Arms Length Affadavit and Renting property back from new owner

I have a question and have googled for weeks trying to get an official opinion on this from someone who might really know. It just doesnt seem to be addressed anywhere. Here it is:

 

"Affiant further says that there are no agreements or understandings, written or implied, that will permit Seller to remain in the above mentioned property as a renter or to regain ownership of said property at anytime after the execution of this short sale transaction"

 

This is the wording in my arms length affadavit for my short sale. I know the offer that has been submitted to my lender is someone who is going to rent the property out. When the arms length affadavit was signed and also by the COE there will not be any discussion and there hasn't been and won't be any written agreement, any implication of me renting the property back.

What if I ask the question about the buyer renting back to me after the COE and they would like to do that? I see no way by reading the exact legalese of that affadavit that any violation of that ffadavit has occurred. If the lender was to pursue anything, they would be having to prove something that never happened. Is my thinking correct?

I also think it is written in a way to scare people off from doing that but to those who read it closely who have a bit of a legal mind can see that they know they have no legal recourse in the event a rental agreement truly occurs in the fashion I described. Am I corrrect or somewhat correct or not correct? 

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Paul: The words, "written or implied", say it all. There can be no written or oral agreements outside the formal documents of a short sale, or the ramifications can be serious to you, as the seller. You are not allowed to remain in the property for any reason, even if you were to make an agreement with the new owner.

Banks have ways of checking up on this kind of thing. If you are found to have circumvented the Affidavit, it can have serious consequences to you -- all the way to unwinding the deal, suing you for fraud, and foreclosing on you without the benefit of a new short sale. Why not just accept the short sale, which is obviously better for you than a foreclosure, and then fulfill your written contract with the new buyer, giving him/her possession on the day of the closing? It does not matter if the new owner will rent the property to someone else. You, as the short seller, cannot be the new renter. In my experience, the Bank will have a non-interested 3rd party do an inspection prior to the closing to make sure that you have moved out. If not, the closing will be delayed until you are out.

The fact that you say there "won't be any written agreement, any implication of me renting the property back," alerts me right away that you believe it's okay for you to circumvent your Affidavit and do whatever you wish. It's not okay, and that is not how it's going to work. If I were you, I wouldn't even try it.

If you complete this short sale, you have been given a gift of a reduced hit on your credit score, and an opportunity to get on with your life. Make up your mind that it won't happen in this house, find a new place for yourself, and move on.

Best of luck in your new surroundings,
Tracy Howard
Tracy,

I just don't think anyone understands this except lawyers. When I signed the affadavit there was no written or implied agreement. I never spoke to the buyers. At close of escrow there will have been no written or implied agreement. I will have never spoken to the buyers. I am looking for a lawyer to either back up what I am saying or tell me some case law that says I am wrong. You clearly are not a lawyer because you dont even understand what I am saying.

If I speak to the buyers AFTER the close of escrow and LONG AFTER I signed an agreement that said there was no written or implied agreement that I would rent out this property from them (there wasn't a written or implied agreement), there is nothing that says I can't NOW have a written agreement to rent the property from them. I think the affadavit serves 2 purposes. It doesnt want a buyer's decisions on the sale to be effected by the fact that they may have an immediate renter and it is to be punitive agaisnt the seller. The language is ambiguous to scare a seller into thinking they cant talk to a buyer AFTER the COE. Bottom line, a bank can not infringe on someone's civil rights to rent to whomever they want AFTER they own a property. If the banks could do that the arm's length affadavit would include something to the effect that "additionally no agreement can be reached AFTER the close of escrow that would permit the seller to remain in the home." The banks know they can't infringe on civil rights, but they had attorneys draft a document that is meant to scare people into thinking there is NO possible way they can rent the property. I contend that as long as there is no written or implied agreement between buyer and seller at the time the affadavit is signed or at closing, whichever comes last, the bank CAN NOT control who the buyer rents to.

Only lawyers or agents or anyone who understands a bit about law and legalities please respond.
Paul, You 're grabbing at straws. The language is not ambiguous. It's not about the timing of the signing. It's about the fact after closing. But certainly seek legal advice. If it's a battle you want to fight by all means fight it. Fighting it hear won't do you any good.

