Bought a REO from Auction.com

[Kao Saeteurn]

I ended up being the high bidder on an auction.com property. Prior to bidding, I had a title company pull an investor search of the title and found that it was recently purchased for 290k by the bank at as a foreclosure at a trustee sale on Aug 21 and property taxes were all paid to be current. The auction.com auction ended on Sep 11. I ended up being the high bidder at 238k and the market value of it was 310k. After I submitted the earnest money, the title company found an IRS tax lien for 85k which was junior to the mortgage that foreclosed. The preliminary title report showed that it will sunset in 120 days (December 19). After researching many IRS manuals and BiggerPockets forums, the IRS lien should be discharged after a non judicial foreclosure and the IRS has 120 days to redeem the property (IRM 5.12.4.3). There many other requirements such as giving notice to the IRS 25 days prior to the foreclosure sale which all did happen by the foreclosing attorney. 

According to the purchase agreement, we are set to close on Oct 11. I consulted with an attorney and his "recommendation" is to not purchase it until the title company is able to give me a clean title. If we delay closing (with the permission of the seller) then we incur a $100/day fee ($7,900). Is there anyway we can avoid this fee? 

It is obvious I should not close until we can get the property free and clear, but say we ended up closing. Will the lien drop off as it would normally in a non-judicial foreclosure? If the lien does drop off and during the 120 day redemption period, the IRS decided to redeem, does the IRS redeem and pay me or the seller (the original foreclosure purchaser)? The attorney said the IRS will most likely redeem from the seller and I should have some stipulation stating the seller must pay me my purchase cost.

I know I should have done more due diligence, but that is beyond the point. I just want to know is there anything else I can do. Any help is appreciated. Thank you in advance! 
 

[Account Closed]

@Kao Saeteurn have you spoken with the point of contact for the bank? Due to the situation they may he willing to extend the closing and wave the fee via an addendum do to the situation. If they are unwilling or unable to do that I would follow the advice of your attorney and absolutely not close until clear title is provided.