Auction with IRS liens

[Keri Boland]

Hi, everyone!  I’ve been watching a property in South Florida that is being auctioned in the near future.  The recorded liens against the property look to be valued at about 400K.

The final judgement of foreclosure is close to 500K.

From what I've learned on this site, it’s my understanding that when an IRS lien is put onto a property, that IRS lien becomes the primary lien and the mortgage holder/bank becomes the secondary lien. If I was to bid on the house, does the amount I bid automatically get applied to the IRS lien first because it’s the primary lien, or would I be applying those funds to the outstanding mortgage, and then be responsible for the full IRS lien?

To throw numbers at this exercise, assuming the IRS/primary lien is 400K, the amount owed to the bank is 500K, and I made a bid at 600K and it was accepted, would 400K automatically go to the IRS to satisfy the primary lien, and then the remaining 200K would go to satisfy the bank mortgage?  Or would 500K go to satisfy the bank mortgage, 100K go to the IRS and then I’d be on the hook for the remaining 300K that the previous owner owed to the IRS?

Am a single parent with two kids, one of whom is about to enter college; can't afford to make a silly mistake.  Any guidance is GREATLY appreciated!