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Trizon.recru…, Home Buyer in 85234

Restriction for sellers in a short Sale

Asked by Trizon.recruits@gmail.com, 85234 Tue Aug 7, 2012

I have a friend who is upsidedown in their home. Are there any restrictions to me purchasing the house from them and them staying in as renters? Can they buy back in future?
Thanks in advance.

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This will depend upon the lender involved with the seller. Many lenders will require that both buyer and seller have to sign a "arms length transaction" form, stating something to the effect of :

"...that you are not related to or a business associate of the seller and that there is no hidden agreements, and that the buyers do NOT intend for the seller to remain in the home as a tenant or to regain ownership at any time after the consummation of this sale ... under penalty of perjury .... and understand that it is a Federal Crime ... to knowingly or willingly make false statements...... punishable by fine or imprisonment."

That said I know that some people have said that they have done this (investors rented back to the seller that is). I am not sure if their lender allowed it or not, but most of the ones that we have been involved with have stated the above in the affidavit of an arm's length transaction. That form comes with the approval of the short sale. It is always best to check with the seller's lender, and your attorney can help advise you.

Best Regards,


Brenda

Ron & Brenda Cunningham
West USA Realty
602-980-3133

*** Recognized in the Phoenix Business Journal as "One of the Top 50 Realtors in the Valley" ***

Search the Official Active FlexMLS for homes for Free through our website:

http://www.CunninghamHomesAZ.com
1 vote Thank Flag Link Tue Aug 7, 2012
Some lenders require the buyer, seller, buyer's agent, and seller's agent to sign a form called an Affidavit of Arm's Length Transaction. This form can state that you aren't related to the sellers, are not giving the sellers financial incentive to sell their home, and the form typically will state that the sellers have to move out of the home at close of escrow. Not all banks require this form to be signed and not every form has these clauses in it. You may want to have your friend check with their bank to see if this form is required and to get a copy of the form so that you will know in advance if this is an option. In the event your friends would like help with a short sale on their home, I would be happy to help. I have worked with hundreds of homeowners in short sale situations and have special credentials that allow me to help sellers work with their bank. If you would like to review recommendations from my clients and the quality of the work you can do so at this link: http://www.trulia.com/voices/profile/Real_Estate_Pro-Phoenix…
0 votes Thank Flag Link Wed Aug 8, 2012
The banks are really trying to shut down this activity and hence have developed the "Arm's Length" documents discussed below. It is an area I would stay away from if were you.

Why don't we find you an investment home for the tenants you have? Nothing wrong with purchasing in a down market and what you choose to do in the future is then completely up to the parties.

Lots of options to consider while the value of property is low.
0 votes Thank Flag Link Tue Aug 7, 2012
This would be against the law. Don't do this.
Banks do audits on short sales and this could become a major legal and financial problem for you and your friend.

Hope this helps,

IrinaKaran
Beachfront Realty, Inc.
IrinaKaran@gmail.com
0 votes Thank Flag Link Tue Aug 7, 2012
Absolutely not. First, you would have to pay what is owed on the home, not market value. If you pay what is owed, just have your agent draw up the contract and have escrow opened. If you offer less than 1 cent what is owed, you need bank approval. If that's the case, the bank will not let you be first in line if they approved the short sale. You will also have to disclose your relationship with the bank, if they are involved as they would require an arms-length transaction.

Jeffrey Austin, ABR, CRS, GRI
Designated Broker/Owner
REAL ESTATE HOMES, LLC
http://www.newresalehomes.com
480.363.7653
0 votes Thank Flag Link Tue Aug 7, 2012
Lenders typically require an "arms length" agreement, but I can easily contact the lenders to find out for you. It costs nothing to get the details and I'd be happy to sit down with your friends and you to determine if a short sale is the best option.My fees are paid by the seller's lender in case of a short sale. Simply give me a call and I'd be happy to help out.
0 votes Thank Flag Link Tue Aug 7, 2012
Some lenders will ask you to sign a form that says that the previous owners will not be staying in the home and that you will not be selling it back to them for a period of time. This is generally part of the arm’s length transaction. You will need to check with the individual lenders and find out if they will allow it or not. Don't just assume one way or the other.

Has your friend listed their home yet? If not have them give me a call. If they end up listing with me then I will pay for your initial consultation with an experienced real estate attorney. It is important that they know their rights. Check out my site at http://www.PinalCountyShortSales.com today.
0 votes Thank Flag Link Tue Aug 7, 2012
Yes there are some restrictions that the banks put in place contractually. In many cases the sellers must actually vacate the property. If you are related in any way some banks will require an arms length agreement to prevent the short sale to related parties. If they follow these requirements, then you may still be able to rent to them or sell to them doen the road.

Your best bet would be to have a lawyer review during inslection period before closing to make sure you can do what you want to do.
0 votes Thank Flag Link Tue Aug 7, 2012
There are no restrictions. You could have the previous owner/tenant sign a lease once you buy the home.
0 votes Thank Flag Link Tue Aug 7, 2012
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