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Captainobvvi…, Home Buyer in 02864

Question about "Arms length affidavit" on short sale... Short term rent back?

Asked by Captainobvvious, 02864 Tue Dec 20, 2011

I am finding tons of information online about the "Arms length affidavit" that says that there is no implied or written agreement for the sellers to rent the property after closing... Does this also apply to very short term rent backs? The sellers of the house I am looking at want to rent back for 60 days or until the end of June, whichever comes first. I will NOT lie on the affidavit for obvious reasons so I want to make sure if this will be allowed or not.

Does the affidavit only apply to long term rent backs or ANY length of time at all?

Of course it varies by lender so I am asking for the general, most common deals.

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0 votes Thank Flag Link Thu Dec 22, 2011
I talked to the loan officer for the lender that is offering me the mortgage and he says that the lender as well as FHA is cool with letting them stay there for up to 60 days after closing.

If I think I can trust the owners, which I do... I think the only issue is THEIR lender being OK with it.

We put it in the short sale addendum to allow them 60 days maximum. If their lender asks us to sign the affidavit and it doesn't specify any time at all then we can't honor the addendum and the sellers will have no choice but to accept it.

I just hope that putting it in the addendum isn't going to slow down the process of approval... The addendum is just between me and the seller's right? The P&S agreement is what the bank is working off of... As far as I know.

My agent is telling me it is OK and to not worry about it.
0 votes Thank Flag Link Thu Dec 22, 2011
Renting back is NEVER a good idea. There are just too many factors that could make this an unhappy situation for yourself. Mainly, what if the ols sellers won't leave? Then you have to spend countless hours & additional money trying to evict them. Think long and hard if this is really a good idea & ask your agent for advice. We always try to steer our clients away from that situation.
The Marie Souza Team - Top Selling on Cape Cod
Cape Cod Real Estate Services
Phone: 508-790-2000
0 votes Thank Flag Link Wed Dec 21, 2011
On your mortgage application did you state the property is going to be owner occupied? If so you must move in within 30 days. The seller seems to want their cake and eat it. If they can't afford their home and need to short sale, then they must leave by closing.
0 votes Thank Flag Link Wed Dec 21, 2011
If you are borrowing money to close the deal and it is an owner occupied loan, check with your loan officer about the possession clause in the mortgage. It is very specific about when you must take possession if you are going to live there.

And do not let your LO tell you it isn’t important, he or she is not the one that will service the loan.
0 votes Thank Flag Link Wed Dec 21, 2011
My realtor said many that he deals with do specify that a short term period of like 60 days is allowed but if it isn't in the end we wont allow them to rent back.

It was added to the short sale addendum that we would allow it but obviously if it would come down to it and we can't and we all have to agree to not allow the rent back to close then we would all agree to not allow the rent back.

I was and am a little wary that there is no language in the addendum specifying that... I just hope that it merely being mentioned in the addendum doesn't throw a wrench into everything.

It is unlikely it would even close early enough to become an issue.
0 votes Thank Flag Link Wed Dec 21, 2011
If the Affidavit is like most it does not specify. I am sure the Short Sale lender would have specified if that option was available. Having said that you could try asking your Realtor to ask on your behalf. Not that it would go anywhere.

Good Luck!
0 votes Thank Flag Link Tue Dec 20, 2011
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