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

Reblogger Jim McCormack
Real Estate Broker/Owner with Nashville Short Sale Specialist - Jim McCormack - Edge Advantage Realty, LLC - 615-784-EDGE (3343) TN RE License# 320030

As a Nashville Tennessee short sale expert and REALTOR, I am faced with this type of situation occasionally.  Sometimes my short sale sellers ask if a friend or family can buy the property from them.  My answer is always that in order to be extra cautious, and not run afoul of the "Arms Length" transaction rules imposed by most short sale lenders, is "No".  While I don't agree with the short sale banks' policies (it reality it makes no difference who buys the property since the banks' are obtaining their own independent valuations of the properties either by BPO or appraisal), there is really no reason to pursue a sale which could violate the "Arms Length" transaction rules unless you have no other buyers and are facing an imminent foreclosure.  In that particular case, I would absolutely disclose the relationship between the buyer and seller in the short sale Purchase Agreement and let the lender decide whether to allow the sale or not.

Original content by Bryant Tutas BK607690

Short Sale negotiator

Hi folks. Last year I had a closing for one of my Orlando Short Sale listings. This particular lender required all parties, including the agents, to sign an Arms Length Transaction Notice. This notice basically states.....well here it is. Read it for yourself.

Kissimmee Florida Short Sale

Of course as an experienced Orlando Short Sale Agent and negotiator I explained this notice to the Seller not only at time of listing but also when it was received and before it was signed. It wasn't an issue as the Sellers were moving anyway and they certainly didn't know the Buyer. All parties agreed to the Arms Length Transaction Notice and signed it. Shortly thereafter the transaction closed and all was well.

Recently, and several months after closing, I was driving around and bumped into the Sellers. They were standing in the front yard of their old house. The one we did the Short Sale on!!

I pulled over to say "Hi" only to find out that they did not move and had signed a lease with the Buyer. I guess this all went down after closing. YIKES!!!

So what do we do now? Will the lender find out? Can I be held liable for an act I wasn't aware of? Can the Short Sale be rescinded?

What say you?

Are you facing foreclosure in Florida?

Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.

Want to find out more? www.CentralFloridaShortSales.com

***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

The BIO for Bryant Tutas

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Nashville Short Sale REALTOR - Stop Foreclosure
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