Intermediate45 minutes9 terms

Arm's Length Transaction Key Terms for REI

This curated collection offers key terms that might be helpful when exploring arm's length transactions in real estate investment. It's designed as a quick reference to understand commonly referenced concepts and their importance in fair and legal property dealings, not a comprehensive legal guide.

Term Collection

Conflict of Interest

A situation where an individual or entity in real estate has competing interests that could influence their professional judgment or actions to their own benefit, potentially at the expense of another party.

Intermediate3 min

Appraisal

An appraisal is an unbiased, professional opinion of a property's market value, conducted by a licensed appraiser, primarily used for lending, buying, and selling decisions.

Intermediate14-15 min

Related Party Transaction

A transaction between parties who have a pre-existing relationship, such as family members, business partners, or entities under common control, which can raise concerns about fairness and arm's length dealing.

Intermediate5-6 min

Arm's Length Transaction

An arm's length transaction is a business deal between two independent, unrelated parties, ensuring fair market value and no undue influence.

Intermediate2-3 min

Due Diligence

Due diligence is the critical process of investigating and verifying all material facts about a property and its financials before a real estate acquisition, aiming to identify risks and ensure an informed investment decision.

Intermediate14-15 min

Fiduciary Duty

Fiduciary duty is a legal and ethical obligation for a professional to act in the best interest of their client, prioritizing the client's needs above their own with utmost loyalty, care, and disclosure.

Intermediate14-17 min

Market Value

Market value in real estate is the most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller acting prudently, knowledgeably, and typically uninfluenced by undue stimulus.

Beginner15-18 min

Disclosure

Disclosure in real estate refers to the legal obligation for sellers and their agents to reveal known material facts about a property that could influence a buyer's decision or affect the property's value.