Can anyone advise on taking property with $6,000 IRS Lien? - Posted by Steve in Tulsa

Posted by Steve in Tulsa on June 07, 1999 at 17:49:27:

Thanks everyone for your posts!

I went to the IRS office today and they said they would release the lien if I paid them instead of the sellers. As the world turns… I agree that I should get the IRS lien removed, the IRS could force a sale of the property later if the sellers fail to make their payments. I called the seller, I believe they will do, I hope…

Can anyone advise on taking property with $6,000 IRS Lien? - Posted by Steve in Tulsa

Posted by Steve in Tulsa on June 06, 1999 at 17:24:13:

Here’s the deal, a title search revealed a $6,000 IRS lien against the property. The owners are making me a very good deal on the property. They say they have been paying the IRS for 10 years on this debt and plan to have it paid for in about 4 years. From what I understand about IRS liens the liens fall off after 15 years. Could the IRS force a sale of the property if the taxpayers fail to make their payments? I was thinking about approaching the sellers to see if they would allow me to place a mortgage on their personal residence for the amount of the lien until the lien is paid or falls off. Any thoughts or suggestions would be appreciated!

Re: Can anyone advise on taking property with $6,000 IRS Lien? - Posted by Bill Gatten

Posted by Bill Gatten on June 09, 1999 at 15:55:20:


Consider having the owner hold the property in a land trust in his name for the remaining period of the lien (satisfies admonitions about title transfer, DOS, etc.) instead of refinancing the property at all (assuming you’re willing to hold for that period of time). This process gives you 100% of the benefits of ownership, including all tax benefits, while he pays off the lien.

If you’re concerned about him not honoring his agreement with the IRS ('sounds like he’s been doing it for a while and is pretty dependable), and feel that you couldn’t afford to pick up the default if you had to, then insist on a Performance Deed on his other property as your secuirty. Or, as someone else mentioned, if the equity is there have him discount the purchase price by the amount of the lien, and pay the IRS as a part of your aggregate monthly obligation.


Re: Can anyone advise on taking property with $6,000 IRS Lien? - Posted by Rob FL

Posted by Rob FL on June 07, 1999 at 11:17:19:

After 11/5/1990, IRS liens are good for 10 years and can be continually refiled for 10 year periods. With a lien of only $6000 that has been paid for 10 years I can’t imagine that the balance is for more than $2,000-3,000 on the lien. Pay it off and keep on trucking.

Re: $6,000 IRS Lien? - READ THIS! - Posted by Scott Moore

Posted by Scott Moore on June 07, 1999 at 08:59:25:

Look, you do not want to mess with the IRS or the idea that the seller still has to pay that off. You say the property is being sold to you at a great deal, then work something out so that the IRS lien is PAID at the time of closing, like an additional $6,000 discount on the price of the home.

Property value: $120,000
Sale price: $86,000
Discounted sale price: $80,000
Loan amount: $86,000
Closing: You still get property at a great price, IRS is paid at closing, IRS lien is no longer a worry.

Just an idea…

Re: Can anyone advise on taking property with $6,000 IRS Lien? - Posted by Irwin

Posted by Irwin on June 07, 1999 at 08:39:04:

I assume that you’re paying cash without getting a mortgage, because no lender will go for leaving the IRS lien on the property ahead of their mortgage. If you’re buying on contract, the lien can remain in place as long as the sellers keep paying on it and the balance is less than what you owe them. Then if you have to pay it off, you can deduct it from the balance you owe them.
If you are paying them all cash, I’d think they’d welcome an opportunity to get this paid off now and not worry about making payments for another 4 years. If I were you, good deal or not, I’d insist on getting it released at closing. If they want you to trust them to pay off the lien, you should ask for an indemnifying mortgage on their home. The balance might be very low now, but if they quit paying and you don’t know it, interest will begin to make it grow again. Also, how are you going to keep track of whether or not they are paying it. I think this would be more trouble and headaches than it’s worth. Since you’re the buyer and it’s your money, it’s also your call.

Re: Can anyone advise on taking property with $6,000 IRS Lien? - Posted by David Alexander

Posted by David Alexander on June 06, 1999 at 22:56:18:

Don’t know if this true, but from my understanding if you get the deed “Subject to”, you can then negotiate a release of lien from the IRS. since you own the property and they have no beef with you.

David Alexander

Re: Can anyone advise on taking property with $6,000 IRS Lien? - Posted by B.L.Renfrow

Posted by B.L.Renfrow on June 06, 1999 at 18:14:54:

Correct me if I’m wrong here, but I believe the lien remains as filed until it’s paid off, so if it was originally for $6000 and they’ve been paying for 10 years, how large could the balance be? As far as the IRS seizing the property if the owner fails to pay, I believe the “kindler and gentler” IRS regs now prohibit property seizure for a debt of $3000 or less.


Re: Can anyone advise on taking property with $6,000 IRS Lien? - Posted by BRnBA

Posted by BRnBA on June 06, 1999 at 17:32:36:

I can’t see them giving you a mortgage on their residence. You would have to take it “subject to” the IRS lein. IRS leins can “fall off” but it’s not likely. The IRS will most likely refile it. You should probably get as much discount as possible from the home owner then try to get the IRS to discount a little but don’t hold your breath on it.

Thanks Everyone! - Posted by Steve Heller

Posted by Steve Heller on June 09, 1999 at 19:05:27:

As an accountant I wanted to contact the IRS personally and discuss the matter. I went to their offices here in Tulsa. The agent said they would release the lein and that I would need to pay the IRS and have a Realtor issue a letter of opinion as to the value of the lot. After talking with the sellers again I found out the lien was in the husband’s name and not the wife’s I started thinking and called the IRS agent. I explained that the deed was in both the husband and wife’s name. She said the IRS would only require half the proceeds to release the lien and the other half goes to the wife. She was happy and it looks like a go. I found a Realtor to prepare the opinion. So hopefully I get the prop next week. After almost two months.

Steve Heller