In a non-arm’s length transaction, the buyer and seller can be relatives, friends, married or soon-to-be married. But, if you buy your shiny, new Benz from the local car dealership, no matter how friendly the dealer was, that’s an arm’s length transaction. If your parents sell you their old beater car, that’s a non-arm’s length transaction. In an arm’s length transaction, there is no preexisting relationship between the buyer and the seller. In a non-arm’s length transaction, there is a preexisting relationship between the buyer and the seller. Non-arm’s length transactions can benefit both sellers and buyers, but they also come with increased scrutiny, restrictions and requirements to prevent either party from taking advantage of the other or avoiding obligations like property taxes. Non-arm’s length transactions and arm’s length transactions are real estate terms used to describe the relationship between the buyer and seller – and each comes with stipulations. And that first couple that stood at least an arm’s length away from each other? If one was buying a house from the other, that would be an arm’s length transaction. ![]() 2 were friends, family members or business partners and one of them was buying a house from the other, that would be a non-arm’s length transaction. It might be safe to assume they know each other well – very well. They are standing close to each other, maybe even arm in arm. It might be safe to imagine they don’t know each other very well. ![]() Let’s imagine two people standing apart from each other, at least arm’s length apart.
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