I have a tree just in front my my lot that isn't part of the lot that I am having problem removing. I can't click on it in the lot and can't click on it in edit town either. It is just in a way to view my sims in their home.

Another issue is when building a house on a new lot, I had to flatten the the property, but everything outside the lot is cliffs and hills. How do I flatten them too? I was limited on how big to place a lot in that area in the city.

Getting rid of the trees needs to be done with the world editor (from the edit town screen it will be the pen icon to the left of the bulldozer). Scroll in near the tree and the cursor should go to the hand cursor, allowing you to click the tree and move/delete it.

Flattening parts of the world will probably take using the Create a World program from EA. I never got the hang of using it unfortunately so someone else will have to weigh in on that.

Yes the world edit is needed to remove the tree if you can. I have found for on lots and in the world sometimes I have to pan in or out to grab something. It can take a few tries and I have had to try to grab in different places, top, bottom, middle, until I can.

And yes, you cannot alter terrain off a lot in the game. That can only be done in CAW.

OP has stated that they cannot click it in Edit Town (world editor).

Sorry for the delay in answering, real life got crazy and my apologies for misunderstanding that you had tried world edit.

I am going to assume that you tried putting a small lot on the tree then deleting the lot. When you tried that, did it say that you couldn't put the lot on unrouteable terrain? From what I understand, ground that has been marked as unrouteable when the world was made, can only be altered through create a world.