Come ON, Is It Really That Easy?
Hi, i have John Becks course. ive had it for like 6 months now and havnt read any of it until yesterday. I am doing a lot of other deals right now including a short-sale, sub-to and a assignment of contract but i think if you cant Really buy a house for 11-10k free and clear it sounds pretty good. from what he says. if you buy at a tax sale you will own the prop free and clear of any other liens/mortgages, etc. there is a 1 year redem. period here in CT that says that they have one year to pay you back with 18% interest and if they dont you own the house free and clear. is this true? is this all that is to it? i am also interested in this house where this guys owes 195k and he has a 8k federal tax lien. this guy is 1 payment behind in payments and is going to leave the house behind and move out of state. should i call the IRS and ask them to purchase the lien for the deed? or is that not practicle? i want this for my primary residence. thanks, Ryan[ Edited by ryand on Date 10/17/2004 ]
ryand--(CT)-----------------
There are many ways to invest. Buying at tax sales is my favorite. but, if you have other ways you like, use them.
The IRS will negotiate a release of a property from their tax lien at a discount from the amout owed. Tie the property up with a contract to buy and then start negotiation with the IRS.
Their liens accrue interest, so, unless it was just filed, expect that the amount owed is a lot more than the original amount.
Good Investing**************Ron Starr***************
thanks for the response. what im asking, is there any way that i can use that tax lien to buy the prop free and clear? can i call the IRS and tell them to forclose on the prop. and then buy it? becasue that would kill the mortgage right?
hi., i am no tax lien expert or anything but i believ you can pay the tax lien off and then the owner of the prop has 1 year to pay you back in full +18% interest and if that is not fufilled then the prop gets deeded to you. no tax liens are always first mortgage i believe and mortgages actually get wiped out. so that how you get prop for pennies on the dollar...P.S. i am a member of ctreia and if you are not i sugest you become one. www.ctreia.com i was at the meeting tonight.
ryand--(CT)---------------------
Gee, it would be nice if you could do that wouldn't it? Keep thinking that way and eventually you'll come up with a real money maker.
Nope. IRS liens are going to be junior to mortgages. The lenders would not have loaned the money with an IRS lien already on the property.
So, when the IRS lien is enforced, the loan will will go with the property. The IRS seizes the property and auctions it off, either public bid auction or sealed sale. Then the owner(s) have six months to redeem and pay the purchase price and some interest. You have no right of possession during that time.
I've never heard of the IRS selling their lien. But, were they to do so, you would be in the same position, I would think.
Delinquent property tax liens are different than IRS liens. Different rules, different laws.
Good Investing***********Ron Starr***********
Thanks so much for that post Ron, it answered my questions I think.
So the IRS doesn't sell liend, but if you could buy an IRS lien and wait the redemption period and foreclose they the mortgage lien comes with the property and you have 6 months to pay that off correct? Would you be able to buy a lien, wait the period, foreclose, then market the property and get it assigned within the 6 month period and do something like a double closing?
So the IRS normally auctions the property for as close to market value as they can get?
Would a tax deed work in a similair way with the mortgage holders lien and a 6 month period?
ron, like i said before. i am def. no tax lien expert. i am just learning tax liens myself. but the mortgage co. did not lend with a lien on the prop. The owner of the prop. didnt pay his income taxes and then the lien was put on. one other thing. i have john becks course and he says that tax liens are always NUMBER ONE. can you please explain what he is talking about? thanks, Ryan
Just from reading on the subject. By referring that it is number one. He is referring that it is in the number one position. When ever there is a loan on a property the first loan to be on the property would be in the number one spot and second in the 2 spot and so on.
So in essence what I believe he is stating in his course is that it assumes the number one position.
Also in part it is in a way a mistake on the lenders part as well. With almost all loans depending on the FICO require taxes to be included into the loan.
thanks for the response, yes taxes are included in the loan but not INCOME taxes. he ownes his own business driving trucks and he didnt pay income taxes so they put a lien on the property. thanks, Ryan
We have the John Beck program also, have you found the program to be of any use to you?
to be honest i have only read one of the books becasue i have been so busy doing short sales and taking prop sub to. i will read it someday
There is a huge difference between IRS and property tax leins. IRS tax leins can fall off of a property when the person the lein is agains no longer owns the house, but it stays with them. Property tax leins stay with the property, not the person who did not pay them.
