To make a long story short, we are the buyers of a SS. It was approved by seller's lender in December and when we went to close, discovered the seller's agent gave everyone bad information and the IRS liens were still on the property. By the time the sellers got the IRS lien releases, the lender's approval letter had expired....so we are now going through the approval/acceptance process all over again. Sigh.
As we are waiting on the sellers bank to yet again approve/accept (hopefully) our offer - we just found out the seller's IRS liens are about to expire.
Does anyone know this process? Will the sellers need to get the releases all over again? Can they just get some sort of extension?
thanks so much
Steve
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In a related situation, my short sale seller had declared BK (discharged 2 months before listing). She could pay the first (@ $260,000) in full, but had a HELOC ($180,000) with BMO Harris. The first was scheduled for Trustee Sale in 60 days. The sale price was $310,000. She had HOA dues in arrears as well. She also had a federal tax lien, but it was NOT filed against her house. It was a personal lien. When she told me about that, I had her request the IRS record it against her house BEFORE submitting the HUD1 to Harris for approval. She called the IRS directly, and was told it would be filed within 30 days, which it was. When the HUD1 was submitted to Harris, they approved the payment of the IRS lien, and accepted the "leftover" amount.
The "take-away" is my seller got out from under a large IRS LIEN, which would otherwise have followed her after the close of her short sale. Listing agents should always ask their sellers if they have any IRS liens, even if they aren't recorded against the property. You never know when it can work to their advantage, as it did in my case.
Also, in terms of "Basic Short Sale 101", the IRS can always file a lien against a property up to the last minute before closing. So, running a preliminary title report won't necessarily alleviate the filing at a later time.
Yes they can & do file... that's why open communication & discovery is 1st & foremost in a Short Sale.
Thank you everyone for your input. My agent informed me this morning that the sellers actually just have a letter from the IRS that is allowing them to sell the house without the encumbrance of the liens, and that in this letter there is a "deadline" specified of 3/14. So the sellers will need an extension to that.
Since the deadline is 3/14 and all players are ready except the bank, I would call the CEO and Presidents offices demanding to have this expedited. try and close. It is in the bank's interest and all parties EXCEPT the IRS.
I am unsure of what else to say except that thre are other alternatives later. Remember that if the bank KNEW that the IRS was involved and they knew they had approved subjesct to release be the IRS, then there is NO reason to lose all the work perfored by all parties over a coule of days.
Push it up the ladder hard as possible. You may get approval in one day! PLEASE be nice to everyone and remember you are asking a favor...and reminding them of all the work thier own part has gone through!
Hi Guys,
You can ask the IRS for an extension. I had to do it on a deal 3 times last year (2 buyers walked) and every time the IRS agreed to the ext. I went through my clients accountant to get the extension but it did not seem to be a problem. I have no contact in the IRS or I would pass that on to you. Good luck
The correct step would have been to request a SSA extension the moment you discovered the tax liens; then getting the release would have been a simple phone call. The IRS knows how to find the seller for payment of their money... a IRS release is no big deal...!
Just curious though... apparently no one thought to check the title on the property for liens prior to processing the SS...? Seems to me the1st step in pursuing a short sale application is to discovery "ALL" obstacles (IRS liens) in the way of a successful closing; Basic Short Sale class #101...!?! I'mjustsayin'
My understanding is the IRS will release a lien temporarily to allow the property to be sold. The lien then follows the person. IRS liens do expire after the debt and filing of the tax is 10 years old.
We found out about the tax lien on one of our short sale listings when a pre-Title was done. We are working with IRS to remove it from the property and was told that it would take 10-12 days via their expedited process. I wouldn't think there would be an expiration date, but that's a good question to ask. An IRS form had to be filled out and many documents submitted. The homeowner will have to agree to a re-payment plan.
But, I would suggest three things:
1. The title company should have a cobtact at the IRS. There is always an agent there who reviewed and approved the release. Ask the escrow officer or the list agent to appeal to this person and see if they will accomodate you once the new short sale approval comes through.
2. Escalate at the short sale lender. Get someone who understands that it can take 3-6 months to get an IRS lien released and now that this has been accomplished it is critical to reapprove the shortage fast enough to clos by the deasline on the IRS release.
3. Lastly, have the seller call TA (The Tax Advocate). They are an extension of the IRS put in place to help expedite files through the IRS when the house involved is in foreclosure and the clock is ticking!!
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