Wisconsin state income tax lien extinguished by foreclosure?

Question

Hello all, I'm in the state of Wisconsin and needing to know if a Wisconsin state income tax lien (junior to the foreclosing mortgage lien) will be extinguished by the foreclosure.  I'm assuming that there won't be enough surplus to pay the tax lien.  Any input appreciated.

Pat L. · Answer

Up here we had one signed over to us by the owners who had $42k in liens against them including a NYS Income tax lien. All liens/judgements were >10yrs old & never filed any recent action so we got the property/title free & clear of any encumbrances. Appraised value $85k cost $6500 & rented for mkt rents.

Jay Hinrichs · Answer

Irs liens have a sunset in I think 120 days.. after that if they have not filed an action to redeem title company will just insure as normal.

in the many many court house steps buys I have made over my career I have NEVER had the IRS come back.. we just wait it out.. and I liked IRS liens it kept beginners at bay as they did not understand them or they needed to right away refi out or put their HML in first position so they would not bid on props with IRS liens we made some nice scores because of those liens..  as to state its state specific.. I think Marcus said they get removed from title.. so that's probably the answer.

Scott Brooks · Answer

Yes Marcus, its a sheriffs sale.  So state income tax liens in WI have filing date based priority like mortgages?  If that's correct, then next question - does WI Dept. of Rev have a redemption period similar to IRS tax liens that I need to think about?

Marcus Auerbach · Answer

@Scott Brooks just to clarify you are buying at a Sheriff sale, not an REO? With the latter you are in the clear.

Scott Schultz · Answer

Income tax and other non-real estate related taxes can be transferred to the tax payer that owes the money, it may not be automatic, Im not sure about State, but federal tax liens there is a form and a fee (around $400) to get the them removed and its not guaranteed they will allow it to be removed. But most likely you will be fine.

Jeff Cichocki · Answer

@Scott Brooks I'm 99% sure it will be removed from the property after the confirmation hearing. But, it won't get wiped out completely. The seller will still be obligated to pay. But, to be safe, check title after you get it. It happens more often than you expect that things that should be removed aren't. If it's not, you can appeal to the judge that did the confirmation. If they won't help, you could be forced to file a quiet title action to clean up title.