off the loan without having a plan to deal with the IRS. There are four ways to do it. Please, $, $$$$$$, FC.

  1. “Please remove this from the house, there is no equity and the lender is already taking less.”

  2. $ means partial release… from the house for nominal consideration… lien still attaches to anything else the seller has.

  3. $$$,$$$ means big bucks to pay lien off and extinguish at whatever negotiated amount. Ewww.

  4. FC means IRS was foreclosed off the house as result of the action the lender is bringing. That might be the only remedy if IRS doesn’t want to deal with the first two, if they think there is some real equity after all. Lien is still valid as example two above.