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Ray
Ray, Lawyer
Category: Real Estate Law
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Experience:  Texas Attorney for 30 years dealing in real estate
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I have purchased a property through an IRS auction in the

Customer Question

I have purchased a property through an IRS auction in the state of MA. The deposit receipt states that there is 180 redemption period for the original owner to reclaim the property. My question is do redemption periods apply in the state of MA and can I collect rent on the property or refinance the property during this period?
Submitted: 6 months ago.
Category: Real Estate Law
Expert:  Ray replied 6 months ago.

Hi and welcome to JA, Ray here to help you today.

You can lease property but there are specific restrictions.No refinance is possible until you have completed the redemption period.

Here are the lease restrictions and more information..

5.12.5.7.1 (07-01-2001)
Lease of Redeemed Property

https://www.irs.gov/irm/part5/irm_05-012-005.html

Lender will not lend on this until the time period has expired.You can use the time to get preapproval for the loan you are seeking so it can be finalized after the redemption period you reference.

  1. Real property may be leased if it is determined that it will be in the possession of the Advisory TM over an extended period of time and that the Government's interest will best be served by such action. The initial determination will be made by the advisor with concurrence from the Advisory GM, and will be based upon the circumstances of the investigation. However, the final decision rests with the Advisory TM and his or her approval must be secured before the property is offered since the Advisory TM must sign the lease.

  2. If it is determined that redeemed property will be leased and a prospective lessee has been secured, the advisor and his/her manager, should request that area counsel prepare a lease agreement in duplicate. The terms of the lease should generally not be more than a year and should not contain any provision which would prevent selling the property, subject to the lease, at any time a suitable purchaser is found. The lease agreement should specify that payments be made by certified or cashier's check or money order and sent directly to the advisor. Area counsel should be furnished the following information:

    1. name and address of the lessee

    2. area involved

    3. description and location of property

    4. how property was acquired by the United States

    5. period of the lease

    6. terms of payment (amount, manner, due date and place of payment)

    7. any special provisions to be contained in the lease, such as property maintenance, authorized alterations, improvements, etc

    8. any other pertinent information

     

  3. Upon receipt of the proposed lease agreement from area counsel, the Advisory GM will:

    1. review the lease to see that it conforms to the intent of the parties involved

    2. forward original and duplicate to the Advisory TM for his or her review and subsequent approval

     

  4. After the Advisory TM has signed the lease agreement, both copies will be returned to the Advisory GM, who will assign the advisor responsible for the investigation to:

    1. secure the signature of the lessee on the original lease agreement.

    2. furnish duplicate lease agreement to the lessee which may be considered authority for the lessee to have possession of the property in accordance with terms of the agreement.

    3. file original lease agreement in the related Disposition of Redeemed Property case file.

     

  5. Payment received from leased property should be discussed with Area Counsel for a determination as to how these funds should be applied. Most likely any payments will be applied first to the revolving fund balance and then to the taxpayer's liability. Please refer to IRM 5.10.7.2(4) for additional information on preparation of a memorandum for lease payments. IRM 5.10.7.2

  6. If a payment is not received within a reasonable time after the due date, the Advisory GM should contact the lessee to secure payment. If payment is not received, area counsel should be consulted as to the legal action required.

Expert:  Ray replied 6 months ago.

More for you here

Redemption Rights: The rights of redemption, as specified in Internal Revenue Code Section 6337,are quoted as follows:

  • Sec. 6337. Redemption of Property.

    (a) Before Sale. - Any person whose property has been levied upon shall have the right to pay the amount due, together with the expenses of the proceeding, if any, to the Secretary at any time prior to the sale thereof, and upon such payment the Secretary shall restore such property to him, and all further proceedings in connection with the levy on such property shall cease from the time of such payment.

    (b) Redemption of Real Estate After Sale.

    • (1) Period. - The owners of any real property sold as provided in Section 6335, their heirs, executors, or administrators, or any person having any interest therein, or a lien thereon, or any person in their behalf, shall be permitted to redeem the property sold, or any particular tract of such property at any time within 180 days after the sale thereof.

      (2) Price. - Such property or tract of property shall be permitted to be redeemed upon payment to the purchaser, or in case he cannot be found in the county in which the property to be redeemed is situated, then to the Secretary, for the use of the purchaser, his heirs, or assigns, the amount paid by such purchaser and interest thereon at the rate of 20 percent per annum.

Expert:  Ray replied 6 months ago.

Thanks for the chance to help you, please let me know if you have more.If you can positive rate when we are done it is always much appreciated.

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