Recently one of our readers asked how she would go about buying her sister’s house which was a short sale. Not possible we had to tell her, a short sale must be an arm’s-length transaction.
An arm’s-length transaction is one which takes place between parties that have no kind of familial or business connection to one another. This ensures that there is no question of conflict of interest and the parties to a transaction are independent and on an equal footing.
Many lenders are requiring buyers to sign arm’s-length transaction affidavits if the purchase is a short sale.