Arm's Length Transaction

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Arm's Length Transaction

A transaction in which the buyer and the seller have no significant, prior relationship. In an arm's length transaction, neither party has an incentive to act against his/her own interest. That is, the seller seeks to make the price as high as he/she can, and likewise the buyer seeks to make it as low as he/she can. The negotiations for an arm's length transaction result in the arm's length price, which is almost always close to the market value of the asset being sold. The term is often used in real estate transactions because family members often sell property to each other at something other than the arm's length price.
References in periodicals archive ?
Company" or "Stream") (OTCBB:SCNWF) is pleased to announce that its long term debt outstanding to a related party (a former director of the Company) was sold by that party in an arms length transaction to a third party ("the Lender") and restructured into a long term facility.
The shares are being issued in connection with the previously announced Joint Venture for the Monte do Carmo project with Kinross, which is an arms length transaction (see Press Release dated September 22, 2005).
The Horwood Property was acquired in an arms length transaction from a five person syndicate.
The Company reiterates that the letter of intent between Tri State and SYCI is not an arms length transaction, as Brian Sorrentino, a consultant to SYCI and a 10% shareholder, is also a majority shareholder in Tri-State.
The transaction is not considered an arms length transaction, as Brian Sorrentino, a consultant to Syndication and a 10% shareholder, is also a majority shareholder and managing member in Tri-State.
Beal has seized upon a previously unrecognized opportunity to oust management and offer an alternative to the individual investors: vote out the existing general partner and install new management whose objective is a liquidation of the property in an arms length transaction.
It was the Dinkins administration's inflexible policy of setting assessments based on 45 percent of inflated sales prices, and then its stubbornness at maintaining the high assessments - even in the face of arms length transactions at vulture prices - that led to so many foreclosures when the low rents and large vacancies in places like Downtown Manhattan could not cover the high taxes.