So I have a listing that has recently been assigned to me. I do my usual occupancy check and MLS search to see what information is in MLS. The home has previously been listed as an REO with a different agency in my town. I list the property, it goes under contract, 15+ offers later. In the 3 day timeframe it took to get an accepted offer, I find out the home was previously under contract and never made it to closing because of an IRS lien. Title confirms the home has a redemption period that could last until May. Interesting that IRS liens, according to my title company, do not just get released from the property. If the IRS are notified BEFORE the foreclosure, supposedly, they will release the property and I guess the lien follows the borrower who is losing the house. If the IRS is NOT notified the property is going into foreclosure, it becomes a mess. Can you guess which is the case with my asset?
Another reason lenders should pull title PRIOR to foreclosure. This could end up being the best thing that ever happened to the borrower if the lender who foreclosed is forced to not only lose money on the loan itself, but now has to pay off an IRS lien that could be larger than the property would ever bring. This could take a while.