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A federal tax liens
can be enforced against homestead property.
Now, IRS has come out and said that they will not enforce thier liens against a property,
against a mortgage that is a purchase money mortgage.
So if the homeowner uses the funds to buy the house, then the IRS says we're
second in line to that lien. But the IRS if they're recorded
first in time, they are first in priority, in addition there is the US vs Craft
decision which most people know about by now, what it says is
that the IRS can enforce federal tax lien against either a husband or a wife
in US vs Craft I think it was the husband, the IRS can enforce
a lien against the husband where the property is owned tenants by the entireties.
So what happens when you're trying to do a sale? Whether
it be a short sale, whether it be a conventional sale, whatever it is
what happens when you run upon an IRS lien, the title company calls you up and says "hey this homeowner has
an IRS lien against them." You use this form: Form 14135
application for certificate of discharge of property from a federal tax lien.
It's fairly simply, straightforward form, it's about 4 or 5 pages long,
it does require that you provide a lot of the information.
So, the settlement statement, the contract, property values, appraisals,
copies of the other liens that are involved, title searches, all of that stuff has to be combined.
The packages that I've submitted have been 40-50 pages each.
But you submit to the IRS and you ask the IRS basically to do one of two things,
number one release the lien because this is a short sale, and there is absolutely no equity
available for the IRS whatsoever, or number two
let us do the closing, and whatever is left,
is paid to the IRS, and I've actually done both
of these types of transactions, it was negotiation with the IRS so it was a bit difficult, but it
worked. And in both cases, we got a form a release that the title company
was okay with, it was recorded and we closed and
the IRS was paid in one case, they were not paid in the other case, then we got our
release and title was clear.