Just so you know when selling - - Not only is there the Capital Gains tax and the Depreciation Recapture, Alternative Minimum Tax to deal with, but effective Jan 2016, there's a new Net Investment Tax - Form 8960 Add the Fed and State (Calif in my case) and Taxes take ~48% of the Settlement Statement proceeds - - Oh the price to be "free".

(Hybrid offers, Control and Roll, Check Funds, Delayed settlement techniques - to mention a few)It has been a long ride - a journey that many times I wanted to give up and work for the man.

I have Zero settlement cracks after 14 years.We do have a HELOC on the original house (zero balance) but it only has a $15k limit.

My dad received a pretty decent settlement in a injury case at his job so he was able to give me $20,000.

The bank (seller) has to provide clear these (items owed up until settlement date) or I don’t have to close.

It is prohibited under Section 8 of the federal law "Real Estate Settlement Procedures Act" (RESPA) according to what I found online.

If the settlement is not done yet, is that a deal breaker?

Long story short, the person literally said just send us x dollars (more of a settlement than anything)..so they collected it but did not seem to have a high degree of expertise about the capital gain topic at that time....you might use an expert who can help minimize the federal and state tax burden if possible...

The link has a trailing period:http://www.freddiemac.com/sell/guide/bulletins/pdf/bll042208.pdfHere's the text where they state four max:The changes announced in this Bulletin are effective immediately except:August 1, 2008For Investment Property Mortgages with Freddie Mac Settlement Dates on or after this date, a Borrower who owns more than one financed investment Property may not own more than four 1- to 4-unit properties that are financed, including the subject propertyMy evidence for why this is not a cycle just like other cycles is the Case-Shiller index.

You need to look closely at your settlement statement.