California Partition Law Blog
The purpose of this article is to explain “arm’s length transactions” in real estate in California. This concept is important because this type of transaction or sale for property may affect the deed or contract surrounding the transaction. It also affects property taxes and the value of a property at the time of sale.
What does an “arm’s length transaction” mean?
An arm’s length transaction means a transaction between two parties conducted as if the parties are strangers regardless of how closely related or affiliated, they might be. (Black’s Law Dictionary (10th ed 2014)). This is indicates the absence of a conflict of interest. (In re Rexford Properties, LLC (2016) 557 B.R. 788, 797.)
The estimated value of a piece of property can be important for resolving several types of legal disputes. It is crucial when a property owner needs to establish damages when the government interferes with the owner’s property and diminishes its value. Spouses may wish to testify regarding the value of their marital property when it is divided during divorce proceedings. A property owner may also want to testify as to their property’s value to contest a bank’s foreclosure on the property.