Can You Rent Back a Short Sale?

Money and HouseYou may think you can fool the bank, but the law says different!

Short Sales are still prevalent in the Real Estate market today. Many sellers who find themselves owing more on their loan than the property is worth may find themselves in a Short Sale scenario. Working with an experienced Short Sale Agent and or Attorney is the first thing that will need to be considered.

After the negotiations have been completed and the parties to the transaction move to the closing of the sale, a very important document will be presented for buyers and sellers to sign. The name of that document is called;

Affidavit of “Arms Length Transaction”

All parties to this contract hereby affirm that this is an “Arms length transaction.”

No party to this contract is a family member, business associate, or shares a business interest  with the mortgagee (you, seller, homeowner, anyone whose name is on the loan). Further, there are no hidden terms or special understandings between the buyer or seller or their agents or Mortgagee.(Like money, kickbacks, gifts and/or arrangements to move back in or stay in the property in any capacity including putting your kids names on the lease.)

The buyers and sellers nor their Agents have any agreements written or implied (spoken or hinted, a wink or a promise) that will allow the Seller to remain in the property as renters (you must move, your whole family must move, you must move everything and not move back, EVER) or regain ownership of said property (you cannot buy it back later from whomever purchases it, go on title and/or live there ever), at any time after execution of this short sale transaction.  None of the parties shall receive any proceeds from this transaction except the sales commission. (Buyers cannot receive credits, kickbacks or any funds from any party to the transaction unless written in as part of the contract, and approved by the short sale lender in their condition letter. Sellers cannot receive credits, kickbacks or any funds, gifts, gift cards, or any funds from any party to the transaction unless approved by the lender in writing as part of the contract and short sale lender condition letter, no matter what).

You will then be asked to sign and affirm this “Arms Length Transaction” Affidavit.  Putting your name on it says that you understand and agree that you are acting in good faith and do not intend to do any of the things that it states you will not do.  So, don’t.

Anything outside of this agreement is considered lender fraud.  It is not worth it.  If you have a legitimate short sale and your lender has approved a kinder, gentler solution to minimize impact to your family and your credit, it’s time to move on.  There is life after a short sale (or foreclosure) and a clean break and moving forward is in order for your well being, your family and for those of us whose tax dollars are going to bail out the lending institutions and make up some of these losses…”

Please feel free to contact me with any questions or concerns you may have. I am more than happy to privately review your personal situation and discuss all of your options.