Say it ain’t so!
After a wonderful holiday weekend, I receive an email from my closer ( god I love her), stating there was an IRS lien on this building for 175K! She has been in talks with the seller about what to do. The seller, in her words, does not seem to enthused to pay it off. I have not been contacted by the seller, YET!. I have a really bad feeling on where this is going to end up…
Oh I really hope the New Year doesn’t start off with one of these…
been there done that many times with uncle
Why is your closing agent just telling you about this so far down the track… Did the lien just pop up or has it been there a while.
One thing I like about title insurance and closings on the West Coast the title plants are all digital and you have instant access to normal title abstract items. I can call customer service and on the phone in 5 mintues get a date down on any property, info including Mortgages, liens, IRS, State, judgements, and anything else that will show up in a title commitment. It is the only way you can be in the courthouse steps foreclosure buying business, real time data in minutes not waiting for a call after the fact.
Anyway thats just a regional difference.
Couple work arounds for your consideration.
If there is a mortgage lodged against this property 99.9% chance the IRS lien is recorded junior or after the mortgage as no lender in their right mind would put a loan on a property junior to an IRS lien or any other lien for that matter.
And if Mr. Seller has this big of lien he probably has a lot of other issues.
so you can.
1. contact IRS and tell them there is no equity in the building and please release the lien, this can and does happen if they figure there is nothing to get. Do not just accept the fact that the lien is there and there is nothing you can do.
2. Buy the underlying debt and then foreclose it out. Once your lender in possession you have further strength to work with IRS and they have to either buy the property from you at your debt amount or release the lien. They have 6 months to do this.
3. Be the purchaser of the property at the trustee's sale, thats if you can get the current Mortgage holder to prosecute the foreclosure, once you recieve title via trustee's deed or whatever deed they use in your neck of the woods. You can just lay low for 6 months. The lien automatically sunsets at 6 months from the Trustee's deed. And your title co will be able to write you a clean policy and you move forward. In the unlikely event of a Water Landing and the IRS steps in and redeems they have to pay you all your money back plus statitory interest rates. BUT they do not have to pay you for any work you may have done on the property in the 6 month holding period, any utilities tax's etc.
I have had probably 25 plus deals with IRS liens over the years and most foreclosure investors were afraid of them. That left some really great deals for me. The big issue is most of the buyers were using hard money to buy their props and did not want to wait the 6 months you had to hold the property. On SFR I would go in do the rehab and start marketing it with a close date just after the experation. I only had one property the IRS stepped back into and it was one that I bought for about 30k and was worth 350k it had obvisously a ton of equity. Lady owed Uncle about 120k. We settled it by writing a check to the IRS for 60k and they released the lien. Our deal was still a smokin deal. Lady got out of dodge with Uncle Although she would have been better to just sell the property.
That leads me to one other Major point of how Americans view the current foreclosure mess and their houses.
7 to 10 years ago people loosing houses would do what this lady did. Instead of sell and grab substantial equity they just did not want to lose their houses and tried all sorts of ways to stay. It would get acute 48 hours before the courthouse sale, and thats when we would get a call, Hey I need 25k tomorrow to bring my loan current etc etc. I did hundreds of those and we then turned those folks into our renters. Thats how I amassed 100 plus rentals in Oregon… All foreclosure bail out last minute.
Subsiquently bad people got into the game and the laws have been changed on Pre foreclosure transactions… Still crooks out there violating the laws. However now instead of properties being saved a few days before the sale more are actually going to auction. So not sure who is benefitting. I know we saved a lot of people the upset of having to move out of the house they lived in for years and change schools and because they had a foreclosure it was tough to rent, As Oregon has the lowest vacancy rates in the Nation and the rental market here is really really tight.
Good luck working through this one do not give up just because of this lien. YOu might be able to send Uncle 15k and they will walk something like that.
JLH
jayhinrichs wrote:been there done that many times with uncleWhy is your closing agent just telling you about this so far down the track… Did the lien just pop up or has it been there a while.
One thing I like about title insurance and closings on the West Coast the title plants are all digital and you have instant access to normal title abstract items. I can call customer service and on the phone in 5 mintues get a date down on any property, info including Mortgages, liens, IRS, State, judgements, and anything else that will show up in a title commitment. It is the only way you can be in the courthouse steps foreclosure buying business, real time data in minutes not waiting for a call after the fact.
