Impact IRS lien has on a property purchased at foreclosure
What impact an IRS lien has on a property purchased at foreclosure? I heard that an IRS lien does not get wiped out at foreclosure (Texas).What are the consequences of buying a property at auction? [size=18][/size]
Anyone...
Mac66,
I am in Texas as well and here is how it works with IRS Tax Liens (I assume this is the case for all 50 states but check to make sure)...
The Trustee must notify the IRS via certified mail, before they file the foreclosure.
If you are the winning bidder for a property with an IRS lien against it, you need to ask the Trustee if they notified the IRS. If they have, ask them to show you the proof of the certified mail.
If they did not notify the IRS... Do NOT buy the property! Tell the Trustee you can't pay for the property because they were not properly notified. The Trustee may give you a cold stare but they will merely re-auction the property with no harm done.
Once a house is sold at the auction, the IRS has 120 days from the day you bought it, to sieze the property.
If they actually do that, they will pay you the amount you paid for the house plus 4% (some claim it is 6%).
BUT.... They will not reimburse for any repairs/upgrades that they deem "not needed."
So, if the roof has a big hole in it, they will reimburse for that. If you paint the house, they will not reimburse for that.
I have not personally heard of a single case locally where the IRS siezed a house. I don't suggest anyone play "chicken" with the IRS.
Most investors I know that have bought with an IRS lien against it, have gone ahead with the rehab and sold after the 120 days had passed (hoping they wouldn't sieze it).
FYI... After 120 days, the IRS removes the lien from the property and I am told that they put the lien onto the previous owner themselves.
and what about HOA foreclosure process in Texas.
Mac, hopefully at this point, you understand that no matter what steps the IRS must go through with a house in foreclosure, you know that you need to do your homework before trying to buy one.
As I said before, I have not personally heard of anyone that had the IRS seize/redeem a property after they bought it at an auction but that doesn't mean it can't happen.
"and what about HOA foreclosure process in Texas."
Are you wanting to know the actual process for an HOA to foreclose or are you wanting to know how to make money with one?
The process is the same as a lender foreclosing because an owner has not paid.
It is possible to make money with them but the chances are not good (in Texas).
I say this because investors took advantage of some large loopholes in the system a few years back and the state changed the rules (as they should have).
If a HOA forecloses on someone, it is because they have not paid their HOA dues. It is entirely possible that an owner can be current on their mortgage and still lose the house to an HOA.
BUT... the new laws in Texas give the owner the right to redeem within 12 months of the sale... with ZERO interest. I am not sure if they can be evicted during that time or not but, after the laws changed, every investor I had known to pursue them, all dropped out of the HOA game.
the new laws in Texas give the owner the right to redeem within 12 months of the sale... with ZERO interest.
I just happened to come across the following clause in Chapter 209.011 of the Texas Property Code: The redemption period is 180 days and an annual interest rate of 10% (if no rate is stated).
Just wanted to clarify..
8)
The last I had heard anything about the HOA laws, was when they were changed in 2003.
I would guess that either the laws have been adjusted during the past 5 years or maybe there is a homestead exception or something.
Interesting if what you found is actually correct. Its worth my calling a real estate lawyer to find out specifics.
Thanks