For example, if you buy a foreclosure and their is a property tax lein AND an IRS lein, they act differently (this happened to me recently on a flip). I fixed the house up and listed it (I usually pay back property taxes at escrow to reduce the capital required, unless they are close to 3 years old, in AZ). There was a $90k IRS lein against the self-employed previous homeowner that had been attached to the property. I could have gone to court to try and have the lein lifted (it was only attached to the property because the former owner owned it. when the bank foreclosed on the mortgage, it was no longer his asset). This lein expired on the property 90 days after the foreclosure sale because the foremer owner no longer owned the house. Fortunately all that ment for me was extending escrow for 4 days with a short addendum to the sales contract. The property taxes were paid out of my proceeds, but the IRS income taxes followed the foreclosed owner wherever he, and his Social Security Number, went.
The only real way to get these properties free and clear for very little money is if it is a small IRS or property tax lein that is placed on a house with little or no mortgage. They are out there, but take a lot of work to get to. State laws vary significantly, so research them before you start investing money that could be tied up for 3+ years if you are thinking short term. The nice thing about the lein auction is that even if you don't end up with a house, you will get a good return on your money. In AZ, the property tax auctions start at 18% or so and people bid them down. So you might buy a $5K tax lein on a house and be guaranteed a 7-8% return on it or a house!
[addsig]
Well, we have done alot of research with this program and it does give you an edge if you are just starting. His dvd is very helpful for a starter. I have a question: how long did it take for anyone here to get in the flow of things and start really making a good investment? I have just moved to Richmond,VA if anyone here can help me out with regulations in VA? From what I have researched VA is more of a Deed state unlike WVA they are lein www.certificate.Correct?
joemac,
Very interesting info! I am new to this and in CA trying to buy tax deeds. I know these behave differently than liens but your post brought up something that I'd like to understand better. You mentioned that the IRS tax liens follow the person, not the property, and I am confused here in that all the "property tax auctions" give the IRS a "take back period" of the property after the highest bidder bought it. In your case, why did the IRS not take the property back with a 90K lRS lien on it? Or, if the IRS lien just follows the person, why do they always warn the property tax auction participants that they may loose the property to the IRS?
Thanks,
stocknre
Bump!
stocknre--(CA)------------------------
For the IRS to redeem after any type of foreclosure sale, such as tax sale or trustee's sale, the IRS has to pay the successful bidder the amount paid for the property. Plus the IRS has to give an interest rate return to that investor of 5% a year, prorated for the time of holding the deed.
The IRS does not have much money with which to fund these deals. The IRS sometimes tries to find a "guaranteed bidder"--an investor--who will put up the money to buy the property back for the successful bidder. The guaranteed bidder contracts with the IRS to bid on the IRS's sale of the property. This might take place a month or two after the redemption of the property by the IRS.
However, if other people appear at the IRS auction, they could outbid the guaranteed bidder. So the guaranteed bidder is not guaranteed to get the property. I believe that the IRS pays an interest rate return to the guaranteed bidder if that person is not the successful purchaser, as well as the return of the money used to redeem the property.
All this takes effort on the IRS agent's part. They might advertise for a guaranteed bidder and not get one. They might not have a very successful auction, so they might not get the full value of what their lien is worth. They have to weigh whether it is worth it to them to take the moves or not.
However, for this to happen as I mentioned, the entity conducting the foreclosure sale must notified the IRS of the upcoming foreclosure sale at least 25 days before the auction date. If the IRS is not properly notified of the foreclosure sale, the IRS lien does not get wiped off the property. It remains on the property just as though there had not be a foreclosure sale or change of ownership.
If one buys a property at a foreclosure sale and the IRS had been notified of the sale, it might be possible to buy from the IRS their right of redemption. This applies only to the new owner of the property. The IRS actually has a form to fill out making ones offer to buy the right of redemption from them. If they agree, you pay them some money for their right of redemption and you know that the property is yours without anybody else going to redeem.
One stacks the certainty of buying the right of redemption, at some negotiated figure, against the possibility that the IRS will not redeem at all, and thus one will not have to pay out the extra money. Of course, should you not buy their right of redemption and they redeem, you lose the property and get your 5% a year interest, prorated for the month or two that you own the property.
At many of the tax sales I have attended there is an indication about the IRS lien's existence. Either it is in the published list of properties scheduled for sale, or it is announced at the auction. Usually it is both published and announced. If you see an IRS lien against an owner of a property you might want to buy, always ask if the agency conducting the sale has notified the IRS of the sale. If they have not, the IRS lien remains on the property after the sale, as I mentioned above.
Good Investing*************Ron Starr********************
RonStarr:
Thanks for the informatiion. You sound experienced.
