Tkb International, Inc. v. United States of America, Tkb International, Inc. v. United States

This case presents the interesting question of whether a federal tax lien on real property, filed in the proper location but outside the property’s direct chain of title, is valid under 26 U.S.C. § 6323 (f)(4) as against a subsequent purchaser for value who took the property with actual knowledge of the tax lien. We affirm the district court and hold that under this particular statutory scheme, the tax liens in this case are not valid as against the subsequent purchaser who took the property with actual knowledge.

I

The real property involved in this case is located at 760 W. 16th Street, Number N., in Costa Mesa, California (hereinafter “the Property”). On November 27, 1984, the Property was purchased by Creative Ways, Inc. (“Creative Ways”), a California corporation wholly-owned by two equal shareholders, Clifford Hanson and Thomas Platfoot. At the time of purchase, a Promissory Note and Deed of Trust were executed in favor of Great Western Savings and Loan Association (“Great Western”) in the amount of $264,000. The developer of the Property took back a second Deed of Trust for $32,500, which was subsequently assigned to Great Western. Title was taken in the name of Creative…