Is this considered an arms length transaction for a short sale?

Asked by Veronica, Modesto, CA Thu Feb 18, 2010

The house is for short sale and it's in my name only, my wife recently started working, she mentioned that our house was on short sale and it seems that one of the owners of my wife's company is interested in our house. Would this be considered in an arms length transaction?

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Answers

11
Anna M Brocco, Agent, Williston Park, NY
Sun Feb 21, 2010
Why not consult with an attorney specializing in real estate for a clear answer--most professionals do offer a free consultation.
1 vote
Rocky G.H. H…, Agent, Ripon, CA
Thu Feb 18, 2010
Hi Veronica,

You may also find this website interesting:

http://homebuying.about.com/od/shortsale/f/arms-length-affid…


Best regards,

"Rocky" G.H. Hawrysz, Realtor®, Broker Associate, CRS®, e-PRO®, ABR®, SRES®
Prudential California Realty
(209) 444-6610 - Direct Office Line
(209) 433-2000 - Direct Fax Line
(209) 915-6209 - Mobile
E-Mail: rocky@prucalifornia.com
Visit http://www.TeamHawrysz.com
License # 01468373
1 vote
Ray Calnan, , Los Angeles, CA
Thu Feb 18, 2010
Maybe not.

This is a typicla statement in a short sae addendum that a bank may require the parties to sign.

"No party to this contract is a family member, business associate, or share a business
interest with the mortgagee. Further, there are no hidden terms or special understandings
between the seller or buyer or their agents or Mortgagee."

The business associate part may cause problems. You may want to speak with an attorney and strongly consider disclosing the relationship to the bank granting the short sale.

Good luck,

Ray
1 vote
Rocky G.H. H…, Agent, Ripon, CA
Thu Sep 25, 2014
Hi Veronica,

Did you end up selling your home to the company? Just curious if your lender approved the sale?

Let us all know.

Best regards,

"Rocky" G.H. Hawrysz
Prudential California Realty
(209) 444-6610 - Direct Office Line
(209) 433-2000 - Direct Fax Line
(209) 915-6209 - Mobile
E-Mail: rocky@prucalifornia.com
Visit http://www.TeamHawrysz.com
License # 01468373
0 votes
Thomas Moser, Agent, East Northport, NY
Mon Apr 14, 2014
I'm sure his issue has been resolved, as this question is more then 4 years old.
0 votes
Robert Hazen…, Agent, Manteca, CA
Mon Apr 14, 2014
For your convenience, below is an example of the wording that you may see in an Affidavit of Arms Length Transaction that you will be required to sign in a short sale. Anything you do outside of the agreement that you sign may be considered lender fraud.

----------
Affidavit of Arms Length Transaction:

“All parties to this contract hereby affirm that this is an “arms length transaction.”
No party to this contract is a family member, business associate, or shares a business interest with the mortgagee (you, seller, homeowner, anyone whose name is on the loan). Further, there are no hidden terms or special understandings between the buyer or seller or their agents or Mortgagee.

The buyers and sellers nor their Agents have any agreements written or implied that will allow the Seller to remain in the property as renters or regain ownership of said property at any time after execution of this short sale transaction. None of the parties shall receive any proceeds from this transaction except the sales commission.”
----------

ADVICE:
So that you fully understand arm length transactions and the ramifications of signing one, you should seek the advice of a real estate attorney.
0 votes
Rick McGrath, Agent, Modesto, CA
Wed May 15, 2013
Depending on what lender you work with, ( many have different policies on what is considered arms length). Typically as long as a blood relative isn't buying the property you may be safe. Again it depends on the wording of the "Arms Length Disclosure" the lender has you sign. To be sure you should consult legal advice from an attorney. This way you know that you know.
0 votes
Henry Brooks, Agent, Ripon, CA
Fri Sep 7, 2012
You must sign “At Arms Length” docs which disclose this for the short sale. This way you would be protected by simply documenting this knowledge and acceptance between each party. If you have any other questions feel free to call me @ 209-814-0119. Thanks, Henry Brooks

Henry F. Brooks II (HB2)
Realtor, Branch Manager
BMC Real Estate
101B W. Main St. Ripon, CA 95366
Direct: 209.814.0119
Fax: 209.254.6727
DRE#01713865
Email: henry@realtorbrooks.com
Website http://:www.realtorbrooks.com
'The happiest of people don't necessarily Have the best of everything; They just make the most of everything they have!
0 votes
Ron Thomas, Agent, Fresno, CA
Tue Sep 20, 2011
I understand that the wording is "Immediate Family".

I can't imagine how you would disclose that you "knew" the buyer.

Good luck and may God bless
0 votes
Carol Perdew, Agent, Manteca, CA
Tue Sep 20, 2011
Veronica,

The best advice is real estate a transaction is in doubt, disclose. . .disclose . . . disclose. Disclosing this information to the short sale lender will protect you from liability if the lender finding out and canceling the transaction or pursuing recourse from you after closing. You will have to sign “Arms Length” paperwork for your short sale so it is better to be upfront about everything.

Thanks,
Carol Perdew
Prudential California Realty
(209) 239-7979
Carol@PerdewHomes.com
DRE 985176
0 votes
Fred Glick, Agent, Mountain View, CA
Thu Feb 18, 2010
Yes, because you and the owner of your wife's company are not related.
Web Reference:  http://fredglick.com
0 votes
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