Anyway thats just a regional difference.
Couple work arounds for your consideration.
If there is a mortgage lodged against this property 99.9% chance the IRS lien is recorded junior or after the mortgage as no lender in their right mind would put a loan on a property junior to an IRS lien or any other lien for that matter.
And if Mr. Seller has this big of lien he probably has a lot of other issues.
so you can.
1. contact IRS and tell them there is no equity in the building and please release the lien, this can and does happen if they figure there is nothing to get. Do not just accept the fact that the lien is there and there is nothing you can do.
2. Buy the underlying debt and then foreclose it out. Once your lender in possession you have further strength to work with IRS and they have to either buy the property from you at your debt amount or release the lien. They have 6 months to do this.
3. Be the purchaser of the property at the trustee's sale, thats if you can get the current Mortgage holder to prosecute the foreclosure, once you recieve title via trustee's deed or whatever deed they use in your neck of the woods. You can just lay low for 6 months. The lien automatically sunsets at 6 months from the Trustee's deed. And your title co will be able to write you a clean policy and you move forward. In the unlikely event of a Water Landing and the IRS steps in and redeems they have to pay you all your money back plus statitory interest rates. BUT they do not have to pay you for any work you may have done on the property in the 6 month holding period, any utilities tax's etc.
I have had probably 25 plus deals with IRS liens over the years and most foreclosure investors were afraid of them. That left some really great deals for me. The big issue is most of the buyers were using hard money to buy their props and did not want to wait the 6 months you had to hold the property. On SFR I would go in do the rehab and start marketing it with a close date just after the experation. I only had one property the IRS stepped back into and it was one that I bought for about 30k and was worth 350k it had obvisously a ton of equity. Lady owed Uncle about 120k. We settled it by writing a check to the IRS for 60k and they released the lien. Our deal was still a smokin deal. Lady got out of dodge with Uncle Although she would have been better to just sell the property.
That leads me to one other Major point of how Americans view the current foreclosure mess and their houses.
7 to 10 years ago people loosing houses would do what this lady did. Instead of sell and grab substantial equity they just did not want to lose their houses and tried all sorts of ways to stay. It would get acute 48 hours before the courthouse sale, and thats when we would get a call, Hey I need 25k tomorrow to bring my loan current etc etc. I did hundreds of those and we then turned those folks into our renters. Thats how I amassed 100 plus rentals in Oregon… All foreclosure bail out last minute.
Subsiquently bad people got into the game and the laws have been changed on Pre foreclosure transactions… Still crooks out there violating the laws. However now instead of properties being saved a few days before the sale more are actually going to auction. So not sure who is benefitting. I know we saved a lot of people the upset of having to move out of the house they lived in for years and change schools and because they had a foreclosure it was tough to rent, As Oregon has the lowest vacancy rates in the Nation and the rental market here is really really tight.
Good luck working through this one do not give up just because of this lien. YOu might be able to send Uncle 15k and they will walk something like that.
JLH
I’m pretty sure she was trying to get it worked out with the seller, before contacting me with it. She realizes that there is very little I could do about it, so I would like to think she was showing consideration for my time. She knows how busy I am and she handles about 8-10 closings per month for me right now…
I have done alot of the same things you talk about in the past as well, can’t remember how many liens I have paid off over the years to keep the deal alive. This lien is just way to big for the deal, the seller is going to have to make some consideration if he wants to get this building sold.
From what I understand this seller is a jack of all trades, owns 3-4 business’, none of which are related to each other.
We will make an another attempt to save this building, but so far the seller is being a jerk. Does not want to own up for his responsibility, how sad!
John
Buy the IRS lien and foreclose this seller out. And or buy the mortgage make a deal with IRS at same time and foreclose the seller out.
best way to handle jerky sellers
JLH
jayhinrichs wrote:Buy the IRS lien and foreclose this seller out. And or buy the mortgage make a deal with IRS at same time and foreclose the seller out.best way to handle jerky sellers
JLH
JLH,
It’s something we have considered, but in talking with our attorney’s, they advised against it. The seller could immediately file for bankruptcy protection and tie us up in a legal fight for years, and really making this deal go sour. This seller has more business’ than I do clothes it seems, I’m beginning to think that he is in a world of trouble, I think the IRS is ready to push it all the way.
It seems that the realistic chance of purchasing this building is quickly fading. What a bummer, I wanted this building in the worst way.
John
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