I placed an offer in on a home (short sale) and the bank accepted the offer. Bank approval has been completed and all paperwork done on my part.

I would suggest that you keep fighting through this if you want the property.  Short sales are not easy, and problems such as yours can easily derail the process.  However, payment of the lienor can come from the seller (if they are motivated to sell), or the lender (if they are motivated to sell), or you can negotiate with the lienor directly and educate them that the lender could take the property through foreclosure and they will get nothing. Sometimes these problems just require persistence, and you usually are dealing with stubborn parties and apathetic parties, which makes it even more difficult. If you had a typical purchase contract, the burden of clearing title is on the seller, so if they are not apathetic, you might start with them.  Sometimes you can have a revised settlement statement submitted to the lender showing the lien payoff and they will agree to lower their proceeds to get the deal closed.  One of their primary concerns is to agree to a deal that has a market value for a price, and then they will negotiate any deductions from that (for closing fees, lien payoffs, taxes, etc.) And sometimes it is best to walk away to go onto the next deal.