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  1. #1
    Join Date
    Aug 2011
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    1

    Default Bought County Tax Foreclosure Property With a Federal Tax Lien Attached

    My question involves real estate located in the State of: New York

    I recently attended a County Tax sale, where properties are auctioned by the county for failure to pay property taxes. I purchased a small vacant lot for $1000. At the auction, I was required to pay 10% of that amount, and I am now required to pay the balance within ten business days, after which point the County will present me with a deed.

    After conducting a title search, I found two liens on the property, one for an owner-financed mortgage, and the other: a $11,000 federal tax lien on the former owner.

    The first lien I think I can resolve, as I have spoken to the guy holding the paper and he is willing to remove the lien in exchange for a settlement of cash (I pay him $300 though he's owed $1000).

    The second, however, concerns me as I have read differing legal opinions online (fear not, I have retained counsel though I am not willing to dump a bunch of money into legal fees). Some say that the lien carries with the property and will remain until the debt is settled. Others say that the judgement is against the individual and therefore does not survive the sale to a third party. I would understand that if the prior owner SOLD the property that the lien would survive, but if he lost it to the county I would assume that the lien would expire. I understand that the county did provide both lien holders with prior notice of the sale, and neither stepped up to claim the property. Does that make a difference?

    Also, a real estate auctioneer told me that the feds have 120 days after the auction closes to claim the property for the cost at which I purchased it plus interest. Any truth in that?

    Any legal issues with settling with the mortgage holder? Will that bug the IRS in regards to their stake in the property?

    Bottom line, I have to pay the remaining balance prior to knowing if the IRS lien survived the sale. Should I pay the remaining balance, or let the thing go back to the county?

  2. #2
    Join Date
    Sep 2005
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    98,846

    Default Re: Bought County Tax Foreclosure Property With a Federal Tax Lien Attached

    Read the information at the bottom of this page or the more simple explanation found here.

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