Federal tax liens on foreclosure

5 Replies

So i'm researching properties to buy at the county foreclosure auction.  I came upon one that looked promising (like 40k difference in lender's max bid and value) but when I searched the title I found like 35k in federal tax liens.  

So is this a deal breaker for most of you?  Is there a method of negotiating these liens down?  

Not going to move on this one but I'd like to know for future reference

Here is a primer on Federal Income Tax Liens on Foreclosure properties in NC. Most likely the frame work for handling Federal Tax liens in other states may be similar ..

https://www.lexology.com/library/detail.aspx?g=14729906-8dc0-49ac-ade6-795cfd735721

If there is little to no equity in a property sale ( short sale ) that has a IRS, FTB, type lien then they typically do a partial release for 0$ or for their equitable position. 

I know that was not your question:

I am not an attorney and this is not legal advice but at a foreclosure auction if a senior lien forecloses then to my understanding the federal tax lien would be released from the property. They follow the debtor not the property. If there is delinquent property taxes or prop tax liens not paid these may fall on the buyer as they follow the property. 

Someone let me know if my understanding is wrong! =)

Originally posted by @Brett Goldsmith :

If there is little to no equity in a property sale ( short sale ) that has a IRS, FTB, type lien then they typically do a partial release for 0$ or for their equitable position. 

I know that was not your question:

I am not an attorney and this is not legal advice but at a foreclosure auction if a senior lien forecloses then to my understanding the federal tax lien would be released from the property. They follow the debtor not the property. If there is delinquent property taxes or prop tax liens not paid these may fall on the buyer as they follow the property. 

Someone let me know if my understanding is wrong! =)

I'm not sure about that one.  I mean, why else would the lien be recorded in the county, same place the property is.  If that were the case, wouldn't it just be between the IRS and home owner in federal court, not involving the county?  

I was always told federal tax liens survive the foreclosure.  I could most definitely be wrong however.