URGENT - Need Pointers ! Sale - Monday - Posted by Bucksnort

Real Estate Investing
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Posted by Bucksnort on November 02, 2002 at 20:08:32:

Ron,
Thanks ! I wasn’t able to talk with these people by any method today.

This is the BEST explananation I’ve ever had on IRS liens. Don’t worry…I know you cannot render legal advice, but, between you, me and the rest of the world, it sounds like you know a lot more than 99% of them do !

Thanks for explaining this so thoroughly. This is actually the 3rd time I’ve run into good deals that have Fed Tax liens, and I’ve had no idea how to really handle them.

Thanks,
Brandon

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URGENT - Need Pointers ! Sale - Monday - Posted by Bucksnort

Posted by Bucksnort on November 01, 2002 at 12:24:21:

Sheriff Sale on Monday.

1st foreclosing (I think) verifying to be sure
40K

2nd lien
Approx 30K

3rd lien
Fed TAX lien around
Approx 9.5K

Fair Market Value: 150K

What can I do at this point ?
I know I can buy it at the sale…
My concern is the Fed Tax Lien. If I buy at the sale. Does the government have the option to come and get it from me ? Or can they only get it, if the bank takes it back ?

What are my options ?
Can I get a QCD from the owner and file it Monday morning before sale and give a copy to the people running the sale and the attorney representing the bank ?

Any advice appreciated.

Thanks,
Brandon

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No Pointers ! Just Questions! - Posted by Eddy (CT)

Posted by Eddy (CT) on November 01, 2002 at 18:34:48:

Bucksnort,
I am new to this foreclosure stuff and have these questions:

  1. Are there any late payments that need catching up on the 1st/2nd?
  2. Any other liens you don’t mention? (tax, mechanic’s)
  3. Can’t they sell this house through a Realtor for some relief? It seems to have equity!!
  4. If there is a redemption period, is there some way you can sign an agreement with the foreclosee to fund the redemption (including Fed taxes if need be) in exchange for giving the foreclosee a $g or 2?

Best of Luck with this one,
Eddy

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Read this thread… - Posted by JT-IN

Posted by JT-IN on November 01, 2002 at 18:12:40:

Buck:

Read this thread with link below… completely. it deals with the relavance of IRS lineson foreclosed property.

http://www.creonline.com/wwwboard/messages/33116.html

some contradictions are enclosed, but read the whole thing…

JT-IN

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Re: URGENT - Need Pointers ! Sale - Monday - Posted by JoeKaiser

Posted by JoeKaiser on November 01, 2002 at 15:36:02:

You need to first find out if there is a redemption period in your state for this sort of thing. If so, there’s probably no reason to attend the sale.

The earlier post had incorrect information. The IRS lien is not simply against the person. You can’t lien a person. You can lien a person’s property. That’s why they call it a lien. It most definitely attaches to whatever the person owns. That’s why they file it.

IRS is never wiped out at a foreclosure auction, at least not completely. While their interest may be legally foreclosed away, they retain the right to redeem the property. They do that by finding another buyer who will pay more for the property than you bid, and if such a buyer is found, you simply receive your money back and IRS collects through the new buyer.

A quit claim deed doesn’t change the foreclosue one bit. They’re not foreclosing against the owner, they’re foreclosing against the property. Whoever happens to be on title at the time of sale is not relevent.

What you should be doing is contacting the 2nd mortgage holder and seeing what’s on his mind.

Joe

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Re: URGENT - Need Pointers ! Sale - Monday - Posted by Randy

Posted by Randy on November 01, 2002 at 12:41:30:

The Federal Tax Lien ONLY affects the owner?s equity, which is lost the moment a foreclosure takes place. The tax lien is on the owner not the property. A QCD is of no value, that conveys any ownership interest ?If you have any? the owner is out. Any consideration the owner might receive will go to the Federal Tax lien. The feds are not your concern; they?re third in line ahead of the owner.

