Income Tax Lien

Hello All,

I have a question. How would this play out?

What happens if someone owes federal or state income taxes that shows up on their credit, but they own no RE. Now, they do a sub2 deal, and have the seller’s deed signed over to them?

Would the Feds attach a tax lien to the property now that they have a deed in their name?

Thank you all for your help.


If you hold the deed then it would put a cloud on the title. Yes, it’s a lien.

Good Luck,

Howdy Willis:

Yes the IRS lien will attach to the property. It would be automatic as the title company will do a search before the sale or refinance and see the IRS lien against that person.

You could use a Corp or LLC or partnership or another form of ownership to avoid this.

So ted,
Are you saying that if I purchased a property using the “subject to” with a lein against it (ie. fed or state), then I can avoid paying that lein or I can sell the prioperty if I place it under the control of my LLC?

Howdy Warhorse 1:

Once a lien has been filed someone has to pay, no way to avoid. What needs to be avoided is buying sub2, lease purchase, contract for deed and keeping the property in the owners name. If they get a lien against them it will attach to the property. Most sub2 deals transfer the title but not all.

So what is your best advice to handle a situation like that if I find out later, after I do my due dilligence, that there is an IRS lein?

Howdy Warhorse 1:

I had a duplex under contract once for $7500 where the owner had an IRS lien against them and the property for $500K. I learned that the IRS will release the lien against the property provided they get the net proceeds from the sale that would otherwise go to the seller. We did the deal.

Sometimes too the lien holder IRS etal will reduce the lien amount. I bought a house for $4K that had a mortgage of $28K. I still had to pay $10K in back property taxes but I knew what I was facing going into the deal. My best advice is to learn all you can from title searches and negotiating with lenders and lien holders before risking any money.

Thanks for the insight on tax liens. Now, my next question is correspondance to homeowners in pre-foreclosure. I have an agant I work with who emails me all the homes going into the pre-foreclosure stage immediately when they hit the MLS. I want to know where I can find a draft of a letter that I could sent them to let them know that I might be able to assist them in selling/buying their homes. I’m talking in terms of letting them know that I am an investor looking for properties and would like for them to call me or perhaps meet with them or things like that. I don’t quite know how to put it into words in a professional, corresponding format. Any suggestions? Thanks

Howdy Warhorse1:

I like colorful postcards. I never open an envelope if I know it is junk. REO suggests to put something bulky in a large envelope and they will open it.

As far as what to say, most of then tell the big lies, I can close in a few days, and give you a million dollars for your equity. Just try to be fare and honest and try to get them to believe you are really wanting to help and not a vulture.

So Ted,
You are suggesting that I should send out perhaps yellow post cards with my company info and the services that I provide to the homeowners and wait for a response or would you suggest sending out the cards and a few days latter, following up with a cold-call to see if they might be interested in the services?

Howdy Warhorse1:

The more the better. Call and write and even knock on doors.