Hi All,
What follows is NOT legal advice; merely researched OPINION
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There is an interesting controversy on the BLOG regarding whose Lien comes first regarding Real Propery here in CV. The maxim in law would seem to be that Liens are served "In order of perfection"; that is, he who files first is served first. There is a general belief that the nature of the WPRF - Rec Lease implied lien at time of purchase is superior.
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It is my belief that a Federal Tax Lien on the property would supersede even the WPRF Lien regardless of when the Tax Lien is perfected; there are very few exceptions; EG: The Federal Government may defer to a State Lien in certain circumstances.
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Please read the following and then place your well considered opinions in the comment stream:
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As always, in complex matters of Law; some ambiguity pertains; enjoy the read
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Dave Israel
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Tax Liens and Competing Claims - what order are mortgages and tax liens paid off
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The truth is often more entertaining than fantasy, and in the case of competing claims to an individual’s property in foreclosure, this is a truism. A proverbial merry-go-round exists between the priority of the Federal government, the various State governments and the claims of other creditor’s such as a mortgagee.
The truth is often more entertaining than fantasy, and in the case of competing claims to an individual’s property in foreclosure, this is a truism. A proverbial merry-go-round exists between the priority of the Federal government, the various State governments and the claims of other creditor’s such as a mortgagee.
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First in First Serve Generally, in determining what order are mortgages and tax liens paid off, the method is governed by the order of perfection in which the liens came into existence, and to perfect a lien over a debtor’s assets, the creditor must observe the procedural rules that apply to filing the lien.
First in First Serve Generally, in determining what order are mortgages and tax liens paid off, the method is governed by the order of perfection in which the liens came into existence, and to perfect a lien over a debtor’s assets, the creditor must observe the procedural rules that apply to filing the lien.
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A Federal tax lien arises by way of the law itself, and no action on the part of the Federal government in order to assert the underlying right over a delinquent taxpayer’s property.
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In the event of the Internal Revenue Service filing a Notice of Federal Tax Lien before another creditor perfects their respective lien, there is no doubt at all that the Federal lien takes precedence.
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Rules regarding the filing of liens vary between the numerous jurisdictions, but in the United States, while statutory procedures require that the Federal government file the Notice in the state in which the property exists, the legislature has ensured that Federal law survives to the exclusion of State law in this instance.
Rules regarding the filing of liens vary between the numerous jurisdictions, but in the United States, while statutory procedures require that the Federal government file the Notice in the state in which the property exists, the legislature has ensured that Federal law survives to the exclusion of State law in this instance.
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As a result, the notice given is valid, regardless of the form or wording of the Federal notice, even if not complying with State procedure.
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The filing of the Federal notice provides the notification demanded of due process of the law, which is a constitutional right, and subsequent competing creditors are subordinate from this time.
The filing of the Federal notice provides the notification demanded of due process of the law, which is a constitutional right, and subsequent competing creditors are subordinate from this time.
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Numerous Federal Court decisions have upheld this basic right of other creditor’s with respect to notice of a tax lien, and the denial of its observance, in the event of competing creditors, is fatal to a claim against the assets of an individual.
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Quite apart from real property, statute has allowed a subsequent creditor to take precedence over a Federal lien in the event of the subsequent lien being held over the debtor’s securities, motor vehicles or retail inventory. Further, the Federal law allows a State lien to take priority when the tax applied is based upon the value of the property in issue.
Quite apart from real property, statute has allowed a subsequent creditor to take precedence over a Federal lien in the event of the subsequent lien being held over the debtor’s securities, motor vehicles or retail inventory. Further, the Federal law allows a State lien to take priority when the tax applied is based upon the value of the property in issue.
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Governments Have Feelings Too A tax lien is the statutory right given to the government over the property in question to recover the tax debt accrued, but of large concern to competing creditors is the enforcement of a Federal levy.
Governments Have Feelings Too A tax lien is the statutory right given to the government over the property in question to recover the tax debt accrued, but of large concern to competing creditors is the enforcement of a Federal levy.
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In this case, statutory freedom exists for the IRS on behalf of the Federal government to issue a Notice of Intent to Levy and actually seize the property of a taxpayer without any legal proceedings whatsoever.
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However, the Federal government in its concern for the health of the economy and that of private enterprise, has been known to concede its claim if there exists a mortgagee over the property.
However, the Federal government in its concern for the health of the economy and that of private enterprise, has been known to concede its claim if there exists a mortgagee over the property.
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Primarily this is due to the government’s seeking to avoid discouraging private enterprise from taking risks and participating in the economy, but this concession is treated with irreverence in a truly curious reality of competing liens over a property owner’s assets.
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Of course, while the States are inferior to the Federal government in priority over competing claims, they have the temerity to assert priority over a mortgagee; the very beneficiary of the Federal concession.
Of course, while the States are inferior to the Federal government in priority over competing claims, they have the temerity to assert priority over a mortgagee; the very beneficiary of the Federal concession.
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This contradiction survives to confound and exasperate the holder of a lien deprived of knowledge in regard to the legal implications attending foreclosure, and the assertion of rights by competing creditors.
This contradiction survives to confound and exasperate the holder of a lien deprived of knowledge in regard to the legal implications attending foreclosure, and the assertion of rights by competing creditors.
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References:
26 U.S.C. SS 6323
Constitution of the United States Article VI cl2
Constitution of the United States, Amendment 14
Mennonite Board of Missions v Adams 462 U.S. 791 (1983)
26 U.S.C. SS 6323(b)
26 U.S.C.SS 6323 (b) (6)
26 U.S.C. SS 7701 (a) (21)
Brian v Gugin 853 F. Supp.358, 94-1 U.S. Tax Cas. (CCH) (D.Idaho 1994)
Gilmore, Grant Security Interests in Personal Property 1999 The Lawbook Exchange
References:
26 U.S.C. SS 6323
Constitution of the United States Article VI cl2
Constitution of the United States, Amendment 14
Mennonite Board of Missions v Adams 462 U.S. 791 (1983)
26 U.S.C. SS 6323(b)
26 U.S.C.SS 6323 (b) (6)
26 U.S.C. SS 7701 (a) (21)
Brian v Gugin 853 F. Supp.358, 94-1 U.S. Tax Cas. (CCH) (D.Idaho 1994)
Gilmore, Grant Security Interests in Personal Property 1999 The Lawbook Exchange
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