All Forum Posts by: Robin Pierce

Update: We are currently working on an owner’s title policy through Chicago Title and that’s going well. And we ended up at Texas Lending, who claims to be very familiar with this type of situation. They were not afraid of the cash out refi on this property and have been easy to work with so far. It’s not a done deal yet, but I’m hopeful. Our particular mortgage officer just happened to have first hand experience doing a previous deal from an IRS seized property. TX Lending’s in house title company is working the title and if I understand correctly they are going to help convert the deed (according to the mortgage officer). I really hope he knows what he’s talking about and this doesn’t end up another dead end. The real estate atty in East TX my Dad met with told him there was no need to convert the QCD.   Ugh  - __ -

I totally understand why @Ronald Rohde says what he does about the QCD...I couldn’t believe how “unofficial” it looked, especially coming from the IRS!! My Dad is going to file it at the county tomorrow so we’ll see how that goes down. 

We have until July 12 to get the $$ back into an investment vehicle with no income tax penalty, so fingers crossed this all works out and we don’t have any more hiccups. 

I will say this...I wouldn’t advise doing a deal like this with the IRS if you have other suitable options. They’re not easy to work with. The QCD has been sitting on a guy’s desk for weeks!! He was SUPPOSED to have sent it out on May 24. It wasn’t received until TODAY (June 24). And this was with diligent follow up and borderline harassment from our side. Haha! The IRS had $300k of my Dad’s money for well over a month and he still wasn’t sure the house was truly his. It’s a nerve wracking position and has been a source of stress. Luckily, we all feel like this house was worth the effort and stress, and even if they take a hit on the income tax, there’s still plenty of equity there if they wanted to sell tomorrow. 

I’ll update again after the deadline!

Just spoke with Chicago Title. They weren’t surprised by the smaller title company not wanting to write a policy (clear title or not). They were very positive!

Now to find a lender who will lend with Quit Claim and a title policy!

So far two lenders have said they won’t lend with a Quit Claim. Could my Dad warranty deed it to my mom? 

I spoke with a good friend who works for Chicago Title (in Chicago actually!) and is an atty. He wasn’t surprised these smaller title companies were shying away. He believed a title company with more robust financial backing (like Fidelity, Capital, or Chicago) wouldn’t be scared away by the IRS or Quit Claim Deed. He thinks it was all a lack of experience in doing a title policy on something like this? 

It’s just quite frustrating. 

Thanks for replying everyone!

Needing help on how to handle a QuitClaim Deed given by the IRS. 

Backstory: My parents won an IRS auction and purchased a  lovely lakefront property to be their forever home (not as an investment or flip) in East TX. This house had been owned outright by the IRS for over 10 years due to unpaid income taxes, and surprisingly part of the agreement between the original owner (an elderly widow woman) and the IRS was that she was able to live in the home until her death (I don’t think the IRS expected her to live so long!) The chain of ownership is short as the lady purchased the land, had the home built (after her husband had already died) and then changed it a few times into the names of two different trusts she had created (likely in attempt to hide the home from the IRS) until the IRS caught up to it and took FULL ownership of the home. She owed over $1mil in income tax. 

Fast forward to us finding the property...I did a local title search at the county level to look for any liens or claims filed against the property. It was clean. I found all the changes of ownership between the set up trusts, etc. but there were no other red flags.  The IRS agent also assured me the property had clear title and there would be nothing to worry about in getting this home. 

My dad won the auction, paid the IRS in cash, some of which came from an investment account. Our financial planner had suggested this was completely OK as he would have 60 days to replace that $ without it being considered taxable income for the year. The plan was to do a cash out refi or a home improvement loan on the property in order to get the funds to replace the money taken out of the investment account. Seems like a solid plan...however...we are 29 days into the 60 day window and it is not happening.

My Dad is running into issues with all the local, small banks and title companies being scared off of the Quit Claim Deed (and the IRS).  The local “real estate” expert atty said he can’t convert the deed bc there is no one else to sign it as a Grantor??! No one has ANY experience with this out there! I am hoping to find a DFW expert with a title company contact and lender contact who can get this done for us. My dad has impeccable credit and still works. 

What do we do? How do we establish clear title? How do we convert this deed? 

How do we get a loan on the property?

Even if we take a bath on the investment funds used and have to pay the income tax on it, this deed will likely be an issue when my sister and I have to sell the property in many years when my parents have passed away. HELP bc the IRS acts like this is no big deal and hasn’t provided any advice or steps to be taken toward a remedy.