We just recently purchased a property with a tax lein attached to the previous owner. We have been told by the forclosing lending institution that the fed IRS has 120 days to give us our purchase price and reclaim the property for tax forclosure. They also stated that although we get the purchase price back, any money invested in repair would NOT be recoverable. Does anyone know if this is true or not?
This is true. However, it is unlikely (but far from impossible) that the IRS will foreclose on the house- unless the tax lein is a large amount.
Remember that this is an opinion, not legal advice...
Chris
Yes, the IRS has a 120 day right of redemption, which means they will give you your purchase money back if they opt to redeem within 120 days of the sale.
That said, I have bought a number of Foreclosure Auction houses with the IRS cloud over them. To me, that means we can't sell the house until that time period has passed. We rehab and repair regardless.
I have never seen (or even heard of) the IRS exercising their right of redemption. I'm sure it has happened somewhere, but not in my experience.
[addsig]
They sometimes do take the properties. Depends on the lien and the value of the property. Also depends on whether there is a local IRS office seems like.