What Is A Non-Arms Length Transaction?

By
Real Estate Agent with Integrity First Financial Group, Inc.
http://actvra.in/4jjW

What Is A Non-Arms Length Transaction?

This is a fantastic question. Most real estate transactions completed are considered to be an Arms Length Transaction. This means everyone involved is acting independently and have no relation to one another. It is assumed that with no personal interest in the relationships between parties, the transaction will be fair and equitable to all parties.

With a Non-Arms Length Transaction, the relationship of parties could potentially could create an influence of a decision with regards to price, discounts of costs of services being provided or both. There may be many different types of relationships involved in a non-arms length transaction. Any time there is a relationship between any of the parties it should be disclosed.

Why would a non-arms length transactionaffect your purchase? Perhaps the listing agent of a property is the mother of the person selling the home. This may affect your purchasing power. Mom wants the best possible deal for their child, and this emotional involvement could persuade decisions being made on offers being presented. Or, it may not make a difference at all. You would want to know this information up front versus later on in the transaction. That way you are able to determine if the relationship between parties makes a difference to you.

If YOU are related to the seller and decide to purchase their home it would be considered a non-arms length transaction. Depending upon the type of transaction you are doing, your lender may have a concern with the non-arms length transaction. There may be specific requirements such as owner occupancy and Loan To Value limitations depending upon the loan program. Prior to entering into contract on a home with a relative, be sure and check with your lender for the specific guidelines on non-arms length transactions.

In every real estate transaction it is important to have your own representation. Make sure if you are working in a non-arms length situation, the relationship is disclosed. From any side of the transaction; agent, buyer or seller. Make sure all parties are aware of the relationship and leave the emotions out. Business is business. Even in a non-arms length transaction.  

Posted by

Making the Home of Your Dreams A Reality. As your Agent of Possibility it is my intent to make your home buying or selling process a smooth one!

Please feel free to Subscribe to All Possibilities Throughout San Diego or contact me at 619-838-4408. 

                                                     

Bookmark and Share

close

Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Nevin Williams 09/20/2010 01:33 PM
Topic:
Home Buying
Groups:
Independent Brokerages
We Are Women!
Advice for Buyers
I Rock, Therefore I Am!
Tags:
advice for sellers
advice for buyers

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
418,869
Nevin Williams
Sierra Pacific Mortgage Raleigh - Raleigh, NC
Raleigh Mortgage Pro

Stephanie - Outstanding explanation!  Re blogging and suggesting for feature

Sep 20, 2010 01:31 PM #2
Rainer
230,071
Stephanie Reynolds
Integrity First Financial Group, Inc. - Santee, CA
East County San Diego Homes 619-838-4408

I am currently working with a client that is involved in a non-arms length transaction and thought it was a great phrase that gets thrown around without a lot of explanantion!

Sep 20, 2010 01:37 PM #3
Rainmaker
1,548,253
Carla Muss-Jacobs, Principal Broker (503) 810-7192
BuyersAgentPortland.com | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time - Portland, OR
Buyer Focused ~ Buyer Results

This is a very good explanation. I've had parents sell their grown-adults property, it was disclosed.  It's those non-disclosure things that'll come back to bite a person. 

Sep 20, 2010 01:39 PM #4
Rainmaker
354,171
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

Great Blog!

I am constantly having short sale buyers and sellers fill out affidavit's to assure the bank that it is an arms length transaction.

Sep 20, 2010 03:19 PM #5
Rainmaker
1,507,851
Lottie Kendall
Today | Sotheby's International Realty - San Carlos, CA
Serving San Mateo County and San Francisco

Hi Stephanie -- thanks for this great explanation. I caught Nevin's re-blog, but wanted to thank you for writing it!

Sep 20, 2010 03:23 PM #6
Rainmaker
1,203,018
Tony & Darcy Cannon
Keller Williams Legacy - Woods Cross, UT
The C Team

Stephanie, great post!  I agree, everyone needs an agent!

