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Adam Leitman Bailey, P.C. Navigates Tax Liens and Forces Closing

Attorneys at Adam Leitman Bailey, P.C. represented the buyer of a professional office space in a luxury building on the Upper East Side of Manhattan whose contract of sale was in jeopardy after a lien and judgment search revealed federal and New York State tax liens that the seller was unable to fully satisfy out of the proceeds from the sale of the unit.

Immediately upon learning of the tax liens encumbering the unit, Adam Leitman Bailey, P.C. called the seller’s attorney and was initially told that the seller did not have sufficient funds to pay the deficiency between the tax liens and the proceeds from the sale. In response, Adam Leitman Bailey, P.C. strongly encouraged the seller’s attorney to apply for a Certificate of Discharge from Federal  Tax Lien pursuant to Internal Revenue Code Section 6325(b) which would have removed the liens from this specific property only so that the unit could have been transferred to the buyer free of any tax liens (see IRS Form 14135).

After the seller’s attorney failed to timely apply for the discharge of tax lien as recommended, attorneys at Adam Leitman Bailey, P.C. sent the seller a letter unilaterally designating a “time of essence” closing date within (30) days, and further advised that in the event the seller was unable to fully satisfy or discharge the tax liens within said thirty (30) day period, the buyer would cancel the contract and be entitled to the return of the contract deposit plus reasonable costs and expenses.

Shortly after sending the “time of essence” letter to the seller’s counsel, the seller agreed to borrow funds from a third-party to pay the tax liens in full. The parties closed the sale and Adam Leitman Bailey, P.C. negotiated a substantial closing credit for the buyer due to the delay in closing by the seller. Adam Leitman Bailey, P.C.’s innovative approach to problem-solving and comprehensive understanding of the Internal Revenue Code was crucial to achieving a successful outcome.

Jack Erdos, Esq. and Andrew C. Jorges, Esq. represented the buyer in this matter.

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