So this property auction is not for a loan but rather back property taxes.
That is a strange one! Similar situations on vary rare occasions have happened where there are no loans but the owner didnāt pay HOA dues. In both cases I am aware of, the owner, most probably, went back to the country they immigrated from.
One more question -
Is the unit vacant? If not, who is in it?
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The unit is vacant. The previous owner is in jail for fraud, so I am not concerned about the owner coming to save their property. I am concerned the fed has too much in this property to let it go. After reading some posts, I wonder if I can win the property at auction and if the fed does try to redeem, then make a deal to settle the lien (and have the lien transfer back to the previous owner and not the property). Any thoughts?
Hi Kwon, The county will typically force a tax lien sale in CA after 5 years. The only recourse that the IRS could take would be to redeem the property and then sell it themselves in order to recoup some of the past due taxes. I had a long talk with our county assessor at an event and asked about CA tax lien sales. He indicated that most of the properties that end up going to sale are strips of abandoned land and other non-usable parcels. You may want to reach out to your local assessor and ask about their tax lien sales. I know 3 different assessors from 3 different counties and I have found all of them to be very accessible and helpful with my questions.
Thanks Michelle. What kind of questions should I be asking? I am going to use a title company to perform a title search and consult with a lawyer as well just to make sure I am not getting to far over my head.
Hi Kwon, I would really want to know if they have seen a situation like that and if the IRS did redeem the property. You can also reach out to your local title company and ask to speak to a title officer. A title officer is also a great resource because they can tell you what it would take to get āinsurableā title to the property.
One question to ask the person in charge of tax lien sales is if they do Notice the IRS if there is a Fed tax lien against the owner. I donāt know how thorough a search they do on title. Iām quite certain if someone does buy at tax sale a title company would want to examine the file to make sure the sale was properly noticed.
It is strange that they are going to sale after only being delinquent 4 years of taxes. I thought 5 years had to pass before a tax sale took place.
This is actually happening in WA state. This appears to be more related to CA but since this inolves the feds, i am sure experiences in one state will not matter. There is a tax lien againt the owner and her trust as well. I spoke with friends and they inform me my best bet is to negotiate with the IRS if I win at auction. They share the same sentiment that the fed doese not want to list the property and as long as I offer a fair value based upon an appraisal than I should be cleared to take over the property. I guess only time will tell.
hi. great forum here. i have a property tied up that has two federal liens on it that total about $30k more than trustee sale. i have it tied up for about $10k more than trustee sale amount. so my question is if I purchased the property during the redeem period and the IRS decided to redeem what does that really mean? Does the IRS come take it away for the price it sold for at the trustee sale if they decide to redeem or can they just invoke rights to redeem it free and clear regardless of what I paid?
You wonāt be able to get title insurance for 120 days after a Trusteeās sale.
You are not clear.
Has the property already gone to sale?
Are you trying to buy it from the purchaser who bought it at the sale? For $10K more than he paid?
IF the above is the case, in theory the IRS can come in and pay the buyer what he paid (plus interest) and take title. As a practical matter, the IRS doesnāt redeem any more. Of course there are always rare exceptions. As successor in interest to the buyer, they would pay you - IF you informed them of your interest in the property. That would alert them that maybe they should redeem. OTH, they would contact the buyer at the sale and pay him.
If there is a bunch of money to be made AND you trust the buyer not to run off with the money you give him if the IRS steps in you only have $10K at risk. OTH, if there IS money to be made, why is the buyer willing to walk?
miketā¦property already went through trustee sale about 80 days ago. I am in contractor to buy it from the bank that took the property back and is the current legal owner of the property. My offer is $10k more than what the trustee sal price was at foreclosure. The value is in the future development of the property which has a preliminary short plat already in place with all utililty work done. last update is that escrow bumped my close date back to 130 days after trustee sale and say they will give clear title and insure. what is my risk after the 120 day period?
NONE! They will then give you title ins.
@miketā¦thanks. Thats kinda what I thought but wanted another experienced investors opinion.
Want to buy vacant foreclosure at court house sale tomorrow that has 50K Fed tax lien. Just discovered a recent hand delivered note taped on property front door from the IRS āAsset Preservation & Recoveryā office asking owner to contact them. Iām now afraid to bid at sale since it appears the IRS is targeting this property and may be planning to redeem after foreclosure sale. What does this indicate to you?
Hi Lorenzo,
I have minimal experience w IRS liens so perhaps someone knows more about IRS posting notices at the property. Thatās a new one for me.
The IRS would normally use the US Mail to communicate with a taxpayer vs posting a notice at the property. If the IRS wants to file a lien vs a delinquent tax debtor, then they have the lien recorded in any/all counties wherein the taxpayer owns real property. Hence no need to post a notice at the property.
Recorded general liens, like IRS liens, judgments, etc. are automatically secured by any real property that is held in the name of the debtor. And they will automatically attach to any other property that?s subsequently recorded in the debtor?s name in that same county. Hence, a hardcopy notice posted by the IRS at the property would seem to be superfluous???
I believe there are rare and unusual instances when the IRS could use their levy (vs lien) authority to sell a piece of real property ahead of a trustee sale. In the case of levy, they would have to post a notice at the property.
There is one other possibility ā¦ that being a competing investor who is using a phony notice in the hopes that other investors might believe the IRS has a recorded lien and intends to redeem. If youāve read through the posts in this thread, youāll note that IRS redemptions are uncommon. Yet if investors were somehow convinced that a redemption was imminent post trustee sale, they might be reluctant to unnecessarily tie up their $$. Posting a phony notice is a form of ābid chillingā and I suspect a violation of several laws.
All that said, I would assume itās a valid notice until proven otherwise. Snap a photo of the ānoticeā and look closely at the info/format. You should be able to verify its authenticity. Of course you should also check at the recorderās office to verify that an IRS lien has already been recorded. If no lien has been recorded, then the notice becomes even more suspect.
Hi Sean,
In the case that the IRS does choose to redeem how long do that have to essentially āpay us backā the amount we paid for the property plus applicable expenses.
They have 120 days to redeem. See 26 U.S. Code Ā§ 7425(d)(1). With regard to interest and expenses see 28 U.S. Code Ā§ 2410(d).
From what Iāve seen, itās more of a ātechnically possibleā risk than a common one - title companies usually wonāt freak out unless thereās real equity. Still, I wouldnāt rush to flip it right away.
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Right. You canāt get title insurance at all on a resale for the first 120 days. After that it should be no problem.