What's The Penalty For Breaking The "Arms Length Transaction Notice"?

I would call your legal hotline for direction and secondly disclose to the proper authorities that you are now aware of the transgression and we were previously unaware. 

Joe Woutersz

I would call your legal hotline for direction and secondly disclose to the proper authorities that you are now aware of the transgression and we were previously unaware. 

Joe Woutersz

I was sucked into this by Ardell (#183) above posting this on her Facebook page.  I agree with post #184, that Ardell is twisting the facts and/or not doing any real analysis.

I agree with Joe Woutersz in #193 about consulting a legal hotline, or even paying an attorney to give you an opinion.  I did just that back when I was practicing law and thought I had to turn in a former client.  And I did so even though the rules applicable to attorneys on this type of thing were much clearer than the rules applicable to agents.  If you do take action here, that very well could have very negative impact on a former client, and you want to be on firm legal footing prior to taking such action.

In Washington under our standard contracts the seller doesn't have to be out until 9:00 pm, and closing is usually between noon and 5:00 p.m., so they are often not even be out of the house at closing.  While it is true they should be moving, many actually move the day of closing so even if you saw no moving activity that morning it would give you very little time to act.

Bryant, I've actually managed to read most the posts here a couple of times now, and I'm impressed at the percentage of agents which advised you to get legal assistence.  I hope you took that advice, and I hope you stayed away for the advice of those here who suggested taking action that might be adverse to your former client prior to getting legal advice  (e.g. contacting the bank before contacting an attorney).

Since I'm not authorized to practice law in Florida, and haven't seen the entire contract, I'm not going to give any legal advice here.  In fact, I wouldn't give specific legal advice on this even if it were based on Washington. Instead, I'm going to give an English lesson.  The language at issue is:

“There is no agreement, whether oral , written, or implied, between the Seller(s) and the Buyers and/or their respective agents which allows the Seller(s) to remain in the Property as tenants or to regain ownership of the Property at any time after the consummation of this sale transaction.”

As many have noted, that is written in the present tense.  The "at any time" language refers to the time the seller rents or regains ownership, not the time of the creation of the contract to do so.

Some people here interpret it as being:

“There is and will be no agreement, whether oral , written, or implied, between the Seller(s) and the Buyers and/or their respective agents which allows the Seller(s) to remain in the Property as tenants or to regain ownership of the Property at any time after the consummation of this sale transaction.”

I won't go into the legal reasons why a court might not interpret it that way, in part because I'm not at all familiar with Florida case law.  What I will point out though is that the bank is actually interested in is making sure the original contract did not include a favorable lease-back or option that might have affected the funds to be received by the bank.  They really don't have any interest or even care about where the seller lives after the fact.  Of course, if the seller moves away it's better for everyone for many different reasons, including that there is no question that a favorable leaseback or option exists, and if it does exist, no question as to when it was created or whether it affected the price. But the concern of the bank is over price, not over where the seller lives.  That very well could be the reason the language used is present tense.  Pure speculation.  It could also be drafting incompetence if they did mean something more, and there is some evidence of incompetence.  For example, the use of "Seller(s)" but not "Buyer(s)."  Also the use of the word "consummation," unless maybe they think one party is being screwed.  ;-)

Again though, I hope you get legal advice and look forward to your reporting back what that is if it's favorable and your attorney agrees it's okay to post that information here.

One more thing on this topic.  When I said above that there are "reasons why a court might not interpret it that way" I was referring generally to rules of construction.  The problem is though that the rules of construction used by courts often conflict with one another, and the courts often pick and choose the rules to get to the result desired by a particular judge or group of judges.  Thus, there is no assurance that if this matter were litigated that the court would recognize the language used is present tense, and it is likely that any attorney advising a real estate agent about this would warn them of that possibility. Thus, by going to an attorney it's unlikely you're going to get an opinion that you're 100% safe, unless maybe that attorney can find a recent binding decision.  Even so, I still recommend getting that legal opinion.

FWIW, I asked a very respected real estate attorney up here in Washington, and her response was that you had no duty to do anything to disclose, but that you also couldn't make any statements that might further any misrepresentations, if any, that might have been made.  It was via an email exchange, so I don't exactly know how she thought someone might further a mistatement after closing.  I guess if the bank knocked on your door and asked you a question?