IRS/Tax liens. The IRS has a 120-day right of rescission, meaning that for the four months after the auction the IRS can exercise the right to pay you what you paid for the property and take it to pay off back taxes. They haven?t aggressively exercised this right in recent years, but it is prudent to hold off on improvements until the period is past. This has implications for your time-to-revenue and for any financing you may get for the deal. Include this variable in your financial analysis.
For state liens, whether or not you have to pay will depend on whether it was filed before or after the loan that was foreclosing. If it is senior (before) the foreclosing loan you’ll have to pay it. If junior (after) you shouldn’t.
You may find the following link helpful in understandign title research: