FREQUENTLY ASKED QUESTIONS RELATED TO AN INTERNAL REVENUE
SERVICE
July 16, 2009
Residence
QUESTION: How is the sale conducted?
ANSWER: The sale is an open, public auction at which
the Internal Revenue Service auctioneer (the Property Appraisal and Liquidation
Specialist) will open the bid price at or above the minimum bid of $52,875.00.
Bidding will proceed generally in even increments as determined by the
auctioneer until the property is awarded to the person bidding the highest
amount. There may be bids that were
mailed to the Internal Revenue Service prior to the sale but for inclusion in
the specific sale.
QUESTION: If I am the successful bidder, what happens
then?
ANSWER: You must be prepared to pay $15,000.00 down
on July 16, 2009 and the balance of your bid on or before August 12, 2009. Upon
receipt of the full amount of the agreed bid price, the Internal Revenue
Service will provide you a Form 2435, “Certificate of Sale of Seized
Property”. This certificate is your
evidence of the sale of the property by the Internal Revenue Service to you,
the bidder. If the property is real
estate and the county or borough permits the recordation of this document, it
is recommended that you do so. If the
property is other than real estate, the Form 2435, “Certificate of Sale” is
your evidence of ownership.
QUESTION: Is the property then owned by me to do
what I wish to do with it?
ANSWER:
If
the property is real estate, the taxpayer, any lien holder of interest or any
other person with a legal interest in the property has a right to redeem, or
buy back the property, within 180 days after the date of sale by the Internal
Revenue Service. If the property is
redeemed, the person redeeming the property must pay you the amount of your bid
(what you paid) for the property in addition to interest on that amount at a
rate of 20% per year prorated for the actual amount of days from the sale of
the property to the date of payment for redeeming the property. If the property is not redeemed within the
180-day redemption period, a Director’s Deed will be issued to you for the sale
of real estate. This deed is a Quit
Claim Deed. If the property is other
than real estate, the property is yours and you may be required to transfer
title for vehicles, licenses, etc. depending upon state and/or local laws. Typically, personal/business property is
yours to do as you wish without further action. However, if there are encumbrances that are
superior to the Internal Revenue Service lien, you may need to resolve those
with the secured party. The Internal
Revenue Service provides information related to those encumbrances. However, the Internal Revenue Service does
not guaranty or warranty the validity of the title, quality, quantity, weight,
size, or condition of any property, or its fitness for any use or purpose. The property is sold “as is” and “where is”
without recourse against the
QUESTION: Then during the 180-day redemption
period, may I collect rent if there are tenants? May I improve the property? May I evict any tenants and move onto the
property myself? Is there anything I can
do with the property?
ANSWER:
The
taxpayer and others of interest have a right to redeem the property and any
action is dependent upon state law.
Therefore, you should contact an attorney or legal representative for
this type of advice. The Internal
Revenue Service will not advise as to actions that you may take against or upon
the property.
QUESTION; What happens after
the 180-day redemption period expires?
ANSWER:
After
the 180 day redemption period has expired, the Internal Revenue Service will
provide you a Director’s Deed in the form of a Quit Claim Deed issued by the
Area Director of the Internal Revenue Service. You must surrender the Form
2435, “Certificate of Sale of Seized Property” given to you upon your full
payment of the bid price in order to receive the deed. At this time, the taxpayer and others of
interest do not have any redemption rights.
The deed discharges the Federal Tax Lien from the property and places
the title in your name giving you possession of the property.
QUESTION: Do I need to make payments to the
mortgage holder, county tax collector, etc. during the 180-day redemption
period?
ANSWER:
Once
again, any payment of expenses related to the property may or may not be
recoverable if the property is redeemed.
This is dependent upon the state law in which the property is located. The Internal Revenue Service does not advise
related to this issue. You may wish to
contact the creditor and make some form of arrangement such as posting a bond
or escrow account for the amount due that would prevent action against the
property and could be refunded back to you if the property is redeemed.
QUESTION: Will the encumbrances against the
property still remain after the Internal Revenue Service sale?
ANSWER:
Any
encumbrance that is recorded prior to the Internal Revenue Service Federal Tax
Lien remains upon the property and must be dealt with by the purchaser at an
Internal Revenue Service sale. The
Internal Revenue Service does not pay these expenses. Even when a property tax becomes due and
payable, the Internal Revenue Service generally does not pay this
obligation. The encumbrances that are
recorded after the Internal Revenue Service Federal Tax Lien, are discharged
from the property upon the issuance of the deed to the property 180 days after
the auction.
QUESTION: Will a title insurance company insure the
property after an Internal Revenue Service sale?
ANSWER:
The
Internal Revenue Service cannot answer that question. You must inquire of the title insurance
company for that information. Experience
from previous sales reflects that some title insurance companies will provide
title insurance for property sold by the Internal Revenue Service. Others will not provide title insurance
without a Quiet Title action in a court.
One title insurance company in one state may insure a property and the
same company in another state may not.
It is all dependent upon the policy of the title insurance company.