How to make an offer on IRS Real Estate tax lien ?
Q.My landlord passed away and left an IRS debt which is now a lien on the home I'm leasing. His ex-wife's name is still on the property so now she has to deal with it. The property isn't worth what's owed on the 1st and 2nd mortgage, plus the IRS tax lien of just under $40,000. Since they're in third position, how could I get the IRS to accept a fraction of the total to clear the lien? Do they consider offers like this as with an Offer in Compromise? Thanks for any help.
A.The IRS tax lien is not in a third position. The IRS tax lien gets paid off first, before either mortgage. So, if the tax lien doesn't get paid, the IRS can seize the property, sell it, and get all of it's money. If you have cash and want to buy the property, and if the 1st and 2nd mortgages are in default, you might be able to do a "short sale" with the owner (his ex-wife, the estate, etc). That would be very complicated in the situation you describe and requires the cooperation and full participation of the owner/seller. Here's a link to some information on short sales: http://www.reitoolbelt.com/gurus/dwan-sharon-short-sale.cfm If you are a tenant, you should make sure that you let the mortgage companies (and maybe the IRS) know who you are and that you are renting. That way, they'll be sure to include you in any notices about foreclosure, tax sale, etc. In addition, one of those parties might get an order to require you to pay rents to them or into an escrow account instead of directly to the owner/estate. You could also just let the owner/estate know that you would be interested in buying the property if the right price and terms could be worked out. But, before you sign any deals, or make any written offers, be sure to speak with an experienced real estate attorney. In this type of situation, having a good attorney is essential whereas in other home purchase situations it may not be as important (but still a good idea unless you know what you are doing).
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