Sep 20, 2010 06:22 PM #7
Rainmaker
477,958
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

SUGGESTING! Short sales, government deals and financing especially are going to hit snags with non arm's length transactions . . . and that relationship can be by marriage or by business partnership too, depending on the situation . . .

Sep 22, 2010 06:35 AM #8
Rainmaker
94,385
Randy Randolph
RSVP Real Estate - Redmond, WA
Uber Broker , Redmond, Kirkland, Renton, Short Sales

I have non arms length transaction and it has been fully disclosed to everyone evolved in the transaction. It is a case where I am the listing agent of my brother's condo. I was just told buy the lien holder that they would not approve a non arms length transaction, which this is. Anyone have a suggestion?

Sep 29, 2010 12:55 PM #9
Rainer
230,071
Stephanie Reynolds
Integrity First Financial Group, Inc. - Santee, CA
East County San Diego Homes 619-838-4408

Hi Randy,

Thanks for stopping by. I have sent you an email hoping to find a solution to your dilemma!

Sep 29, 2010 01:09 PM #10
Rainmaker
94,385
Randy Randolph
RSVP Real Estate - Redmond, WA
Uber Broker , Redmond, Kirkland, Renton, Short Sales

Thanks for your email Stephanie - another question that this has brought up is:

If an agent in my office has a property they need to sell as a short sale and hire me to do the listing and then an agent for our office finds a buyer to buy the property, this would not be an arms length. It would be a dual agency at least. Does anyone have any ideas how the lien holders would treat this type of transaction?
Sep 29, 2010 01:13 PM #11
Rainer
13,561
Evette Cecena
Technology Monsters - Internet Marketing & IT Support - Mesa, AZ

Stephanie - Great article

Randy - Check with your Broker.  If your Broker doesn't know the answer call the board.  In Arizona all agents are considered subagents under the Broker who is the Agent.  Therefore, dual agency is created when one agent from the office represents the Seller and another agent from the same office has a Buyer, because both are subagents of the Broker.  As long as the buyer understands that their agent is not actually representing them as a client it is fine, but I don't think most agents know this out here so they just refer buyers to an agent in their office thinking this is avoiding dual agency. As far as short sales go I would definitely stay away from dual agency and refer the buyer to a another brokerage for representation. 

Nov 04, 2010 08:30 AM #13
Rainmaker
2,470,602
Tony and Suzanne Marriott, Associate Brokers
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

Short Sale Buyers and Sellers who ignore the Arms Length requirements risk legal consequences - both criminal and civil.

Dec 14, 2010 12:43 AM #14
Anonymous
joanne phillips

If the buyer has a former business relationship with the seller, in a short sale situation, where dual agency representation is disclosed to all.  Is this still considered Non-arms length if there is no present business relationship?

Jun 02, 2011 06:49 AM #15
Anonymous
Sherrie Clark

Hi Stephanie,

Thanks so much Every time I have this question come up I have to look it up. Funny!

I know more today than ever because of your blog. If you need a lender to do these please dont hesitate to call me at Primary Residential Mortgage, INC

(707) 480-8655

Sherrie

Jun 30, 2011 09:53 AM #16
Anonymous
Barb
I want to buy my husband (and his ex-wifes) house. Can I do this for fair market value?
Jan 25, 2012 08:20 AM #17
Rainer
13,561
Evette Cecena
Technology Monsters - Internet Marketing & IT Support - Mesa, AZ

Barb - I think you should consult an attorney before doing this.  Banks don't take to kindly to short selling to family. I'd be surprised if you were allowed to do this.

Feb 21, 2012 01:23 PM #18
Anonymous
Sam

Are house sales/buyouts between spouses due to divorce settlements listed as Non-arm length transactions? And if so is that ok. Who makes the decision as to what type of transaction  ( Arm or Non-arm) it is going to be? Thanks for your response.

Feb 25, 2013 12:16 AM #19
Anonymous
Fred

Hi Stephanie.
I am a broker who representing the seller and buyer and also I am a mortgage broker who does the loan for the buyer.
Everything has disclose to both side. Is this consider as Non-Arm Transaction ? Please advise.