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The Great Starrini Predicts: . . . - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on November 01, 2002 at 20:51:35:

Brandon-------------

Thanks for the added details.

The Great Starrini Pedicts: The owners filed bankruptcy today, Friday the 1st of November. The sale will not take place on Monday. Heed the Sayings Of Starrini.

You are right, if you have the money to completely pay off the foreclosing lender, you can tender it at the auction and that will prevent the auction from taking place. However, you would only want to do so if you were the owner of the property. Which means you will want to get a deed signed by all the owners in front of a notary, with the proper legal description upon it.

The Great Starrini Predicts: If the Great Starrini has erred in the earlier prediction and the sale does take place on Monday, there will be several other investors there to bid for the property.

Good Investing*****Ron Starr*************

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Re: No Pointers ! Just Questions! - Posted by Bucksnort

Posted by Bucksnort on November 01, 2002 at 19:43:47:

Eddy,
To answer your questions.
1)Yes, there are late payments that need catching up. The property would not be being foreclosed on if there weren’t.
2) No other listed liens other than those 3.
3)Yes, they could have sold the house. They can’t now with 3 days left ! Yes there is equity !
4)Too late on paying up the arrearage. It’s all or nothing time for the bank…their 45 day period passed to “catch up the arrears”.

Brandon

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Re: No Pointers ! Just Questions! - Posted by Bucksnort

Posted by Bucksnort on November 01, 2002 at 19:40:21:

First, a big thank you to everyone’s fast response.

I left a message for the couple. No response. I’ll stop by at their house tomorrow.
My hard money lender says they won’t provide money unless the property is vacant & I get an appraisal. I would need to pay 10% down, balance in 10 days.

My plan will be to talk with the owner. See if I can just pay the second mortgage off prior to the sale through the attorney. Get an agreement of sale signed (first) and then get the place closed up.

By the way…here’s the deal.

1st - Approx 40K remaining.
2nd - Foreclosing and will be around 41 K at sale.
3rd - IRS Tax Lien of $9761.

The people are still living there and would need to be evicted out.

Joe and JTIN, THANKS for the responses ! I’m going to read through the posts. Joe, thanks also for the info on the TAX liens not getting wiped off. Oh, also, there is no redemption period.

Oh, get this, I had comps pulled. This place is worth 160K. Guess who was the seller’s agent for the three closest properties to this one…the wife who is being foreclosed upon !!!

Later,
Brandon

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Re: URGENT - Need Pointers ! Sale - Monday - Posted by Brandon

Posted by Brandon on November 01, 2002 at 13:31:55:

So, are you saying…forget about the 3rd (fed tax lien)…it will stay with the owner after the sale on Monday ?.

If I go to the sale…and the first bids up to 40K. Let’s say the second doesn’t show up.
I bid 41K…it’s mine. The Fed Tax Lien is gone ?

Thanks by the way !

Brandon

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Re: Analyze This! 7 units $83K! - Posted by Ron M

Posted by Ron M on November 07, 2002 at 01:32:52:

Ron,

I posted a message this morning (11/06/02)about a 7 unit building I am looking at. I was hoping you would take a look at the posting and give me an opinion.

Additional information for the post is: I got an annual insurance quote today for $1,950. One of the main reasons I was looking at doing this deal is because I am up against a deadline on a 1031 exchange and I figured when the building was paid off in 6 years it would have great cash flow after various rent increases over that time frame.

Is this a deal you would do? Do you think my $20K would be better invested elsewhere? I’m not looking for you to make the decision for me, so no pressure. I’m just looking for your input if you have the time to respond.

Thanks for your prior responses to my ?'s.

Ron M (WA)

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JD Predicts - Posted by JD

Posted by JD on November 02, 2002 at 21:21:53:

Hard to make a prediction since Bucksnort never said what State the property is in. But here goes: The property goes to sale. The current owner’s corporation or friend buys the property at sale. Thereby circumventing the IRS lien.

