Has anyone successfully convinced a Bank (specifically BoA) to accept a non-arm's length short sale? If you have, what steps did you take and documents you submitted?
This will get you started, hope it helps.
What's the exact non arms length relationship?
Thanks Sydney. The Identity of Interest Certification form definitely helps. I found a form online that would work. Just hope the bank accepts it.
It is a relative's non-owner occupied house that I want to buy and will not be using any conventional financing like FHA.
I have closed almost 150 short sales. B of A will require a short sale contract addendum. I was not able to attach it, but this is the verbiage as of March 2014. I hope that this helps. ** please note items # 3 and #11.
"This Addendum to Purchase Contract is entered into and is effective as of ___/___/___ by and between Seller(s) and Buyer(s) (hereinafter referred to as “the Parties”) and shall be deemed to amend, modify and supplement that certain Contract dated ___/___/___ by and between Seller(s) and Buyer(s) (the “Purchase Contract”).
NOW, THEREFORE, in consideration of the mutual benefits to be derived from this Short Sale Purchase Contract Addendum and of the representations, warranties, conditions and promises hereinafter acknowledged, Sellers and Buyers hereby agree as follows:
1. The Parties acknowledge and agree that the Subject Property is being sold in “as-is” condition.
2. The parties acknowledge and agree that the Seller may cancel this agreement prior to the ending date of the contract period without advance notice to the broker and without payment of a commission of any other consideration, if the property is conveyed via foreclosure to the mortgage insurer or the mortgage holder.
3. The Parties acknowledge and agree that the Subject Property must be sold through an “Arm’s-Length” Transaction. “Arm’s-length” means two unrelated parties characterized by a selling price and other terms and conditions that would prevail in a typical real estate sales transaction. No party to this contract is a family member, related by blood or marriage, is a business associate or shares a business interest with the mortgagor (Sellers).
4. The Parties acknowledge and agree that neither the Buyers nor the Sellers nor their respective Brokers/Agents have any agreements written or oral that will permit the Seller or the Seller’s family member to remain in the property as renters or regain ownership of said property at any time after the execution of the Short Sale transaction. This includes if the seller is retaining a direct or indirect ownership or possessory interest in the property and/or has a formal or informal option to obtain such as interest in the future.
5. Seller agrees to vacate the subject property within _____ days PRIOR TO closing of the transaction OR Seller agrees to vacate the subject property within _____ days after closing subject to terms as shown on the Purchase Contract.
6. The Parties acknowledge and agree that none of the parties shall receive any proceeds from this transaction.
7. The Parties acknowledge and agree the purchase contract cannot have any provisions for Assignment/Assignee and/or Option to purchase. Bank of America will NOT approve any transactions with these sales contract provisions and any such provisions are expressly deemed unapproved.
8. Buyer agrees that property cannot be sold or otherwise transferred within 30 days of closing.
Bank of America, N.A., Member FDIC. Equal Housing Lender. Â©2012 Bank of America Corporation. SHEET-12-12-0058.M C31001-2 05-2013
Short Sale Purchase Contract Addendum
Page 2 of 4
9. The Parties acknowledge and agree that, upon Bank of America's request, the Parties shall provide all material documents involved in the short payoff transaction, including but not limited to the Buyer(s') and Seller(s') HUD-1 Settlement Statements.
10. The Parties acknowledge and agree that this Short Sale transaction will not constitute appraisal fraud, flipping, identity theft and/or straw buying.
11. The Parties acknowledge and agree that any misrepresentation or deliberate omission of fact that would induce Bank of America, an Investor or a Mortgage Insurer to agree to the terms of a short payoff that would not have been approved had all facts been known, constitutes Short Sale Fraud and may subject the responsible Party to civil and/or criminal liability.
12. The Parties acknowledge and agree that this Addendum, together with the Sales Contract, shall constitute the entire and sole agreement between the Parties with respect to the Sale of the Subject property and supersede any prior agreements, negotiations, understandings, optional contracts or other matters, whether oral or written, with respect to the subject matter hereof. To the extent that any term or condition contained within the Short Sale Contract is contradictory or inconsistent with this Addendum, the Parties agree that this Addendum shall supersede. No alterations, modifications or waiver of any provision hereof shall be valid unless in writing and signed by Parties, FHA, VA, government agencies, any Investor and/or mortgage holder hereto.
Thanks Laura. However, what I am trying to do is the opposite. I know I can have my attorney put in language in my contract stating my relationship with the seller (a relative) hence this will be a "Non-Arm's Length Transaction".
I will be buying it cash and will not be using any conventional mortgage financing.
From your experience and any others here in BP that have done short sales; What is the likely hood that the Bank will accept an offer from a buyer who is related to the seller? I know the percentage will be low, but has it been done successfully.
My exit for this property is not to flip it but hold it long term for cash flow.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!