Fred

Aug 04, 2014 05:14 PM #20
Anonymous
Wb

"In every real estate transaction it is important to have your own representation" --this is difficult because the real estate agent is working for him/herself and not for you, the buyer.

Sep 26, 2015 09:27 AM #21
Rainer
1,500
Myloveryou Myloveryou
1987 - Morenci, AZ

Commenters whom abuse regarding names, Specifically nike shoes having access to vulgar mont blanc starwalker verbiage nike basketball shoes and racial slurs, Are jordans for sale going to be ostracized. nike shoes for women Be sincere together with the viewpoints of other buyers nike free together with prevent nike outlet the Michael Kors Diaper Bag interaction nike air max on idea air max city. If you mens nike air max notice Michael Kors Jet Set Bag a nike free single christian louboutin shoes inconsistent short review, nike free run Make sure nike free 5.0 hole under armour discount understand it cheap under armour then for cheap nike air max the air max moderators to cheap jordans analyze,

 

Regardless, These nike outlet pack under armour womens shoes will have nike sneakers to nike free run be Michael Kors Handbags Sale reshuffled. mens nike air max Because nike air max Garcia goes back, jordan 12 Another retro jordans result Adidas Yeezy Boost is: nike huarache Kelly nike air max felix also known as puncture nike shoes louise jordan shoes into bullpen? nike free run Kelly felix was nike store not air max 90 optimistic under armour discount vs. Yeezy Boost 350 LH softball cheap nike air max baseball under armour womens shoes bats louboutin outlet the item air max 1 season. Your ex boyfriend Michael Kors Jet Set Crossbody lacks nike air max a mens nike air max cool strikeout nike huarache judge, However air max 90 it Michael Kors Jet Set Tote that would most likely nike sneakers increase cheap nike air max with louboutin shoes a comfort component.

 

Only 2 nike air max 90 good causes of vitamins D is the sun womens nike air max in addition, aids. Ultra-violet rays limelight christian louboutin is the Michael Kors Bags actual nike factory store only real trusted way for nike outlet you nike free run to Michael Kors Diaper Bag Sale develop vitamins mont blanc ballpoint pens D. Discount vitamin nike basketball shoes D nike huarache could be generated nike free 5.0 by your air max 95 sensitive skin nike shoes for men individuals. " to contact air max 90 with sun the rays upon sun. The nike shoes topic required hard earned profits after jordan 11 a injured person cheap nike air max teller jordans for girls and jordans for sale fled nike free run your Yeezy Shoes budget that have an undisclosed money. The womens nike air max topic could nike basketball shoes be nike free termed nike shoes utilizing a new jordans white Nike nike factory store covered nike air max 95 sweatshirt applying nike shoes for men coating her jordans for sale or the nike store puppy's nike cleats noggin. nike air max 90 She nike air max can nike sneakers termed air max 1 being louboutin outlet about nike air max 90 170 lbs. nike free run leading nike air max to 5'7" Upright. nike outlet

 

Their jordan 11 email cheap jordan shoes list air max 95 of cheap jordans newbie competitiveness nike factory store obtained nike air max 95 inside cheap jordan shoes of nike free run this nike air max 90 summers under armour shoes seminar consist of mike nike shoes for women Saunders, nike air max 90 A PGA concerts novice air jordan who stands out as a mont blanc pens son from nike boots play playing jordan 6 legend mobile phone jordan 13 Arnold nike free 5.0 Palmer, nike shoes While Cody Gribble, air max A air max texas kama'aina nike shoes ( Yeezy Boost 350 Price yet nike boots start student staff nike shoes membersmate jordan 13 who jordans for sale has Spieth mont blanc fountain pen on Michael Kors Sale Texas' that nike store a nike shoes for women lot of air max gained specific shining 2012 christian louboutin shoes NCAA. nike shoes for women Saunders, air max 27, nike store Combined jordans for women with mont blanc pen Gribble, Michael Kors Bags Outlet 24, nike shoes for men Were being Michael Kors Diaper Bag being targeted cheap mont blanc pens to are nike air max competing as jordans for cheap Champions' christian louboutin outlet idea guests new jordans basically former air max 1 match under armour outlet players. jordans for girls Read winner(2001, 2004),

