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I recently was able to help a client remove a federal tax lien from her property so we could short sell it.  Ok, if that's a lot of confusing terms, let's start with Short Sale.   A Short Sale is when a seller is trying to sell a property for less that what is owed on the property.  The bank who holds the mortgage has to approve the sale of the property in order for title to change names into the new buyers name. You can read even more about Short Sale by visiting my posts at http://www.LasVegasShortSaleConnection.com. I'm not quite sure why they call this type of transaction a short sale, because it typically takes a lot longer than a traditional transaction.   Bank have been so inundated with short sales, that they do not have the staff to cope with the thousands and thousands of short sale packages they are receiving each and everyday.  Having said that, the process is getting better and is becoming more streamlined.  I have a current buyer who got an approval on his offer in 30 days!! That's remarkable compared to the 200 day waits other clients have seen.

Anyway, in a short sale, the bank pays all of the real estate commission which is a question I hear all the time.  The bank will decide on the commission amount, the amount of closing cost it will consider for the new buyer, and all of the fee that you would normally see on a settlement statement.  The sellers DO NOT pay real estate commission.  If you have a federal tax lien on the property, all liens must be removed or discharge before clear title can be conveyed to the new buyer.  One of my clients recently had a tax lien and she was FREAKING out that the short sale processed was ruined.  After some carefully investigating on the IRS website and a few phone calls, I was able to find out how to discharge the lien in order to sell the home.  Here's a list of what they require:

First of all, there is no form to fill out. It's simply a letter typed out with certain verbiage and I would list each item in the package you're sending:

• Description of the property (Full Address) requesting the lien removal
• Show when the owner will be divested of all rights (The approval letter from the bank.  Sometimes the bank won't issue the release until the lien is discharge, but the IRS won't discharge until the bank approves the short sale.  That was an interesting hurdle to cross, but the IRS was shockingly helpful. GO IRS!!)
• A full copy of the lien OR a Pre-Liminary Title Report (Your Realtor should be able to provide this to you)
• A list of encumbrances OR a Pre-Liminary Title Report (Your Realtor should provide this or he's doing a bad job)
• A estimated HUD-1 showing all expenses of the property.
• An Appraisal of the property or two Broker Price Opinion from two disinterested parties qualified to give an opinion of value (I was able to use the bank's appraisal of the property instead of getting a comparative market analysis from colleagues of mine.)
• Your Full name, address, phone numbers and contact information where you can be reached.
• If you have an attorney, provide his contact information
• You must also copy a perjury statement VERBATUM and sign the letter.
• Also, you will need to get your escrow officer handling your short sale to sign an Tax Information Authorization.  Make sure you specifically name your escrow officer and not the entire title company.  That form is 8821 and can be downloaded from this link.

The full instructions available from the IRS.gov website is available by visiting this link:

Certificate of Discharge of Property from Federal Tax Lien

Now, all of this sounds like a lot of work, but actually your realtor will need to gather most of this documentation anyway.  Now, once you send it to the appropriate Tax office, (make sure you send it by certified or overnight mail so you can track the package) they will contact your escrow officer and start the process.  The have a total of 30 days to issue a letter of discharge.  When I sent my client's package overnight on a Monday, the package was received on Tuesday.  They called my escrow officer in TWO DAYS!! I was shocked.  After sending the IRS email statements from my client's lender, they issued a letter of discharge for the lien in one week.  I was absolutely, pleasantly surprised.   That was the easiest part of the short sale process.   It is definitely worth doing if you're serious about short selling your home.  If you'd like to discuss your options for your home, please contact me toll free at 1-866-589-1646 or email me at felipe@felipecrook.com.

Felipe Crook

Prudential Americana Group Realtors

Las Vegas NV 89117

1-866-589-1646