Are non arms length short sales legal in Washington State

Seattle, WA Viewed 48 times. Posted about 1 month ago in Foreclosure

I have a client who wants to purchase a short sale from her sister (of a different last name). Is this legal or not ? The owner of note is a big corporate bank. One rep from the loss mitigation dept. said:

1) they will not accept non-arms length short sales

while another rep of the same bank said..

2) they might, depending on the circumstances

I'm stumped

Answers (1)

David A. Leen

This attorney is licensed in Washington. Posted about 1 month ago.

The lender can impose any limits on whether or not to accept a short sale. Generally they want the sale to be arms length to ensure that there is no collusion in the transaction. It is a policy, not a law. I recommend to explain the true situation rather than risk a claim of misrepresentation after the fact.

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