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Trying To Beat Foreclosure Auction With IRS Cooperation |
OMISteve
26 Posts
Member Since: 11/20/2002
Matteson, IL
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Posted: 10:01 on 08-06-2003
Any foreclosure guru comments with experience handling IRS tax liens would be appreciated.
I have been trying to short sale a 450,000 property in Illinois that has a 210,000 1st, a 75,000 2nd and a 260,000 IRS tax lien. Only the first filed foreclosure; the second did not file. After 3 months of attempted correspondence and offers and delayed replies with the first, the sherriff's auction is now 1 week away; and the first now says it won't short sale; the second refuses to short, but claims it will buy the first out at auction, and the IRS continues to drag it's feet in giving any assurance (letter of commitment) that it will provide a certificate of discharge on settlement if I purchase the property for just a few thousand more than the first and second total payoffs. The IRS obviously wants a mountain of paperwork completed before it will even consider writing off the quarter million dollars it claims it has entitlement to (which is debatable).
Is there another way around this "red tape"? If I buy the first at foreclosure auction for say 200,000, will clear title be given to me of any claim from the second mortgagee or the IRS, or will I still have to settle up with them?
Would it be best to purchase through a trust to acquire deed or an SorCcorp/ LLC if any protection would pass against 2nd or IRS follow-up claims?
The deal is too good to lose ... HELP!
Steve 
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cjfeath
64 Posts
Member Since: 01/29/2003
Monroe, NC
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Posted: 10:52 on 08-06-2003
IRS or any other government Lien could wipe out the others (the 1st and 2nd mortgage). That is why tax liens are getting popular. They can get the property free and clear.
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Posted: 12:42 on 08-06-2003
I think cjfeath is referring to property tax liens. Irs liens take priority by date of recording just like all other liens. Although you may get them to release the lien against the property it is unlikely they will release the owner from the debt.
Beaware if the first goes to auction the IRS has a 180 day right of redemption under federal statue. Clear title would not be obtained until the end of their redemption (even if they choose not to redeem) or you get a partial release of lien from them listing the particular property exempt from their lien.
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