Waiting out the 120 IRS redemption period


#1

I am in the same boat. Waiting out the 120 IRS redemption period after purchasing a house at a sheriff sale. I have a question that I am hoping that someone with experience can answer for me, as I am so nervous that I will lose the house. The plaintiff was the first mortgage holder, there was also a second mortgage holder. Then the IRS lien was third in line. I know that the IRS would have to pay me back what I paid at the auction plus 6%, etc. However, does anyone know if they would have to pay the 2nd mortgage holder which has a lien that is junior to the first mortgage holder, but senior to the IRS lien? I am hoping that this is the case, as there would be no equity left if they had to pay the 2nd mortgage holder. Their lien is for $190,000, so there would not be any equity in the home if they had to pay for both liens that are senior to the IRS lien. Thanks!


#2

Hi Michelle,
We cannot come up with a single example of a recent sale where the IRS exercised their redemption rights. (and I talk to a lot of title people on a regular basis). It is highly unlikely that you have anything to worry about.
I could be wrong but I believe they would just need to redeem the property for the amount paid at trustee sale.


#3

I agree, in all the research I did going through my ordeal, I only found where it talked about paying back the amount of purchase at the trustee sale. I’m done with my situation by the way. I waited out the 120 days, nothing happened, no word or anything from the IRS during the whole thing. Now we’ve closed and we love the new house. Hopefully everything goes just as smooth for you.


#4

Congrats to you Curtis! I am happy for you. I am on day 124 - and anxiously awaiting our new prelim title report. (Day 120 fell on the weekend…and they said it takes a few days to receive the updated prelim report) It has been a loooong wait, but I am sure it will be worth it.


#5

The IRS steps into the position of the party they redeem. The 2nd is wiped, in your case if that happens. Which it won’t.