In real estate, a short sale occurs when a bank or mortgage lender agrees to discount a loan balance due to an economic hardship on the part of the mortgagor (i.e., the seller). Circumstances determine whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market climate and the individual borrower's financial situation. A short sale typically is executed to prevent a home foreclosure. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing.
An arms-length or short sale affidavit is a document created by a bank in an attempt to prevent sellers from selling to relatives or friends to act as a straw buyer. Sometimes sellers make such side agreements. Then, after the transaction closes, the pretend buyers quickly transfer title back to the seller. This practice, in affect, means the sellers have repurchased their home at maybe half the cost, which greatly benefits those sellers.
Hawaii Short Sale or Arms Length Affidavit is a legal document used in the real estate industry to demonstrate that a transaction, specifically a short sale, is being conducted at an arm's length, or fair market value. It is a crucial form that helps prevent fraud, collusion, or any unethical activities that could manipulate property prices. In Hawaii, there are various types of Short Sale or Arms Length Affidavit. These include: 1. Hawaii Residential Short Sale or Arms Length Affidavit: This affidavit is commonly used in residential property transactions in Hawaii. It outlines the details of the sale, such as property address, buyer and seller information, purchase price, and confirms that the buyer and seller have no personal or financial relationship. 2. Hawaii Commercial Short Sale or Arms Length Affidavit: Similar to the residential affidavit, this document is tailored for commercial property transactions. It ensures that the sale is conducted fairly without any conflicts of interest, thus maintaining the integrity of the transaction. 3. Hawaii Distressed Property Short Sale or Arms Length Affidavit: This affidavit is specifically used in cases where the property is distressed or facing foreclosure. It requires additional information regarding the financial hardships of the seller and demonstrates that the buyer is not associated with the distressed property or the seller's financial situation. 4. Hawaii Investor Short Sale or Arms Length Affidavit: When an investor is involved in a short sale transaction, this affidavit is employed. It guarantees that the investor is not taking advantage of distressed sellers or manipulating the market. It emphasizes a genuine and arms-length transaction between parties. In all types of Hawaii Short Sale or Arms Length Affidavits, the document typically includes extensive information such as property details, seller's financial information, a declaration that the sale is conducted at fair market value, and a statement affirming that all parties involved have provided accurate and true information. The purpose of these affidavits is to maintain transparency, protect all parties involved, and ensure the sale is conducted legitimately. Lenders often require the completion of this affidavit to approve short sale transactions and ascertain that the process is free from any fraudulent activities. In conclusion, Hawaii Short Sale or Arms Length Affidavits serve as a vital tool in real estate transactions, providing a clear and documented declaration that the sale is conducted fairly and at arm's length. With various types suited for residential, commercial, distressed properties, or investor transactions, these affidavits play a significant role in protecting the integrity of the real estate market in Hawaii.
