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 ?
Peterson's explanation of how his self-interested deal at a discount to market value is superior to our proposed arms-length transaction at a premium to market value.
An owner is permitted to object to the proposed sale on several grounds including a claim that the price is too high or that the proposed sale is not a bona fide arms-length transaction.
This is an arms-length transaction, which will compensate Asarco at fair-market value.
an information technology consulting firm, in an arms-length transaction between EpicEdge and shareholders of COAD.
AMEX Symbol: AMK), a leading manufacturer of high-performance electronic components, including capacitors and Thin Film circuits for a broad range of commercial and military applications, announced today that, in an effort to align its inventory of palladium (a precious metal used in the manufacture of its products) with current and presently anticipated demand, it has sold a substantial portion of its palladium inventory to one of its vendors in an arms-length transaction, for approximately $3.
In the SEC filing, the members of Rush River Group stated they "presently believe that it is in the best interests of (Quipp) and its shareholders that (its) Board of Directors undertake efforts to sell or merge (the company) in an arms-length transaction.
So long as the owner makes it clear that there is a loss factor and couples this notice to the tenant with an opportunity for the prospective lessee to inspect the premises and take measurements to verify the amount of space being rented, the bargain between the parties will be deemed to be an arms-length transaction which will prevent the tenant from having any claim demand that the lease be rewritten at subsequent period of time.
The arms-length transaction consisted of convertible notes totaling (CDN)$200,000 and future service contracts.
The negotiation and sale of the Riviera Country Club was an arms-length transaction, fully disclosed even before it was consummated.
claims that the announcement was intentionally issued by Unisat in an attempt to mislead its shareholders and divert their attention from the serious problems it has brought upon its shareholders because of the improper Telforce acquisition and, further, that the announcement by Unisat intentionally makes it appear that the acquisition of Emerview is an arms-length transaction.
Because this was a "non arms-length transaction," HUD underwriting requirements would not allow the project to be processed as a purchase transaction pursuant to 223(f).
The transaction should be considered as a non arms-length transaction.