LAW OF THE LAND: IRS auctions – getting in on the action

William L. Martin III
William L. Martin III

The Internal Revenue Service routinely sends out updated lists of properties seized by the IRS that are scheduled for auction. While certain of the properties have minimum bid prices that seem like a “steal,” it is important for bidders to perform due diligence before getting in on the action.

The properties are subject to any senior encumbrances. For example, a Florida dwelling in Casselberry, approximately 2100 sq. ft., with a pool and attached garage, has a minimum bid price of $26,000. While $26,000 seems like a steal, a search of the official records reveals that the property is encumbered by a mortgage senior to the IRS’s Federal Tax Lien. A bidder would want to determine whether a $26,000 bid results in value after taking the amount of the mortgage into consideration. In other words, the bidder would want to make sure he or she is not buying into an underwater property. Encumbrances recorded after the IRS Federal Tax Lien are discharged by the sale.

All payments must be in the form of cash, certified cashier’s check, treasurer’s check, or money order. The IRS won’t loan you the money to buy the property. Moreover, the properties are offered “as is” — the IRS does not guarantee the properties and you have no recourse against the IRS after purchase.

Visitors to the IRS’s Auction Home will be fascinated by the variety of properties offered for auction: including real estate; aircraft; automobiles; commercial/industrial property, equipment, and supplies; and liquor licenses. Specific examples include a 2006 Dodge Charger, party barge and trailer, roofing and construction equipment, a 1947 Navion North American Aircraft, and merchandise and clothing in Opelika, Ala. And there are homes and commercial real estate properties on the block in almost every state in the US. 

A successful real estate bidder will receive a deed from the IRS (usually a Quit-Claim Deed) upon surrender of the Certificate of Sale. The deed will be granted in accordance with the laws of the state in which the real property is located. If you want to get in on the action, visit the IRS Auction Home on the Internal Revenue Service’s website, perform your due diligence, and submit a bid. It’s that easy.

Bill Martin is a former B-52 and B-1 pilot and senior attorney for the Federal Deposit Insurance Corporation. He is currently a partner in the law firm of Keefe, Anchors & Gordon in Fort Walton Beach, Fla..