Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I have been a tenant for a year and our landlord is going to short sale the property. I went to make an offer, got a buyers agent, got preapproved and we sent the offer to the the sellers agent. They wouldn't aceept the offer b/c I was told by the sellers agent that the owner would not sign the affidavit saying that this was a "Arms length transaction".
I called the bank, they said since I was only a tenant and was not related to the seller by family or marriage or commercial enterprise (business partner) that I could submit an offer.
Problem is that the seller will not sign the affidavit because he keeps saying that he is concerned that even though our relationship is a residentail lease agreement, he fears that make us partners.
I gave the the banks number told him to call and he says he did, he said they told him otherwise.
I can't make him sign anything. He is just stonewalling me for whatever reason and being a jerk.
Time to move on (literally) I suppose and forget about.
Issues with selling to tenant (from short seller's side) so this doesn't have to do with you personally.
Banks want full disclosure of finances.
Chances are distress homeowner renting out the home isn't exactly truthfully with finances. Probably hasn't reported rental income to IRS and doesn't want bank opening up pandora's box.
Who knows how long he/she's been renting out home without reporting income. In this day and age, many distress homeowners do not report income on rental property.
It's the truth.
They'd rather deal with someone else who can't really raise red flags about distress owner's finances.
Chances are distress homeowner renting out the home isn't exactly truthfully with finances. Probably hasn't reported rental income to IRS and doesn't want bank opening up pandora's box.
Sounds like this owner is not going to allow fraud stand in his way of pocketing your rent and walking away from his obligation to pay his mortgage and property taxes.
FlyingV, What you are running into is a very common situation involving renters. Although popular belief is the LL is doing something shady and thats why they won't sign the papers, based on what you stated, it appears it's just the opposite. The LL is probably operating above board and as such that is what is causing your issue.
Lets look at it. If the LL was operatuing under the table, there would be NO relationship at all and they wouldn;t hesitate to sign the paper. Afterall, if they were hiding the rental and income (as others seem to think) unless YOU opened your mouth and said something, nobody knows about it, since its hidden.
BUT,
your LL is concerend over the realtionship which means they are not hiding it and to them (very common thinking) there is some business or partner relationship going on. Why does the LL think that? Most people do not know this but in many local communities, rental property is subject to local ordinaces and in lots of places, a busines permit or some permit to operate is issued to make the business of renting, legal under local laws. Add to the ability to deduct expenses from rental income and all sorts of other legalize within leases and in your State Landlord Tenant laws, and you can see why an Above Board landlord will hesitate to sign that the transaction is at arms lenght.
So what do you do? You get a legal someone to explain in plain english the legalities of this. This may mean paying the consultation fee to a lawyer of their choice to ensure they are at ease in knowing exactly what the affadavit is about, what arms lenght means, and where they sit in the picture.
Now, back to the regularly scheduled "landlords are evil and must be doing something wrong" program already in progress.
FlyingV, What you are running into is a very common situation involving renters. Although popular belief is the LL is doing something shady and thats why they won't sign the papers, based on what you stated, it appears it's just the opposite. The LL is probably operating above board and as such that is what is causing your issue.
Lets look at it. If the LL was operatuing under the table, there would be NO relationship at all and they wouldn;t hesitate to sign the paper. Afterall, if they were hiding the rental and income (as others seem to think) unless YOU opened your mouth and said something, nobody knows about it, since its hidden.
BUT,
your LL is concerend over the realtionship which means they are not hiding it and to them (very common thinking) there is some business or partner relationship going on. Why does the LL think that? Most people do not know this but in many local communities, rental property is subject to local ordinaces and in lots of places, a busines permit or some permit to operate is issued to make the business of renting, legal under local laws. Add to the ability to deduct expenses from rental income and all sorts of other legalize within leases and in your State Landlord Tenant laws, and you can see why an Above Board landlord will hesitate to sign that the transaction is at arms lenght.
So what do you do? You get a legal someone to explain in plain english the legalities of this. This may mean paying the consultation fee to a lawyer of their choice to ensure they are at ease in knowing exactly what the affadavit is about, what arms lenght means, and where they sit in the picture.
Now, back to the regularly scheduled "landlords are evil and must be doing something wrong" program already in progress.
OP needs to look at county records to see if homeowner even filled out form to get rid of their homestead status. I live in Florida. I've seen quite a few homes eventually short sold that were being rented out for 1-2 years and homeowner still was listed as the primary home.
Why does this matter? Cause more banks are forgiving in short sales if the home is their primary home.
Like I said, in this case (short sale case), distress homeowners will try to tell the banks how little income they have. People seriously under report income when it comes to short sales.
OP needs to look at county records to see if homeowner even filled out form to get rid of their homestead status. I live in Florida. I've seen quite a few homes eventually short sold that were being rented out for 1-2 years and homeowner still was listed as the primary home.
Why does this matter? Cause more banks are forgiving in short sales if the home is their primary home.
Like I said, in this case (short sale case), distress homeowners will try to tell the banks how little income they have. People seriously under report income when it comes to short sales.
Thats true, however, in this case, the bank is aware that the property is being rented and that the renter is interested in purchasing it. It is also the bank that is saying that the rental lease arrangement does not crate any "Partner" or "Business" relationship as commonly thought. However, the seller apprears to be concerned/confused (which is very common in above board similar cases) and it is complicated by the fact that he apparently called the bank and got a different answer to the question, which is also very common when dealing with a bank. In reality, its not the Bank the seller needs to get reassurance from, but a lawyer. The OP needs to get the seller legal advice, not some bank interpretation (and we all know how they interprete things and interprete them diferently depending on who you speak to, what day of the week it is, if the person answering the the question cares if its factual, or if they got a date for their cousin's weddding or not))
As a former public accountant I can tell you that an arms length transaction involves a familial relationship or close personal tie to an individual.
This is definitely not arms length and the LL is way off base in interpretation.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
