How to negotiate away tax liens?

Question

I've recently come across many properties that have various State, IRS, and even city tax liens on them. "With encumberances" is how they're being classified. What are some successful strategies for getting liens taken care of? If someone would like to partner up with me on these, let me know. It would seem that if these liens can be taken care of, the properties would make good investments. Any suggestions on what to do with them?
            
             Dean

Jim Wineinger · Answer

Not sure what area you are speaking of, but in general all tax liens take on 1st position liens. This is why all lending contracts make a provision to take care of those taxes or the lender will step in and pay the taxes and add it to your loan proceeds amount which is owed. If they did not do this then the tax lien would take on the first position lien and the mortgage lien would be in a second position lien. This is why all tax liens survive but the mortgage liens are wiped out once a property is forclosed upon for taxes.

The government (city, local, county, or state) will usually contact any interested parties (lien holders) because all they want is their money which is usually a small amount usually in respect to all mortgages. Since they were notified of the impending sale and did not take advantage of their rights to pay the taxes it is considered the same thing as giving up their lien rights to the property.

It is a matter of law what each county is able to do as far "negotiating". In my opinion they can not negotiate with anyone until the property has gone through at least one tax sale. With no one bidding on it, it is then purchased officially by the county and can be listed as surplus lands. At this time they will begin negotiating with anyone to get the most they think they can for the land.

But as far as reducing the taxes due before any type of (tax sale) auction this is not normally done. And may not be able to be done by the State law. This is something that you would have to check on with a "realestate tax attorney" for your area.

Jim Wineinger · Answer

The IRS may be the one that you have the best shot at negotiating with right away. But they dont make it easy. If they have also attached other properties that will give them the amount that they need they may be willing to release the lien on that one property as long as they are able to attach the escrow funds that would go to the people that they are after.

Melissa Webb · Answer

I Haven't heard of anyone trying this, but that's not to say you can't.  Go ahead, and let us know if you have any luck!  I would think that if you were going to negotiate the price owed down, you could do it the same way you would negotiate with a bank on a short sale.

Hope this helps, and good luck!

Dean Julie · Answer

Right. I understand that they have to be paid. What I'm wondering, has anybody called up the organization that placed tax liens on properties and negotiated with them if they would take less than the full amount? IRS, city, county tax liens. Those are easy to find the contact source. Has anybody ever called up the IRS and tried to negotiate a tax lien lower than what it was originally placed as? What about the city or county concerning tax liens? As I said in my first post, if there is a way to negotiate these down, I've found some properties that could make good deals once the tax liens are lower.

Melissa Webb · Answer

From my understanding, all tax liens must be paid in full within 30 days of purchase of a property.  These are involuntary items attached to properties, everyone must pay them, no matter what.  That is why it is very important to check the title to see if there are any leins against the property.  However, if it is a tax auction, all voluntary items (mortgages, etc) I believe do not have to be paid.  If you have a title company in your area, they should be able to answer your questions.  If your area doesn't have title companies, then just ask a real estate attorney (they shouldn't charge you for a five minute question, in my opinion)

Dean Julie · Answer

So what negotiation techniques are there for taking care of liens. Does everybody just pay them off at full cost? Or is there a way to negotiate, or eliminate them entirely?

Nick J. · Answer

property taxes and property tax liens are 1st position over anything and everything here in my county.

All other liens are treated like any other lien be it 2nd, 3rd or even 4th position liens