How Does FEDERAL Tax Lien Impact Foreclosure Auction

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We are interested in purchasing a two family that is owned by two investors currently. The auction is next week and I pulled some info on the registry of deeds that shows a federal tax lien on one of the two owners in excess of $151,000. I have not gone to the town records to see if there is local taxes owed yet. Does anyone know how the federal tax lien may or may not impact the sale?

Comments(4)

  • NewKidInTown319th September, 2008

    I think you are missing a key point. The federal tax lien stays on the property until the owner sells the property or ten years whichever occurs first. I believe the IRS can even renew their lien for another ten years if the first lien expires.

    However, once the property is sold at foreclosure, the IRS has a 120 day right of redemption or their lien on that property is extinguished. If your state law grants a longer redemption period, then the IRS redemption period follows your state law.

    If you purchase the property at the foreclosure sale, you only need to wait out the 120 day redemption period for the IRS lien to go away. If the IRS chooses to redeem their lien, then whatever you paid for the property will be refunded to you by the IRS plus a 20% premium.[ Edited by NewKidInTown3 on Date 09/19/2008 ]

  • NorthGeorgia20th September, 2008

    6 months?

    120 days = 4 months

  • NewKidInTown321st September, 2008

    Quote:
    On 2008-09-20 22:42, NorthGeorgia wrote:
    6 months?

    120 days = 4 months
    The IRS Tax Lien redemption period is 120 days from the date of the foreclosure sale or the period allowable for redemption under local law, whichever is longer.

  • cjmazur31st October, 2008

    federal tax lien are superior and not wiped.

    Did you buy it thru foreclose or a property tax sale?[ Edited by cjmazur on Date 10/31/2008 ]

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