Kansas State (Income) Tax Liens

5 Replies

Have a property under contract for $2500. Beat-up place with holes in the roof that needs a gut rehab. Just found out the current owner has about $30k in State Tax Liens filed against him. His only other property is his current residence that is worth maybe $40k in its current condition. 

I'm wondering if anyone on here knows if it's possible to get a release of lien from the state for this property considering the market value is essentially $0 due to its condition and the current owner has neither the means nor the inclination to fix it.

Originally posted by @Jim Viens :

Have a property under contract for $2500. Beat-up place with holes in the roof that needs a gut rehab. Just found out the current owner has about $30k in State Tax Liens filed against him. His only other property is his current residence that is worth maybe $40k in its current condition. 

I'm wondering if anyone on here knows if it's possible to get a release of lien from the state for this property considering the market value is essentially $0 due to its condition and the current owner has neither the means nor the inclination to fix it.

You may want to contact the department of revenue (in Kansas) to explain the issue. Did the seller discount the house by the lien amount or were they unaware of the lien?

Originally posted by @Jim Viens :

The lien was not disclosed. The house was discounted drastically due to its condition and the fact that the ARV is only about $45k

If you were to pay the lien in full you would still have this: ARV - (Lien + 2500) = $12,500. Not including repair cost. You may have to see if you could 'settle' the lien for a lower amount as it may cost close to or more than $12,500 to get the house in a rentable condition.

Account Closed Repairs on the property are going to be about $25k-$30k by themselves so the liens would definitely be a deal-killer to the extreme. Good news is...I talked to the Dept of Reveue and found that if all the seller's proceeds are surrendered to them at closing (as a payee on the HUD) then they will provide a lien release on the subject property and just leave the remainder of the lien on the seller's other assets. I'm trying to get hold of the seller now to make sure he's cool with all that. But this is really his best option. He could just let it go to the county for property taxes but he's paid-up on those right now and properties aren't auctioned until they've been delinquent for at least 3 years. By that point the house would just be a knock-down. And in that neighborhood I don't see where it would be worthwhile to rebuild on the lot. Ergo the property would not sell at auction, the county would not recover the taxes and he'd then be on the hook for 3+ years of unpaid property tax on top of his $25,000+ in State Tax Liens.

Originally posted by @Jim Viens:

... Good news is...I talked to the Dept of Reveue and found that if all the seller's proceeds are surrendered to them at closing (as a payee on the HUD) then they will provide a lien release on the subject property and just leave the remainder of the lien on the seller's other assets....

Interesting. It may be a feasible deal then if you can contain repair and other cost.