It does not sound like you have enough capital gain and have not been depreciating the property long enough to take advantage of the 1031/121 combination under Revenue Procedure 2005-14.

That may have been a mistake; they perhaps should have done the standard screw-the-landlord procedure and kept the last month against the security deposit, but they were naive and assumed it would be returned...

Will lending procedures on the home be different than usual?

Also there is some blood in the house, probably a lot I assume, are any special cleanup procedures that would have to be done?

I thought the HUD1 was done at actual time of closing from the Title Company.Can someone explain the correct procedure and how it works?

These representatives have hundreds, if not thousands of problem files that they are working on and they have specific procedures to abide by.

However, there was a county that stopped their Tax Sales for a few months (I believe this is what you may be referring to) as there were some questions being raised about the process or procedures.

In most metro areas, you can find all the pre-printed forms you will need, as well as the exact procedure to follow, at the (usually) district court.

We camp in the state parks there and it is just the finest place to be.

This means that the inventory of available homes will still be increasing while the number of people who can actually afford to buy will keep decreasing due to lending procedures getting back to normal and the fact that most people's real income keeps shrinking like it has for the last 20 years.