Pay Off Tax Liens by Selling Your Bay Area Home for Cash

If you have a tax lien on your Bay Area home. Federal IRS, state Franchise Tax Board, county property tax, or any combination. And the debt is large enough that you can't easily clear it on your own, selling the house is often the cleanest exit. We do this regularly.

Here's how it works in practice.

When we close, the title company pulls a payoff statement from each lien holder. Federal IRS liens, FTB liens, county tax delinquencies, judgment liens. Every encumbrance gets paid off at closing from the sale proceeds before anything goes to you. You don't write a check to the IRS or the state. The title company handles the wires.

If there's enough equity in the house to cover everything owed, you walk away with whatever's left over. If the liens equal or exceed the home's value, we may still be able to do a deal. Sometimes with negotiated discounts on certain kinds of debt, sometimes with a short sale arrangement. Every situation is different and worth a conversation.

A few things to know.

The IRS and state tax agencies will negotiate payoff amounts in some situations, especially for older liens. We can help coordinate that as part of the closing.

A traditional listing with significant tax liens is harder than it sounds. Some buyers' lenders won't fund the deal until the liens are released, which can create a chicken-and-egg problem. We pay cash, so the lender issue doesn't apply.

You don't have to settle the liens before talking to us. We work with whatever situation you have today. Call us, walk through the situation honestly, and we'll tell you what's possible.

Call or text 415-800-1415, or fill out the short form below. We'll review the situation with you and let you know if a sale makes sense.

County, IRS, and FTB: three different animals

Not all tax debt behaves the same way once you decide to sell, and it helps to know which flavor you're dealing with.

Delinquent county property taxes are the most common. Miss enough installments and the county adds penalties, and if the default runs long enough the property eventually becomes eligible for a county tax sale. The mechanics at closing are simple, though. Escrow requests a redemption figure from the tax collector, the amount comes out of your proceeds, and the county is done with you. Of the three, this one clears the fastest.

A federal IRS lien attaches to everything you own, and it shows up the moment title runs a search. Escrow requests a payoff letter, the IRS responds with a balance calculated to a specific date, and the funds get wired at closing. If the number on that letter is higher than the last notice you saw, that's normal. Interest and penalties keep accruing until the day the payoff actually lands.

A California Franchise Tax Board recording works much like the federal version, just with Sacramento on the other end. Escrow orders a demand, the FTB states the current balance, and it gets paid through the same closing.

We've closed sales with one of these on title, two of these, and all three stacked on the same house.

A lien is not a levy, and that difference matters

A tax lien is a recorded claim against your property. It sits on title and gets satisfied when the property sells. A levy is the government actually taking assets: funds pulled from a bank account, a slice of your wages. The claim almost always comes first. If you're still at that stage, you control the timing of the sale, and that control is worth protecting. It shrinks the longer the debt sits, because the balance grows every month you wait.

What if the numbers are tight? When sale proceeds can't cover the full federal balance, the IRS has a formal discharge process that can release a specific property from its claim so a sale can close anyway. It takes an application, documentation, and lead time, and whether it fits your case is a question for a CPA or tax attorney, not for us. We'll run the sale-side numbers with you honestly so you and your advisor know exactly what there is to work with.

If the underlying problem is unpaid property taxes and nothing else has been recorded yet, our back taxes page covers that earlier stage. If a mortgage default is also in the picture, we handle both in one transaction.

When listing beats selling to us

Sometimes it does, and we'll say so. If you have strong equity, one modest county balance, a house in decent shape, and no pressure from the taxing agency, a traditional listing will usually net you more even after commissions. The debt gets paid through escrow the same way with a retail buyer.

The sellers who really need us have the heavier version: several recorded debts, a house that needs work, a levy threat getting closer, or equity so thin that a financed buyer's lender balks. In those cases a cash offer with a firm closing date is often the difference between a sale you control and one the government schedules for you.