Background: 

A homeowner purchased a distressed property for $1,000, with plans to clear any outstanding debts and take full control. However, the property had $23,000 in unpaid property taxes that needed to be addressed to avoid an upcoming tax auction. On top of that, an IRS lien was placed on the property, amounting to the property’s full market value—approximately $500,000. The homeowner reached out to us to resolve the lien issue and ensure they could move forward with the property acquisition.

Challenges:

• Outstanding Tax Debt: The homeowner had to pay $23,000 immediately to prevent foreclosure due to unpaid property taxes.
• IRS Lien: The IRS lien was the same value as the property’s market value, creating significant barriers to resale and refinancing.
• Title Insurance Issues: Most title companies would flag the IRS lien, complicating the process of selling or refinancing the property.
• Long-Term Holding Risks: The homeowner needed to decide whether to rent out the property until the IRS lien expired or pursue a more aggressive approach.

How Our Company Resolved the Issue: Upon assessing the homeowner’s situation, we took immediate action to resolve the unpaid taxes and IRS lien. Here’s the process we followed:

• Acquiring the Property and Avoiding Tax Auction: To prevent the property from going to tax auction, we stepped in and acquired the property from the homeowner, paying off the $23,000 in unpaid property taxes. This secured the property and ensured it would not be lost to foreclosure, immediately putting money back in the homeowner’s pocket.
• Negotiating and Paying the IRS Lien: Given the substantial size of the IRS lien—matching the property’s market value—we worked directly with the IRS to negotiate a settlement. We successfully paid off the IRS lien in full, clearing the title and eliminating the major obstacle that would have made it difficult to sell or refinance the property.
• Securing a Clear Title: After paying both the property taxes and the IRS lien, we coordinated with the appropriate title company to ensure the property’s title was free of encumbrances. This allowed us to secure the property and prepare it for future sale or rental.
• Strategic Title Transfer to LLC (Optional): As an additional option, we explored transferring the property to an LLC, which would help in managing future title issues and provide more flexibility for the homeowner.

Results: By acquiring the property, paying off the unpaid taxes, and settling the IRS lien, we effectively avoided the tax auction and relieved the homeowner of the burdens of unpaid debts. Not only did we prevent the foreclosure, but we also put money in the homeowner’s pocket, allowing them to move forward with their next steps without the financial strain. Our proactive approach helped clear the title and ensured the homeowner retained control of the property.

FAQ

Q: What is an IRS lien and how does it affect property ownership?
A: An IRS lien is a legal claim against a property due to unpaid taxes. It can prevent the property from being sold or refinanced until the debt is paid. In some cases, the lien can be removed through strategic legal actions or by waiting for the lien to expire.

Q: How long does an IRS lien last?
A: An IRS lien typically expires after 10 years if not refiled. However, we assisted the homeowner by negotiating a settlement with the IRS, removing the lien and making the property more marketable.

Q: Can I sell a property with an IRS lien?
A: Selling a property with an IRS lien can be challenging, as many title companies will flag the lien. However, we resolved this issue by paying off the lien and working with the title company to clear the property’s title.

Q: What are the risks of holding onto a property with an IRS lien?
A: Holding onto a property with an IRS lien can present risks, such as difficulties in refinancing, resale, or the need to pay off the lien before selling. However, by stepping in and clearing the lien, we removed these risks for the homeowner.

Need Help Resolving Title Issues with an IRS Lien?

If you’re dealing with a complex title issue or IRS lien on your property, we have the experience and strategies to help. Whether you’re a homeowner looking to hold, sell, or refinance a distressed property, we can provide a tailored solution to meet your needs.

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