Foreclosure property in CA, what tax liens should I pay?

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Hi, can anyone tell me what tax liens will I have to pay for while buying a property in foreclosure in California. Do I also have to pay IRS income tax liens that are on the property? Is it beneficial to foreclose rather than do a short sale just because their IRS debt is paid. I appreciate your suggestions

adonis · Posted: Thu Jan 25, 2007 12:00 am Post subject:

Welcome Joshua,

If you are the successful bidder in the foreclosure sale, then you will get the title to the property in spite of the tax lien on it. And, you will have to pay the tax lien if the lien has been recorded prior to the foreclosure. Otherwise, the IRS can foreclose on the tax lien.

Caron

Hi Joshua,

If the tax lien is subordinate to the mortgage being foreclosed and the lender has given an advance notice of the sale to the IRS, then the IRS has 120 days redemption period after the sale. This means that the IRS will have 120 days to pay the successful bidder the amount paid at the foreclosure sale.

For example;

If you are the successful high bidder at the foreclosure auction, you will receive title "subject to" the recorded IRS tax lien. If the lien was recorded before the loan that is being foreclosed (highly unlikely), you become obligated to pay that tax lien or the IRS can wipe you out by foreclosing on its tax lien.

Thanks,

Caron.

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