The scenario, found an owner of a bando property. Sub says lost it to bank. After checking title commitment to close bank appears to have vacated the foreclosure. There are back taxes owed $4K in property taxes, and a $19K Federal tax lien. Seller says he didnt know of any back owed taxes. My question. How to best deal with the Fed lien? Just pay it off? Negotiate a payoff? Trust?
IRS liens are difficult to deal with. They don't easily negotiate. Essentially, the seller hasn't paid his personal taxes, so the IRS has put a lien on his property. If there is enough equity in the house, the lien can be paid off at closing. If there isn't any equity, or the owner can't negotiate with the IRS to remove the lien (they usually won't until paid), someone will have to satisfy the lien.