New Albany, IN · Member since 2014 · 4 posts · 0 votes
Hi - I am in the process of trying to buy a property from a married woman in a contract for deed arrangement. The deed is in her name only.
In researching the chain of title myself, I found that after she purchased the property with a warranty deed, she quit claimed the deed from herself to her husband and her. I found a Notice of Federal Tax Lien on her husband recorded several years later. And a week after the Notice of Federal Tax Lien was recorded they quit claimed the deed back to her as a sole person on the deed.
Because both husband and wife were on the deed when the Notice of Federal Tax Lien was recorded, I am assuming that means if I buy the property from the wife (the Contract for Deed would just be for a year), the Federal Tax Lien of the husband could attach to the property and I could potentially lose it. Is that correct?
@Maria McGary there are a lot of answers to this based on the situation. The safest assumption is that yes, it's attached to the home and needs to be satisfied if you're going to buy the property. Assuming that you're going to either flip the home or at some point want title insurance, there needs to be a resolution before you'll be able to get a warranty deed on the property (at least without an exception).
There are variables to this of course, they don't last forever without the IRS refiling so the timing is important. Divorce and other circumstances or agreements can be struck in which the property is released but no document recorded. That's why I'll stick with the safe answer, it's probably attached still.
Yes Maria. You are correct. The FTL attaches to the property. The mere fact the Husband gave the property back to the Wife does not change anything. The FTL expires after 10 years. The government can renew it but that is very rare. The fact that they were married and the FTL was only against the Husband does not matter either. 20 years ago the FTL had to be against both to attach but the government changed the rules. I hope that helps. The FTL needs to be paid at closing. If the deal is much to your advantage, you can pay off the FTL for the Sellers.
Thank you for the confirmation. I suspected that was the case. Just wasn't sure. The tax debt is way more than the tiny little house. And the house is a complete re-do, so absolutely not worth hassling with a tax lien. Too bad-it will probably be torn down.