I purchased a house at a trustee sale for defaulted deed of trust loan in California. Sale occurred without any delays, notice of trustee sale was 22 days prior to auction date. The day before the auction the IRS recorded a lein. I have heard that this might not be a valid lein due to its posting date. Is this true? What are my options? Thanks, JackSprat
Ryan--------------------
IRS liens must have been filed at least 25 days before the foreclosure auction for them to have a right of redemption.
The idea is that they should check the title of the property before they file so they know what the situation is.
They will still have a valid IRS lien against the non-taxpayer and any properties that that person may own in the county.
Good Investing***********Ron Starr***********
Ryan--------------------
IRS liens must have been filed at least 25 days before the foreclosure auction for them to have a right of redemption.
The idea is that they should check the title of the property before they file so they know what the situation is.
They will still have a valid IRS lien against the non-taxpayer and any properties that that person may own in the county.
Good Investing***********Ron Starr***********
Thank you very much! Is there a site that addresses foreclosures that I might reference for other questions?
Ron:
Thanks for your help. I am fairly new at this and need to clarify since it is about a $10,000 IRS lien.
What I think you are saying about the IRS lien filed the day before the trustee auction is that it is a valid lien but the IRS does not have a right of redemtion.
I also understand that if they do not do something in 120 days that they lose something too.
So if I resell this house before the 120 days, will the IRS get notified and collect the amount of the lien from me? (This implys I should not call attention to it until the 120 are over.)
Also would like to know if there is a web site or book written to be a good reference so I don't have to be a bother.
Jacksprat
Jack Sprat--------------
Their lien does not apply to this property, in my opinion. But I am not an attorney. You might want to consult with an attorney about the issues you bring up.
If the IRS was not informed of the auction and their lien were filed at least 25 days before the sale, then their lien would be "senior" and not wiped off by the sale.
I don't know of a good book on this topic. This is an esoteric part of the law. Your best bet is to read IRS website material, I'd guess.
Good Investing************Ron Starr***********
Thanks for the help Ron. Am planning on a trip to a lawyer with several good questions. Hoping to find a good realestate lawyer in Lake (Possibly Sonoma, Napa or Solano) County, California.
Luckily, have purchased another situation with it's own question.
Sale has an overage of about $10,000. The people that were paying on the defaulted mortgage were not the original debtors. Suposedly the original debtors passed away and left the property with it's' loan to the folks that lost it. Beni put the first up for sale and we bought it for about $10,000 more than openers. There is a second for about $2,000 leaving $8,000 for our renters (the folks who supposedly got it from the people that passed).
For several reasons we decided to rent to the people that lost it. They are waiting for the overage to pay us substantial deposit out of this money.
Problem is that I do not find any recorded documents that say the place was ever their's or that the deed of trust was assigned to them. The notice of trustee sale does refer to it being their default by last name.
Do you think that the sale overage belongs to these people that are now renting our property ? If not who would get the overage?
Thanks, Jacksprat
Thanks for the help Ron. Am planning on a trip to a lawyer with several good questions. Hoping to find a good realestate lawyer in Lake (Possibly Sonoma, Napa or Solano) County, California.
Luckily, have purchased another situation with it's own question.
Sale has an overage of about $10,000. The people that were paying on the defaulted mortgage were not the original debtors. Suposedly the original debtors passed away and left the property with it's' loan to the folks that lost it. Beni put the first up for sale and we bought it for about $10,000 more than openers. There is a second for about $2,000 leaving $8,000 for our renters (the folks who supposedly got it from the people that passed).
For several reasons we decided to rent to the people that lost it. They are waiting for the overage to pay us substantial deposit out of this money.
Problem is that I do not find any recorded documents that say the place was ever their's or that the deed of trust was assigned to them. The notice of trustee sale does refer to it being their default by last name.
Do you think that the sale overage belongs to these people that are now renting our property ? If not who would get the overage?
Thanks, Jacksprat
Jack Sprat--CA----------------------
Probably the property was owned by the estate of the deceased borrowers. To get the money, any heirs would have to do a probate action. The personal representative of the probate estate would get the excess proceeds from the court or the first lender. Then, the probate would have to go forward and the money would go to the heirs as determined in the probate. Typically, a probate will take about 9 months.
I recommend that you get the people to give you a deposit from their own funds. If you like, you could break it up into four or five payments, spaced out a month apart, for instance. If they don't come up with the deposit money, you might consider getting them to leave. Or start going over there regularly to observe the condition of the property.
Good Investing************Ron Starr***********
Your answer sounds likely. The good news is that the place does not amount to much and we don't have much money in it . Value more in the land than the structure, plus having heat in it this winter means a lot to me. Jacksprat.