Seller failed to obtained clear tittle 2 days before closing
So on may of 2025, I sign an purchase agreement with a seller to buy his house for $350,000. $0 down close in $30 days. Within a week, I did an inspection and an appraisal. The seller asked me for the appraisal but I did not give it to him since the house appraised for $390,000.
about 15 days after the contract was signed, the title company found out that the house had an IRS lien on it due to his wife and this being a community state. Seller new about the lien and never disclosed it. Additionally, seller had made multiple payments to the IRS for that lien. Seller asured me that we would be able to close but woudl need an extension so we extended the closing by another 3 weeks.
a few days before the three weeks ended, the seller said that the IRS required an appraisal in order to release the lien. So I provided mine.
then he also asked for another extension. So we extended the closing until the end of June 2025.
I was going to rent the house out. So I found the tenants and make the seller sign a property management agreement in order for me to rent the house out. The house rented out for $3300/month.
on June 25, he asked for another extension so I agree to extend it until August 1,2025. All this time the seller asured me in writing (text that he would be able to release the house and remove the lien).
2 days before August 1, he asked for one more extension so I agree to extend until September 1, 2025. By this point the rent money was going to the owner and we still were nowhere near to getting the lien removed.
two days before closing seller sent me an email saying that "they tried with good faith to get the lien removed but will not be able to sell the property".
I used the atartday purchase agreement which states that the seller has to pay 10% of the purchase price if he backs out. Will this counts as that?
it's my understanding that the seller can still sell the property but the IRS would take any and all equity from the sale of the house. Is this true?
any recommendations on how to approach this situation?
