Can a renter purchase the home he is renting in a short sale and it still be considered an arms length transaction?

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The renter is someone she knows and has been paying her rent to live there. There is no formal lease. Does that make a difference?

I would say it isn't necessary, but if you had a lease agreement, it may help. We have seen many tenants purchase short sales and it has not been a problem. On the same note though many banks will complete a buyer verification internally to audit the buyer. If the bank finds a reason for concern with the buyer ( family, potential financial benefits to the borrower ) they would not allow them to purchase the property.

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Ask  the lender.



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