Are you Reading Your Short Sale Approval Letters Carefully?

armslength.jpgSeveral Banks now include an Arms Length Affidavit with their short sale approval letters which require the parties to certify "That the sale of the property is between parties who are unrelated and unaffiliated by family, marriage or commercial enterprise".

One Affidavit has the buyer certifying that they will not re-sell the property within 120 days without having substantially refurbished or added value to the property and goes on to require that the closing agent will not act as the closing agent of subsequent transactions involving the property within one year of closing the short sale.

The penalties?  Each signatory agrees to indemnity THE Bank and the current owner/holder of the mortgage lien for any and all loss resulting from any negligent or intentional misrepresentation made in the affidavit including, but not limited to, repayment of the amount of the reduced payoff of the loan".

The moral?  Disclose, disclose, disclose all relationships between the parties and read your paperwork carefully.  Ask your closing agent for these forms to review before your signing.

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Post is included in group: Market Updates
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2 Comments on Are you Reading Your Short Sale Approval Letters Carefully?

OCT
25
2011
179,253 Points

Julie

Every agent that concludes Shirt Sales should be well versed in any form that the asset holder sends to them to sign. They also should be very clear when they explain them to both the sellers and the buyers agents
4:06pm • #1
123,030 Points Outside Blog

Hi Laura, hopefully the brokers suggest that the parties seek advice from their own tax professional.  What I really wanted to point out here is the importance of disclosing any relationship between the parties in writing.  I don't think that is happening enough.
4:13pm • #2


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