What Realtors Should Know about IRS Lien Subordination and Withdrawal

What Realtors Should Know about IRS Lien Subordination and Withdrawal

What Realtors Should Know about IRS Lien Subordination and Withdrawal

  • Posted by Ohio Tax Attorney
  • On June 6, 2019

If you’re a licensed realtor in Ohio, the thought of finding out a property you’re supposed to sell has an IRS lien attached to it can by gut wrenching. Is it possible to sell the home? What does IRS lien subordination mean? What are the common scenarios in which an Ohio realtor may face an IRS lien? Can the lien be withdrawn? It’s important for you to know the answers to those questions, and to get those answers from an Ohio tax attorney.

Can a Home with IRS Lien Be Sold?

As Ohio tax lawyers, our firm recognizes that it can be very intimidating for a realtor to find out that a home they were asked to sell has an IRS lien attached to it. Can it even be sold? The short answer is yes. However, before it is sold, the property must first have the lien subordinated, withdrew, or discharged. It is also important to note here that the IRS recommends that the process begin at least 45 days before the home will be sold. Otherwise, the sale of the property could be delayed and a loan for the homeowner facing the lien could be denied.

What Does Subordination Mean When Related to an IRS Lien?

When an IRS lien exists, it is a debt that must be paid by the property to which it is attached is sold. Even if the property still had an outstanding mortgage balance, the IRS lien is required to be paid first. If the homeowner applies for and receives subordination of the IRS lien, the legal requirement to pay the IRS first upon the sale of the home no longer exists. Instead, the bank, financial institution, business, or individual holding the mortgage may be paid off. The lien still exists. Money is still owed to the IRS, but another creditor receives preference when the sale of the home is completed.

Withdrawal may be another option. A withdrawal removes the IRS tax lien. However, it is important to note that although the lien is withdrawn, the homeowner still owes the money. To discuss whether subordination or withdrawal application is best, the homeowner should be encouraged to speak with an Ohio tax lien attorney.

The Two Most Common Scenarios Realtors May Face an IRS Lien in Ohio

The two most common scenarios faced by realtors in Ohio involving an IRS lien are:

  1. The taxpayer is buying a different home. It’s likely that the new home is more affordable and will place the taxpayer in a better position to repay their tax debt. The mortgage lender will only cooperate if they’re able to get the IRS lien subordinated so that the mortgage lender receives priority.
  2. The taxpayer wants to sell the home to pay some or all of their tax deb For this scenario, it would be important to have the IRS lien withdrawn so that the buyer can purchase a different home.

How Realtors Can Help Their Clients

IRS liens can make selling and buying a new home difficult for both realtors and their clients. If you’re a realtor, you’re not expected to be a federal tax expert, but your clients do expect that you’re able to at least point them in the right direction. If you have a client who is facing a tax lien, one of the best things you can do to help them is encourage them to talk with an Ohio tax lien attorney.


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