There are TWO things going on. One is that when you sell a property in a fully taxable transaction, the passive loss carryovers are allowed to be used for that property.
But there is another thing happening. Passive losses are allowed to the extent that there are passive gains.
When your three rentals have a loss, there are no gains, so the losses can not be used (except for certain circumstances).
But you sold one property, presumably at a gain. You now have Passive Gain from that sale. Your passive losses are allowed to the extent that there are passive gains.
