What Is An Arms Length Transaction?

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Categories: Short Sales & Foreclosures Posted on May 13th, 2010

When selling short, the lender that is taking the loss has a vested interest in making sure that they are getting market value for the property. One of the pre-cautions most of them put in place is making sure that the contract is within “Arms Length.” To ensure this, most banks will have the buyer and seller sign an addendum confirming the following…

The transaction has been negotiated by separate parties that are un-related have only their own interest at stake.
No buyer OR agent of the buyer is a FAMILY MEMBER or BUSINESS ASSOCIATE of the seller or borrower.
No buyer OR agent of the buyer shares a business interest with the seller or borrower.
There are no hidden terms or agreements that are not disclosed on the sales agreement or settlement statement.
The seller HAS NOT received ANY proceeds from the sale of the property reflected in the agreement.
No agent, seller, or buyer shall receive any proceeds not approved on the settlement statement.

Therefore, it is VERY important to be careful who you sell your home too AND that your transaction is completely disclosed on the settlement statement. Dishonesty in a short sale is not worth the penalties involved.

For any questions involving the short sale process contact me!

originally posted here

This entry was posted on Thursday, May 13th, 2010 at 6:00 AM and is filed under Short Sales & Foreclosures. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.