Bloomfield State Bank v. United States, No. 10-3939 (7th Cir. 2011)Annotate this Case
In 2004 the bank made a loan secured by a mortgage and all rents from the property. Three years later the borrower defaulted. The IRS filed a tax lien against the property. A receiver, appointed at the request of the bank, rented the property and collected $82,675. The district court held that the IRS lien had priority. The Seventh Circuit reversed and remanded. The bank had perfected its security interest in the rents under Indiana law; 26.U.S.C. 6323 gives such an interest priority over a federal tax lien if the property subject to the interest was "in existence" when the federal tax lien was filed. The property at issue is the real estate, not the rental income, and was in existence at the time the lien was filed.