Can an IRS Lien Override a Mortgage?

If you owe taxes and haven’t paid, the IRS can place a lien on all personal property including real estate.

But what if you have a mortgage on that property?

The IRS does not get priority over other liens placed on that property at an earlier date. Therefore the mortgage, which is also considered a lien, is always the most superior lien on a property. This is because the bank granting the mortgage must use the property as collateral in case the homeowner defaults on the loan.

An IRS lien never trumps the mortgage lender.

This means the IRS can foreclose on a property, but they must pay the mortgage lender off first before collecting any remaining amount to cover tax debt.

Although a Forgiveness and Debt Relief Act exists to protect debtors who lose their homes to foreclosure, not all homeowners are protected.

In certain cases the homeowner must pay the taxes. Learn more in this article:

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