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Re: URGENT - Need Pointers ! Sale - Monday - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on November 01, 2002 at 20:41:07:

Brandon------------

The IRS lien is a “name lien” which attaches to any property owned by the named person. It thereby becomes also a property lien.

When the property goes to foreclosure, the IRS lien, being junior to the foreclosing loan will be wiped off the property, but the delinquent taxpayer will still be liable for the lien. Now, the IRS’s property lien is not wiped off immediately. The IRS has the right to redeem the property back from whoever buys it at the foreclosure sale, either lender or third party bidder. They pay the purchase price plus 6% interest plus any necessary repairs to perserve the property, but not cosmetic or unnecessary repairs. Their right of redemption is for a limited term–120 days, or the length of time for the former owner to redeem from the foreclosure sale, whichever is longer. After their redemption period is over, they are off the property.

Now, all this assumes that the IRS lien is junior to the foreclosing loan. And that the IRS was notified of the sale at least 25 days before the sale, and that the IRS lien was filed at least 25 days before the sale. If the IRS was not notified, their lien is still attached to the property, as though it were senior to the foreclosing loan. If the IRS lien were senior to the foreclosing loan, it would not be wiped of the property by the foreclosure. However, I doubt if a lender would loan to an owner who had an IRS lien on the property senior to the lender’s lien.

Also, what I am describing is so for non-judicial foreclosures. As this is a sheriff’s sale, the foreclosure is actually a judicial sale. The way it works might be a little different there.

Another thing though. As a junior lienholder, the IRS has a claim to excess proceeds from the foreclosure sale. They can collect up to the amount that they are owed from the amount that the property sold for over the amount owned to the foreclosing lender. If they were to collect enough to satisfyt their lien, they would release the lien completely and it would not be attached to the property.

Also, if you are the successful buyer of the property at the foreclosure sale, you can make a proposal to the IRS to buy from them their right of redemption of the property. They have a form that you fill out–I forget the number, but they will give you one if you ask for it. You make your proposal and they may remove their lien from your property for less than what they are owed. Well, they will sell you the right of the redemption. At that point you have the complete ownership of the property and the IRS lien is not an obstacle to your reselling the property. Again, this is the way things work here in CA, which is a non-judicial sale state. You may find that they are somewhat different where you are, if you are in a non-judicial foreclosure state.

Also, understand that I am not an attorney nor an IRS employee. I cannot render you legal advice. You may want to consult with a knowledgeable attorney about how things work in your state.

Good Investing***********Ron Starr*************

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Read this thread - Posted by JT-IN

Posted by JT-IN on November 01, 2002 at 18:15:32:

Brandon:

Read this thread with link below… completely. it deals with the relavance of IRS liens on foreclosed property.

http://www.creonline.com/wwwboard/messages/33116.html

some contradictions are enclosed, but read the whole thing…

JT-IN

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Re: Analyze This! 7 units $83K! - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on November 07, 2002 at 21:25:35:

Ron M–(WA)---------------

I noticed that another poster had done a cash flow analysis for you on the property. So I didn’t bother do one. I mostly want to buy bargain properties where I don’t even bother with a cash flow analysis.

If the loan will be paid off in 6 years, yes, you should get a very significant cash flow from the property. Expecting to raise the rents is questionable. You might not be able to do so, depending upon economic conditions where you are. Here in Oakland, CA, we could not raise rents from about 1991 to about 1998 or so. Now, rents are lower than they were a year ago. So, don’t count on higher rents in the future. If you get them, excellent, but, please, no counting on them.

The question then becomes do you have the resources to carry the property for the six years without too much strain on you? If not, you had better pass. If you could carry the property for say two or three years and then refinance with a lower-payment loan, so that you would not have as much of a strain to carry the property, it might be possible to buy it. But, that would probably require a somewhat longer loan payoff and thus a later time to start getting the gravy.

Good Investing****************Ron Starr********