1st Mortgage Foreclosure Sale: IRS Succeeds In Squeezing 2nd Mortgage Holder For $100K To Release Its Right Of Redemption On Federal Tax Liens, Despite Its Subordinate Lien Priority

From the blog Bankruptcy-RealEstate-Insights.com:

• A secured junior lender who purchased property at a senior lender’s foreclosure sale paid $100,000 to the Internal Revenue Service to induce it to release a right of redemption in connection with its tax liens on the property.
  
  After a bankruptcy court held that the junior lender had priority over the IRS but would not address the settlement payment, the junior lender sued the IRS in the U.S. Court of Federal Claims. It sought return of its $100,000 settlement payment, ... asserting that the settlement agreement was void for lack of consideration based on an argument that the right of redemption was illusory because it was later held to be invalid.
  
  After losing in the Court of Federal Claims, [the junior lender] appealed to the Federal Circuit Court.

For more, see Trying To Undo A Settlement: Bad Liens Don’t Make Bad Settlement Payments.

For the Federal appeals court ruling, see Road & Highway Builders, LLC v. United States, 702 F.3d 1365 (Fed. Cir. 2012).