Is there a limit to "family member" in the arm's length agreement?

I have been looking up the definition of family member in California. CAR says NOTHING.  California law seems to clarify it as "immediate" family.  How far out the family chain is okay?  The primary borrower is deceased, and I NEVER met her. Her son-in-law is the other borrower, a distant cousin by marriage. I met him a few times when he was in high school.  Have had no dealings with him or his wife (on title but not loan) in 15 years.

Someone mentioned in a recent reply that one cannot even represent friends or acquaintances.  In a small town like ours, that would mean we should close our doors. 

Karen in Small Town, California

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My opinion is that you are ok.

This would actually make a very good post!

When you read these "arm's lengh"  affidavits from the lenders We real estate agents would have very limited ability to do business! What about past clients? While former, is this a "business relationship"? I have developed close relation ships with former customers! Are we not able to now list this former customers home as a short sale?

Back in the "old days" BSS (Before Short Sales) I did a heck of lot of business with relatives, including selling my parent's home, buying selling several investment properties for a family member. All that was needed in the contracts, mls etc, was a simple "agent is related to  Seller/Buyer! "

Our daughter will be moving here. Do I avoid showing her short sales, (agent is related to buyer)

Networking, contacts, business relationships, referrals, has always been a real estate agent's greatest source of business! It is sad that because of the crap that as happened (and still happening because of just unscupulous agents lenders, title co etc)  creating the short sale epidemic, is limiting us die hard agents from doing business, without driving ourselves nuts, (good honest agets like Karen, ). Heck, will we need to get DNA tests done to be sure, we are "arm's lengh"?

At Arm's Length is a confusing arena. I recently sold a home under short sale terms where the Buyer's Realtor was the "father" of the Buyer. I explained to him there was a chance that he may not receive the commission, and possibly even have his offer rejected. He wrote a very detailed description in the offer about his relationship to the Buyer. We submitted the offer and it was approved. And, he received his commission. If disclosed, and approved, we are all good in my books.

I also listed my husband's cousin's property, where I described the relationship in detail in the listing agreement. I submitted it for HAFA approval, which we received in one week. We then received several offers, and my client chose a VA Buyer because he felt it was the honorable thing to do, and the offer was just as good as the others. (I was thrilled by the way; poor Vets rarely get a second look in this market). The standard "Listing Agent is related to Principal" went into the offer, and it was also approved.

I've read numerous At Arm's Length disclosure forms and the more I read them, the more I think that the bank is primarily focused on relationships between Buyers and Sellers. Example) I've also inquired about submitting an offer from a husband who wasn't on title to purchase the home from his wife who initially had purchased the home prior to their marriage. It was flat out rejected, as you can imagine.

Karen, based on these experiences and many others I've had in short sale situations, I would believe you are fine. Honesty is the best approach. Disclose the relationship and that will be your ticket out should there ever be an issue down the road.


Great Isabella!!!!!!!!!!!!

When in doubt, disclose, disclose, disclose, disclose!




I have found through the years that arm's length is defined by the bank and not by statute or a state association.  Check with your negotiator and make full disclosure at all times.  I have also found that it applies more to buyers and sellers and not necessarily sellers and agents.  I have sold properties for and to very closely related family members and have been the listing agent on properties where people who are loosely affiliated (even by family) have closed successful short sales.


Cameron Piper

Coldwell Banker Burnet

licensed MN Real Estate Broker

I can give you good advice too. The fact is that I recently came across a website where I managed to meet black singles, and I think you should pay attention to this too, because in fact there are sites here that are definitely worth paying attention to, and I'm sure you won't regret it. I wish you good luck!



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