Nasty IRS 1040 Tax Lein
Pulled Title on what would have been a pretty sweet deal and there was a $120,000 small business tax lein. If this house goes to auction (Tennessee), when you buy it at auction do you inherit the IRS tax lein or does it follow the person who owe's the backed taxes?
Thanks,
Gerry
Depends on the seniority position of the IRS lien vs. the foreclosing liien. If the IRS lien is senior it stays, otherwise it goes. And if it goes (i.e. gets wiped off at auction), the IRS has an automatic 120 day right of redemption where they can take the property from the high bidder for what they paid at auction (no reimbursement for improvements).
The IRS lien will stay for 120 days after the Auction. In that time they can repay you the money spent at auction plus 6% interest on your money, but will not pay for any improvements. This may be a good thing if it keeps others away at the auction, any other liens will be gone and if you can wait for 4 months before you start remodeling you can come out with quite abit of equity. Good Luck
Bob 8-)
I'm not sure how to determine seniority of lein positions. The Mortgage was originally taken out in 1992, The taxes started accruing from 95 to present. Over the 12 years of this mortgage it was sold 3 different times. Is seniority based on the date of the original mortgage or based on the last time it changed banks?
Here's another question, If I contact him before it goes to auction is there any way that he can deed me the property without paying off that tax lein? Is it best to let it go to auction?