Are you Reading Your Short Sale Approval Letters Carefully?

Several 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.