Your argument is like saying "I promise not to trespass on your property" . Then signing an agreement to that affect. 2 days later you change your mind and trespass. When caught you go in front of the judge and try to explain that when you signed the agreement you had no intent of trespassing but then changed your mind. The judge will laugh at you and find you guilty. Make sense?



Paul Jones said:
Tracy,

I just don't think anyone understands this except lawyers. When I signed the affadavit there was no written or implied agreement. I never spoke to the buyers. At close of escrow there will have been no written or implied agreement. I will have never spoken to the buyers. I am looking for a lawyer to either back up what I am saying or tell me some case law that says I am wrong. You clearly are not a lawyer because you dont even understand what I am saying.

If I speak to the buyers AFTER the close of escrow and LONG AFTER I signed an agreement that said there was no written or implied agreement that I would rent out this property from them (there wasn't a written or implied agreement), there is nothing that says I can't NOW have a written agreement to rent the property from them. I think the affadavit serves 2 purposes. It doesnt want a buyer's decisions on the sale to be effected by the fact that they may have an immediate renter and it is to be punitive agaisnt the seller. The language is ambiguous to scare a seller into thinking they cant talk to a buyer AFTER the COE. Bottom line, a bank can not infringe on someone's civil rights to rent to whomever they want AFTER they own a property. If the banks could do that the arm's length affadavit would include something to the effect that "additionally no agreement can be reached AFTER the close of escrow that would permit the seller to remain in the home." The banks know they can't infringe on civil rights, but they had attorneys draft a document that is meant to scare people into thinking there is NO possible way they can rent the property. I contend that as long as there is no written or implied agreement between buyer and seller at the time the affadavit is signed or at closing, whichever comes last, the bank CAN NOT control who the buyer rents to.

Only lawyers or agents or anyone who understands a bit about law and legalities please respond.
Bryant, with all due respect, your example about trespassing does not hold water nor is it relevant. I am trying to establish whether or not a lender or investor in a court of law would be lawfully able to do anything in the event an agreement is struck AFTER the close of escrow. Contracts and affadavits are about EXACT words and if the banks were legally allowed to control behaviors AFTER the close of escrow the affadavit would read that way.

In your example someone would be signing a contract not to trespass (in the future). The contract would not be written "there is an agreement not to trespass". That would not make any sense to write an agreement with those words nor would it be true. In a silly world it might read "this is an agreement that I WILL NOT trespass" but again that would be about the future. In the real word it would read, "I will not trespass." The ARMS length affadavit is strictly worded about RIGHT NOW and the PAST, I believe knowing there is no legal way to enforce it in the FUTURE. People don't seem to understand about "tense" and its importance in this affadavit. People seem to think "implied or written" are the operative words. The most important word in this affadavit is "IS". "There IS no agreement, written or implied". And no, I am not Bill Clinton.

Again, I repeat, I believe the affadavit serves 2 purposes with regard to renting. They do not want any decisions by buyer or seller to be made with the thought that the buyer will have an immediate renter or that the seller makes his/her decisions on whether to sell the property or who to sell it to dependent on the thought that he/she may be able to stay. It is also punitive, so it is written in an ambiguous way to fool people like you and Tracy into not even thinking about what I am talking about. Yes, the banks are that devious and yes they pay big money to lawyers to draft documents like that knowing they cant legallly do anything after COE but they can certainly try to scare people. That is my thought on it and I am looking for legal opinions on it from this board as opposed to paying a lawyer. A lawyer that I spoke to said that I am on the right path with my argument. Just thought I would solicit more opinions and maybe help others to realize not to discuss renting with a buyer until after COE. If one really follows that code, there is no way the bank would be able to prove something that NEVER happened.
Brian, well put.

When my child was 5-6 years old she tried to practice this kind of "logic" on me. It was all about getting what she wanted without having to live up to HER promises, i.e., a promise made yesterday has no effect today or tomorrow.

Affidavits are subject to the law of perjury, which we have heard about "ad nauseum" recently.

