ARTICLES

Arm’s Length Transactions and Minnesota Appraisal Law

In the current business climate, companies like yours may be looking for ways to maneuver your interests and assets in order to weather the economic storm.  It takes savvy management and a keen eye for the prospect of a deal to improve your standing in a challenging economic environment, but it can be done.  One of the ways that this has been accomplished historically has been through the sale of real estate at lower than market value.

A new Minnesota law could hinder your ability to use this powerful bargaining chip, and falling afoul of the law could be a costly mistake.  Contact the Minneapolis business lawyers of Skjold ▪ Barthel, P.A., at 612-746-2560 to learn how you can remain in compliance with the law when it comes to the sale of real estate.

A New Mode of Conduct

The principle of arm’s length transactions has long been a standard tenet of the purchase and sale of real estate and other corporate interests.  The aim is to prevent the contracted sale of an asset at an unreasonably reduced price attributed to favoritism or a close relationship between the parties involved.  When there are questions about the fairness of a real estate transaction pertaining to the price, the entrance of a professional opinion by an independent third party appraiser has been sufficient to establish that the agreed price is equitable.

In some of these situations, it may have been expected that the appraiser would follow the course prescribed by the parties transacting business. But a new Minnesota law strictly prohibits the following entities:

  • Mortgage originators
  • Appraisal management companies
  • Real estate brokers
  • Appraisers

and others from "attempt[ing] to improperly influence the development, reporting result, or review of a real estate appraisal."

Contact Us

The Minneapolis business lawyers of Skjold ▪ Barthel, P.A. can help you prevent costly violations of the new law so that you aren’t caught up in needless litigation or faced with heavy fines. Contact us today at 612-746-2560.