All Forum Posts by: John Krausman

I have a question regarding lien priority for properties sold at Trustee Sale in California.

I am looking at a property that has a first loan going to sale. After that deed of trust, the property owner had 20+ different state tax liens recorded in the same county against his business. I only found them by searching his last name, as the business name contains his last name. The state tax liens are all filed by the California Employment Development Department. I can find no way of seeing their amounts online.

#1. I am unsure if these can even attach to the property, considering they appear to be in the business name. However, owner of the business is clear, as his business name contains his name.

#2. Assuming they can attach to the property, are state tax liens like this given any special priority in California? Basic searches on trustee sales show that some liens do not get wiped away, and some list state tax liens as those that do not get wiped. However, I assume this varies from state to state, and have not been able to find any specific answer to this in California. Are state tax liens recorded after the foreclosing deed of trust wiped away in a trustee sale?

#3. I am wondering if any special notice requirements exist to the EDD in regards to their liens from the Trustee. I think it is highly likely that the trustee would not have been aware of these liens to notice if they had not searched specifically for the individual’s last name in county records. If you include the first name in the record search, these do not show up. (Example: Searching John Smith doesn’t show these liens, but searching Smith does, as they are recorded under Smith Electrical). I suppose this comes back to the question of whether a lien recorded under Smith Electrical can tie to the property of John Smith.

Any help or insight would be very helpful!

Thank you Wayne.

The trustee sale was held by a big-name trustee, so I would hope they know to send in whatever is needed to the irs. I’m unsure of how to verify that though. 

My main concern was that there would be any possible way the irs could redeem the house without paying either the original purchaser or the LLC the amount paid at auction. I know logic says that they can't take a House for free, but I cannot find any info or wording regarding paying back a new owner.

They always say you cannot sell such a property within 120 days because title won’t insure it, but I wasn’t sure if that was only because the possibility of a redemption for the auction price, or if there was some rule or law that made a transfer illegal or a very bad idea.

I am new to Bigger Pockets, but have lurked for awhile.  I have a situation I am hoping someone might be able to offer an opinion on.

We bought a house at trustee sale a few weeks ago. Long story short, the trustee's deed was vested in one parter's name. We would like to move it into our LLC owned by multiple partners. So the plan we figure is cleanest is to have the LLC buy the property from the individual partner (writing check from LLC to individual partner, and recording a grant deed transferring title to the LLC). No profit or loss on this transaction since nothing has changed with property in the few weeks since sale.

Here is the concern:

There is an IRS lien on the property junior to the foreclosed loan, so the IRS has a 120-day right of redemption. I know that you can't usually sell such a property within the 120 days because you can't get title insurance. However, does anyone see any issue with transferring (selling) it to the LLC? Obviously the IRS could still redeem within the 120 days, but does having a new owner than the original purchaser at auction present any issues?

If IRS redeems, who would they pay the redemption amount to? Having sold the property to the LLC would not give the IRS any ability to redeem the property without paying someone the price originally paid at auction, right? I'm having an irrational fear that there is some impossible to understand IRS language that would allow the IRS to redeem the house with no payment since the current owner would be different from the original purchaser at auction.

All of the language I read on the IRS website mentions that redemption requires the IRS to pay a purchaser at auction back their purchase price, but I can find no info on if the property is transferred to someone else before redemption.

Any help GREATLY appreciated, as the current plan is to transfer to the LLC ASAP.

I know the likelihood of an IRS redemption is very low, but I still want to plan for that possibility.

House is located in Southern California, if that matters.