§7425 Discharge of Liens

Summary

Protects the United States’ legal claim (lien) on property when that property is sold or a court orders a sale, unless the government was not properly notified. If the U.S. is not a party to a court case, a judgment or court-ordered sale will not disturb the government’s lien if the lien notice was filed where the law requires before the case began. If no notice was filed or no filing system exists, local law decides whether the lien is ended. If a court sale does end the lien, the United States can claim the sale proceeds (excluding costs) with the same priority as the lien, so long as it does so before the proceeds are paid out. For nonjudicial sales (sales under a lien contract, confession of judgment, or statutory lien), the sale will leave the U.S. lien in place if the lien was recorded more than 30 days before the sale and the government was not given the required advance notice. If the lien was not recorded in time, the local law of the place governs, or if the Secretary is given notice as required, local rules apply. The Secretary must get written notice at least 25 days before the sale by registered or certified mail or personal service. The United States can agree to a sale free of its lien. Perishable goods may be sold after notice to the Secretary before the sale, and the proceeds must be held as a fund subject to the U.S. lien for at least 30 days. If real property is sold that affects the U.S. lien, the Secretary may redeem it within 120 days (or a longer local redemption period), must pay the amount the law requires for redemption, and must record documents or a certificate of redemption to show and transfer title to the United States.