Tracy


To Paul: There are probably some attorneys out there who would agree with your views. Find one and go for it. The fact that you haven't been able to find anything after you have "googled it for weeks" may have a clue for you. FYI, I do have a background in law, graduated with honors as a JD, and chose not to practice law, but to spend the first years of my career as a real estate paralegal, which led to my decision to become a real estate broker. Just trying to help keep you out of trouble. Your choice!!
Tracy, no one would be perjuring themselves. This is not childs business. This is LAW and this would not be perjury. I understand why you chose not to practice law. You would be giving people advice based on lessons you're learning from your child.
Tracy, lawyers and banks would screw you over in 2 seconds about exact words in a contract. Why not use it back on them?

Why would they not write the affadavit in such a way that states "nor will there be any agreement in the future that would allow the seller to remain in the property." They know its an infringement of civil rights, particularly when the new owner owns the home outright. They leave that phrase out for a reason Tracy.
OKEY DOKEY!

Paul Jones said:
Tracy, lawyers and banks would screw you over in 2 seconds about exact words in a contract. Why not use it back on them?

Why would they not write the affadavit in such a way that states "nor will there be any agreement in the future that would allow the seller to remain in the property." They know its an infringement of civil rights, particularly when the new owner owns the home outright. They leave that phrase out for a reason Tracy.
Perjury is a statement in court under oath that is not true Tracy. Any court case involving this would be whether or not I violated that affadavit. The question in court would be whether or not I violated something I signed. This is not about finding a lawyer who agrees with me. Either my thinking is correct or it is wrong. There is no ambiguity. If my thinking is correct a judge could not rule against me.
Well, Paul, you seem to have all the answers you want. So, as I said before, find an attorney to back you up and go for it!! Oh, and also look up "perjury" for an accurate definition.
Best luck,
Tracy


Paul Jones said:
Perjury is a statement in court under oath that is not true Tracy. Any court case involving this would be whether or not I violated that affadavit. The question in court would be whether or not I violated something I signed. This is not about finding a lawyer who agrees with me. Either my thinking is correct or it is wrong. There is no ambiguity. If my thinking is correct a judge could not rule against me.
Paul, I wouldn't even consider renting back to you if I was the new buyer. Banks are now UNDOING short sales and foreclosures where fraud has been committed and to me, that would be way to risky.

Yes I do believe the law is open to interpretation, but lenders don't want you to remain on the property or take ownership again. It's pretty cut and dry to me. If you would like to take owneship again or rent back from the buyer, write up a disclosure before the closing and put it into your contract. The lender has every ability to read and decide whether they will approve it.

As much as if I were the buyer and wouldn't rent back to you, there is a strong part of me that believes once I own a property, I should be able to do whatever the hell I want with it. The problem is lenders are so fearful of fraud right now, so they are spitting out all kinds of arms length affidavits, disclosures, addendums, you name it to protect themselves. This is the nature of short sales at this current time. No one cares for it, but we have to adapt to it or possibly be subject to huge liability.

There are a ton of houses on the market to rent. Find one, and move on.
Smitty much better answer than the previous posters. I am the one who would be ulta fearful of a reversal as this short sale is VERY important to me. I would only rent back if I find the bank has no recourse. I think the verbiage in the affadavit has done an incredible job of scaring people off. The banks hired a good law firm to do the legalese to put as much doubt in peoples minds and it has worked. I never see any threads like this anywhere on the net and the few posts I see on this, people are very afraid of that language.

Smitty, I am ready to move on because of the risk that you are talking about and the fact that I would not want to have to pay a lawyer to defend a case that I would probably win. Bank may just want someone to have to pay legal bills to defend themselves.

My real goal is for this thread to go viral and bring this issue into peoples consciousness and have real estate attorneys and other real estate professionals including bankers weigh in on it.

I think until now the banks lawyers in drafting that agreement with that great ambiguous verbiage have done a wonderful job of pulling wool over the collective masses eyes. There is a very good chance they know they can not pursue such matters after COE and have done a great job of scaring people away from questioning. That is why I cant find anywhere a good thread discussing the true legalities of this.

Any suggestions to help me bring this thread viral as opposed to this one website? Last thing the banks want, but it would be great for the consumer.

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