What is a non-arm's length home sale?

A non-arm’s length transaction is when the buyer and seller have a personal relationship. A sale between friends, family or co-workers is considered to be a non-arm’s length transaction. With a non-arm’s length home sale, self-interest may not be the motivation – like a parent selling their home to an adult child.

Are non-arm's length mortgages illegal?

No, non-arm’s length mortgages are not illegal. In fact, lenders can approve loans for non-arm’s length sales in most situations. However, these types of transactions pose a greater risk of fraud for lenders and investors who purchase these loans on the secondary mortgage market.

What is a non-arm's length real estate transaction?

Most real estate transactions are arm’s length ones. Non-arm’s length: These are transactions in which the buyer and seller have a personal relationship.There is a higher chance of fraud when buyer and seller have a personal relationship, so non-arm’s length transactions often face more scrutiny.