I have purchase tax liens before but a few questions came up that I want to get answered before I reinvest this year.
I had previously thought that a tax lien takes priority over a mortgage, but recently I also read that if the mortgage was there first, the lien is junior to it. Do you know which is correct?
(one of the example sources I found http://www.moranlaw.net/postbrtaxliens.htm)
Also, I was wondering what happens to a tax lien if the case when the homeowner files for bankruptcy.
the important thing to remember is that the tax lien is always the first priority lien, over all other liens except for in some cases Federal IRS liens.
when property lines are drawn around an area of land, that area of land is given a parcel number.
the tax lien is always attached directly to the parcel number…thus making it the first priority lien.
as far as bankruptcy laws…they may differ from state to state…but generally they will be the same as they are here in FL.
you will never lose your investment in tax certificates due to bankruptcy…but the amount you receive in interest, and the time it takes to receive your investment back may be altered
in FL…the interest you will receiv e back will be determined by a bankruptcy judge,he can order the homeowner to pay a interest fee of as little as 6% and up.
also…you can not start the tax deed application request until the bankruptcy is removed from the property…so your investment will have to wait as long as it takes for the bankruptcy to be cleared up
hope this helps
also…all mortgage liens are completely wiped out after the issuance of the tax deed, except for in the state of New Mexico.
other liens or encumbrances may or may not survive the issuance of the tax deed…this will differ from state to state.
for example…here in FL - only county and municipal special assessments may survive the issuance of a tax deed (along with of course IRS liens)
excellent info!
excuse the newb. By IRS liens i assume back income taxes owed? in which the IRS could seize the house?
how would one avoid this issue? is there a way to check on something like that before purchasing the tax deed/lien?
and what would happen if you bought one and the IRS DID have a superior lien? would you loose your investment?
thanks!
you’re all set, can’t learn it till yu ask questions…
yes, an IRS lien is placed on props. for monies owed to Internal Revenue…
yes, this is why you MUST always research the title to the prop. before purchase…if there is an IRS lien, you should be able to find it easily…and if you took the road (which many do) of hiring a title service to do the work (usually around a $100), and they didn’t find it…you would not be held responsible…
they don’t necessarily seize the home, and they are really only out for the person who owes the IRS lien…however if you bought a prop. and you did not either contact them right before the sale of purchase…or you didn’t contact them right after the purchase…they just might hold you accountable, and now the lien is on you…
Thank you for the information guys. Mortgages and tax liens are quite complicated most especially when it comes to a person who are new on real estate topics. This is a good source of data.