Tax Lien from Prior Owner

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  • #31905
    Bob Jablonsky
    Participant

    I have a potential client that is trying to sell their property. There is a Federal Tax Lien against the property from the prior owner (was a foreclosure property sold to the current owner). They are being told that they cannot close the sale by the Title Company until the lien is removed. What would be quickest way to address this – Contacting the IRS Lien Group, requesting a CAP Hearing, or through another channel? What would typically be needed to get it removed? Thanks.

    #31952
    James Wade
    Participant

    Bob,

    Normally a foreclosure sale (if done properly) extinguishes prior mortgage, liens and encumbrances on the property. Do you know if the title company knows the lien still exists on the property because of the prior NFTL or assumes it because nothing has been filed by the IRS extinguishing its lien against the real estate?

    I’d really look into the foreclosure first to see if the IRS had notice. If yes, than probably you will have to contact the lien unit to get something stating that the lien does not apply to the former residence. If not, than your client has a title issue that will need to be addressed (still thinking about what next if IRS lien was not properly extinguished).

    Jim

    #32181
    Eric Green
    Keymaster

    Bob I agree with Jim. The foreclosure sale should have taken care of this and the IRS should have provided a release from its lien, which should have been recorded. Contact the closing attorney when the client bought the property.

    Eric

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