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Tax News
Partial Release of Lien for Short Sales

With many people facing financial difficulties, distressed homeowners are trying to sell their homes for less than the loan balance. This is called a Short Sale.

Sometimes, during Short Sale transactions, there may not be enough funds in escrow accounts to pay our recorded state tax lien in full. If this happens, we may be able to assist the taxpayer with a Partial Release of Lien.

A Partial Release of Lien releases a specific piece of property from a recorded state tax lien. However, it does not release the lien in its entirety. The lien remains in effect against the taxpayer and continues to encumber other property the taxpayer owns or acquires in the future.

To expedite a Partial Release of Lien request due to a Short Sale, the following documents are required:

  • Letter of explanation detailing the request.
  • Estimated closing statement.
  • Current preliminary title report that includes the legal description of the property.
  • Current appraisal.
  • Documentation to substantiate all lien payoffs through escrow.
  • Lender’s Short Sale Approval.
  • Additional documents may be required.

The above documents should be sent by the escrow or title representative handling the Short Sale transaction and sent via overnight mail to:

Attn: Lien Resolution Unit – Mail Stop A456
Franchise Tax Board
Sacramento, CA  95827

During the evaluation process we will:

  • Review the reason and substantiation for the request.
  • Verify that the property is being sold at, or near fair market value.
  • Determine that industry standard fees/commissions are charged.
  • Confirm that only senior lien holders and/or judgment creditors are paid.

We recognize the urgency to process a Partial Release of Lien request as quickly as possible. But they can take up to 21 working days due to increased requests.

Go to our website for more lien information.

Back to July 2011 Tax News