Anyone have experience buying a house at auction with a Federal Restitution Lien?

4 Replies

In researching some up-coming auctions, I came across a house with a lien entitled: 

Notice of Lien for Fine and/or Restitution Pursuant to the Anti-Terrorism and Effective Death Penalty Act of 1996”

Here's a link to the Code: Title 18, US Code, Sec 3613(c)

This lien is fairly recent but the senior lien is the one foreclosing. And in researching this type of lien, it appears that it stays for 20 years… so the question is, does foreclosure wipe out this type of lien or does it have a redemption period like an IRS Fed Tax Lien or does it have some kind of special treatment?

The Restitution Lien posted is far greater than the value of the home, but I’m just curious about the process as this deal may be worth it if this lien can be wiped!

in the same link you posted...

the lien shall be valid against any purchaser, holder of a security interest, mechanic’s lienor or judgment lien creditor, except with respect to properties or transactions specified in subsection (b), (c), or (d) ofsection 6323 of the Internal Revenue Code of 1986 for which a notice of tax lien properly filed on the same date would not be valid. The notice of lien shall be considered a notice of lien for taxes payable to the United States for the purpose of any State or local law providing for the filing of a notice of a tax lien.

without diving into the IRC I would guess this is senior to the mortgage and would be a federal tax lien type super lien.

I think this might be what you are looking for:

http://www.law.cornell.edu/uscode/text/28/3201

This excerpt from your link in the OP seems to give an answer:

"... The notice of lien shall be considered a notice of lien for taxes payable to the United States for the purpose of any State or local law providing for the filing of a notice of a tax lien. A notice of lien that is registered, recorded, docketed, or indexed in accordance with the rules and requirements relating to judgments of the courts of the State where the notice of lien is registered, recorded, docketed, or indexed shall be considered for all purposes as the filing prescribed by this section. ..."

And from reading that, it sounds a lot like they follow the same rules as any IRS lien; but I cannot say I have encountered this type of lien before ...

The "First in Time, First in Right Rule" I'm sure applies to this Criminal Restitution Lien as well, so just like an IRS Tax Lien, it makes sense that they should also have to get in line. And I know the IRS's Redemption Period is 120 days but what I was unclear about was did this kind of lien have any special redemption periods or did it simply follow the same set of rules outlined in the IRS's site here about Fed Tax Liens: Section 5. Redemptions

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