Rizzotti JH Real Estate Blog

I am often asked, what is an arms length transaction. This is where parties to a transaction are independent and on equal footing. There is no direct relationship, interest or connection between the parties.

Sale of a property from a parent to one og their children would not be considered an arms length transaction. Also, sale of a property from an LLC to a member of the LLC woudl typically not be considered an arms length transaction.

When selecting comps for a subject property, interviewing parties involved in the transaction is critical in determining if a transaction was "arms length" and a true, open market trasaction.

Ken