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Residential house sold and deed transferred with a tax lien on the house.

An "Original seller" sold a house and title & deed were transferred. The house was later re-sold to a third person. A little over a year later it was discovered that the "Original seller" had a tax lien on the house that was never cleared. The "Original seller" had an attorney handle the sale of the property. Who is responsible for paying the tax lien the current owner, the previous owner, or the "Original seller"? Or are the attorneys responsible?

Note: No mortgage or bank was involved in the transactions. 
  • April 30 2014 - US
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Answers (2)

The lien encumbers the property, so if the IRS decides to foreclose on the property, they can do so to satisfy the lien.  The Original Seller remains responsible for the underlying taxes. 

If you obtained title insurance, you can make a claim on the title insurance policy.  I don't see how the attorney can be liable if all they did was prepare and record the deed.

Whether the current owner can force the Original Seller to satisfy the lien depends on the type of title transferred.  If it was transferred with a warranty of title, the Original Seller may be liable.  There are other types of title, so it would depend on how you took title.  I recommend you consult with a local real estate attorney.

  • April 30 2014
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This is a perfect example of why you buy title insurance. If you have it they should take care of it and make it go away, how ever they do it it won't cost you. You are best to get an attorney involved that can start by finding out if there is title insurance.
  • April 30 2014
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