Joe, karp, BB, JPiper-please help me through this tangled web of a deal to the profit. - Posted by Jack Z.

Posted by John Behle on February 04, 2000 at 20:38:59:

He doesn’t have a right to sell you the property - unless it is cleared by the court. So, assuming that is cleared, you have the IRS lien. They don’t go away easily and you can’t get clear title without it doing so. You pretty much have to assume that will need to be paid.

If, after all that it still looks good, then you just need to clear a sale with the court and pay the IRS off. Now, is the court going to give away that equity? Not necessarily. Creditors could and should object and the judge might be reluctant anyway. He would tend to think it is more important to sell the property at market value and pay the creditors than to give it to you. Personally, I think he should give it to you, but he doesn’t value my opinion.

MANY property owners think they can sell, finance, etc. when they are in bankruptcy. Not without working through and getting the approval of the court. In some cases, the court can be much more reasonable than the seller. We bought one property for 50% of appraised value through a bankruptcy where the owner was kicking and screaming the whole way.

It’s possible the property is not in the Chapter 13 any more and if so, you don’t have the court to worry about, but the IRS lien is pretty much a problem.

Joe, karp, BB, JPiper-please help me through this tangled web of a deal to the profit. - Posted by Jack Z.

Posted by Jack Z. on February 04, 2000 at 20:28:12:

Hi Everyone,

I just met with a seller this evening. Pretty house, very big (2700 sf), nice gated community. It’s in foreclosure, er, actually that’s being held up by a Chapter 13 filing. The balance of the first mortgage is $110k. The fella told me the back fees to cure the loan are $15k (this is a 15% loan!) So right there, we’re looking at $125k. The house needs new flooring, new window coverings, and some landscaping. I figure for $10k, it’ll look better than new (built in 1993). Houses exactly like it, same sf, same style, same look from the curb, within .15 miles of it have sold from $180k to $193k this year.

But… there’s also an IRS lien for roughly $21k, AND some back taxes. I’m not sure if the back taxes are included in the $15k of bank fees to cure. They might be, since the seller seemed to think they were. Apparently, the bank wasn’t collecting escrow money to take care of that sort of thing.

Anyway, I told the fella I wanted the deed, and I’d see what I could do. But I don’t really know. What CAN I do? If I get a deed and record it, will the IRS thing go away, if I tell them that the guy doesn’t live there anymore and ask them nicely to peel it off? Should I try to buy the tax liens and foreclose? And how does the bankruptcy affect this? How to work around that?

I’m sorry for having these questions. If I’d been paying better attention, I probably would have known how to do this by the various posts. But I’ve been spending more time on finding projects like this to work on than I have been trying to figure out how to fix them.

Please help out if you can. There’s a pretty good spread here, if I can take the right steps.


Jack Z.