| - I owe more than my house is worth, and the IRS has | | | | Another exception is property taxes. In Arizona and |
| also put liens on it. Can I still do a short sale? | | | | many other states, the statutes are written so that the |
| - I want to bid on a house at a foreclosure auction, and | | | | property taxes for the specific property become a lien |
| it has IRS liens, do they disappear like all the other | | | | on January 1st of each year; however they also are |
| liens? | | | | granted first position, ahead of all other liens (There |
| These, and other similar questions, are very important | | | | may be some esoteric exceptions.) Further, there is no |
| to consider if you are buying or selling your home in a | | | | recording requirement, but there is for all other liens. |
| short sale transaction, or bidding for a home at auction. | | | | What about an IRS tax lien? It is no different than any |
| In general, the priority of a lien against real property | | | | other lien, in that it must follow the "first in time, first in |
| follows the rule of "first in time, first in right". What this | | | | right" rule, however there are some notification |
| means is that when you get a mortgage and then | | | | requirements, and the IRS has some rights. |
| later get a home equity line of credit and then later get | | | | First, the IRS must be notified if a foreclosure |
| a home improvement loan, generally they will be paid | | | | proceeding is going to wipe out their lien. Then, after it |
| off in that order. First, the mortgage gets paid, then the | | | | is wiped out, they have 120 days to come back and |
| equity line, then (if any money is left) the improvement | | | | buy the property themselves (They must reimburse |
| loan. | | | | what was paid for it). This is in the case of a |
| There are some exceptions. One is called a | | | | foreclosure. What about a short sale? In a short sale, |
| mechanic's lien, which is not usually from a mechanic at | | | | the IRS will sometimes release the lien so the short |
| all, but rather comes from a workman or contractor | | | | sale can proceed, especially if they can see that there |
| who is doing work for you. The "mechanic" has a | | | | is insufficient equity in the property to get anything. |
| number of interesting rules he must follow, and then | | | | There is no advantage to them, to hold up the sale, |
| they can "perfect" the lien; and the date of the lien is | | | | and they would be wiped out in a foreclosure anyway. |
| related to when work was started, not when he sent | | | | So how do you get them to release the lien? |
| you the bill. So even though it might have been | | | | Paperwork, of course. The instructions are on IRS |
| recorded after another lien, the priority is established | | | | form 783. |
| earlier, when the work was started. | | | | |