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Tax.appeal.168
Tax.appeal.168, Tax Accountant
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Experience:  Nearly 30 years of varied tax industry exp. Tax Biz owner
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I am processing a short sale and I have state of california

Customer Question

I am processing a short sale and I have state of california income tax lien. Does the lien have to be paid off to close the escrow. I get no money from the sale.
Submitted: 10 months ago.
Category: Tax
Expert:  Tax.appeal.168 replied 10 months ago.

Welcome. THANK YOU for choosing Just Answer. My name is XXXXX XXXXX my goal is to help make YOUR life, a little...LESS taxing.

 

 

In brief, the lien amount will be added to your closing costs, and will need to be satisfied prior to, or at the close of escrow. In order for the buyers to be able to take clear title to the property, the lien will need to be satisfied. As an FYI, In cases where people want to refinance, they may be able to request a partial lien release or a subordination of lien. These options are not applicable in your situation.

 

 

Please let me know if I can be of further assistance to you regarding this matter.

 

Thank you again for using JUST ANSWER.

Customer: replied 10 months ago.

You failed to consider that the seller gets no money the mortgage payoff takes all the available money.

Expert:  Tax.appeal.168 replied 10 months ago.

Hello again Janet,

 

My apologies, you did mention that this was a short sale. As this is a short sale, the lien does not have to be paid by you at close of escrow. Please keep in mind that even though the lender agrees to a short sale, a lender may accept the short sale purchase price to “release the lien” on the property but still require you to pay the full amount of the original debt.

 

Please let me know if this clarifies matters for you.

Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 2430
Experience: Nearly 30 years of varied tax industry exp. Tax Biz owner
Tax.appeal.168 and 7 other Tax Specialists are ready to help you
Expert:  Tax.appeal.168 replied 10 months ago.

Janet, Thank you for the positive rating. I should have asked this question initially, but has the lender approved the short sale yet? If not, the following information will be beneficial for you to know. While the lien does not have to be paid by you prior to closing, the lien will need to be released from the property. SEE BELOW.

 

----------------------------------------------------

 

State Tax Liens (California)

 

With a federal tax lien you can submit the paperwork for release of liens prior to getting the short sale approval from the lender(s). However, if you are in California and you have state tax liens you must have written short sale approval letters prior to submitting your application for the release of the state tax lien. You also need to submit an appraisal report with your application whether it’s the appraisal from the short sale lender(s) or from the buyer’s lender. If you don’t have the appraisal you can write a letter indicating that the appraisal report is forthcoming but please note that if you do not submit the appraisal with your application your release of the lien will be contingent upon the State receiving the appraisal. (Caveat: in lieu of the appraisal report you can submit a thorough CMA. Although the guidelines state that an independent appraisal is needed from licensed appraiser there have been instances where the CMA provided is sufficient to garner lien release). REFERENCE SOURCE: http://www.realestateofmarincounty.com/2012/01/04/can-you-do-a-short-sale-with-federal-and-state-tax-liens/

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