IRS or State Liens can be removed to proceed with the sale. But these liens will stay withe the sellers.
Property Tax liens will need to be paid before title can be transfered and will probably be paid at closing. The bank proceeds should allow for these payments and should be on the HUD statement.
I cannot tell what stage you are in at this point. But it sounds like you found a listing that states it has a tax lien on it. Maybe meaning they want the buyer to pay the lien. Not likely!? need to clarify...
But to answer your questions yes an owner can sell a house with a tax lien on it but that is why you need proper representation when buying a home. Title insurance will protect you from this.
No it does not mean the bank has foreclosed but who ever owns the tax lien can foreclose if the redemption period is over. usually 24 months. Banks will generally protect their investments and pay those liens off.
REMAX OF CHERRY HILL
1736 Rt 70 East
Cherry Hill NJ 08003
Office (856) 424-4040 Ext 187
Fax (856) 751-2791
Cell (856) 296-4999
Hope this helps! Feel free to contact me with more specific questions. Eric
You can learn more about the short sale process here:http://www.shortsalespeople.com