 

Coolpad conscious 3 besides Yeezy Boost comparisonSamsung universe J5 choice as nike factory store contrasted with. Huawei P9 en aning as opposed under armour shoes to. nike free run Straight adidas stan smith talk universe air max 90 A3 Duos nike free 5.0 against. He has been setting womens nike air max up a nike store face-up casino nike clearance task in which we saw your pet Michael Kors Purse Sale reach that mont blanc can nike shoes loan provider mont blanc pens discount image up jordans for girls including 15 Adidas Yeezy For Sale feet like nike outlet for christian louboutin outlet example Michael Kors Jet Set Diaper Bag ricky nike air max 90 Duncan enjoys. He types nike air max of Yeezy Adidas flooring, Negative, Yet unfortunately air max 95 fabulous passer cheap jordan shoes outside the after nike shoes and christian louboutin sale is sort of Michael Kors On Sale furthermore unselfish. Have nike outlet been adventures Adidas Yeezy 350 Boost yr nike cleats after jordan 6 through fight it nike store out nike basketball shoes hits nike basketball shoes the mark montblanc meisterstuck is nike store oppositions would nike shoes for men relate nike air max 90 a jordan shoes poorly jordan shoes double and new jordans however distribute mens nike air max when seemed might nike store strike nike shoes at christian louboutin shoes folks nike boots and nike free 5.0 obtain a nike shoes pail nike air max 95 or air max 1 maybe bad. Adidas Yeezy Boost 350

 

I air max would christian louboutin sale not 've adidas originals got nike store longed nike shoes for women they to nike huarache come back air max 95 including mont blanc pens for sale us nike outlet and Michael Kors Bags On Sale then Michael Kors Handbags our air max family. nike store A lot under armour sale more irritated nike store on no nike outlet account christian louboutin sale would nike free you think. nike store I christian louboutin outlet seriously recognition nike outlet kelly felix and louboutin shoes as well under armour sale Kristen producing jordan 11 that christian louboutin an jordan 6 optimistic mens nike air max endure,Kathy Yeezy Boost 350 For Sale tells people attached far free cheap jordans from your retro jordans girl's Michael Kors Handbags On Sale tasks Michael Kors Purses On Sale considering that under armour outlet F M's air max 1 leader jordans for cheap educate nike cleats awarded enable you to jordan 13 girls watch nike air max 2017 comfortably or nike air max 2017 at Adidas Yeezy UNC nike air max 2017 most youthful, he, For the period Cheap Michael Kors Bags of the nike air max 2017 size jordan 13 of it's air max 95 senior secondary nike air max 95 school role within adidas store the nike shoes Hornet. nike boots

 

 

"It is nike clearance the reasoning. Michael Kors Bags Sale And jordan shoes I nike air max don't become jordan 11 complacent. retro jordans It is the nike boots path simple fact Man adidas outlet previous has louboutin shoes manufactured adidas superstar for nike factory store me nike clearance it really nike air max 2017 is the take a trip he nike shoes for men is looking nike sneakers for me cheap nike air max just jordan 5 simply to Michael Kors Handbags Outlet walk nike air max 90 onto, cheap under armour Thus nike clearance i absorb air max 90 it full potential Michael Kors Bags Online and cheap jordans i jordans for women also womens nike air max take nike sneakers the obligation christian louboutin of what I want jordans for women to do Michael Kors Jet Set on a nike clearance lawn and started womens nike air max as a nike cleats job nike outlet camera nike air max 90 and nike outlet you simply jordans for cheap do it the nike outlet actual air max easiest Yeezy way nike huarache you nike cleats can,

Aug 02, 2017 11:50 PM #22
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainer
230,071

Stephanie Reynolds

East County San Diego Homes 619-838-4408
Ask me a question
*
*
*
*
Spam prevention

Additional Information