Title Insurance Officer Guidance Needed
Hi everyone,
I’m reaching out for advice on Title Insurance, as I couldn’t find a specific subreddit for this topic. I hope someone here has experience in this area.
I’m a Realtor with a buyer client interested in purchasing a property under their corporation’s name. The client has a federal tax lien with the IRS that they claim is incorrect and are in the process of rectifying. However, their lender wants to title the property as “Acme Products, Inc., A California Corporation, by Wile E. Coyote, CEO.” The buyer prefers that their name does not appear in the title.
Since the transaction is being conducted through the corporation, and the only individual mentioned is the CEO, we were advised that this should not pose any issues for the property purchase. The concern lies more with future transactions, where the tax lien might need to be addressed. We want to confirm that the property acquisition won’t be at risk of seizure by the IRS. It’s also worth noting that the client owns three additional properties in their name that the IRS has not attempted to seize or foreclose on.
I understand this is a complicated situation. I’ve spoken with several title representatives, but I’m hoping someone here might have more insight or personal experience that could help us navigate this. Any guidance would be greatly appreciated!
It’s great that you’re gathering information to ensure a smooth transaction for your client. When it comes to title insurance and federal tax liens, there are a few key points to consider:
Title Vesting: Since the property will be purchased in the name of the corporation, the IRS typically cannot seize corporate assets to satisfy the personal tax lien of the CEO, as long as the transaction is legitimate and not an attempt to evade taxes. It’s important that the transfer of title be properly documented and that the intended use of the property aligns with corporate purposes.
IRS Tax Liens: Federal tax liens attach to personal assets but may not extend to corporate assets unless there is a determination that the corporation is merely an alter ego of the individual. In this case, you need to ensure that the corporation is treated as a separate legal entity with its own business operations.
Title Insurance Concerns: Title insurance underwriters will typically want to evaluate the implications of the tax lien, particularly in terms of any potential future claims against the property. Be transparent with the title company about the situation so they can provide the best guidance and offer the appropriate coverage.
Closing: At closing, it will be crucial to ensure that all documentation reflects the transaction as intended. If the buyer’s name should not appear on any documents, then all records must reflect that the purchase is being made by the corporation.
Consult With Legal Counsel: Given the complexities involved with corporate ownership and tax liens, it’s advisable to consult with a real estate attorney familiar with both corporate law and tax implications. They can help ensure that everything is structured appropriately and provide additional protection against any potential IRS claims in the future.
In summary, while it seems that the transaction can proceed without the buyer’s name appearing on the vesting title, it is wise to consult a professional to avoid any mishaps. Good luck, and I hope this helps clarify your situation!