Owner’s Affidavit

A legal document signed by the seller of a particularly property and provided to the buyer and title company that provides proof of ownership of said property and provides factual information with regards to the legal status as it pertains to bankruptcy, liens, agreements, or judgments against the property.

Putting “Owner’s Affidavit” in Context

Lakeview Real Estate Partners, a private real estate investment firm, is in the process of acquiring the Willow Grove Shopping Plaza, a 65,000 square foot neighborhood shopping center located in suburban Chicago, Illinois. The property, anchored by a well-known grocery chain and a mix of local tenants, has a purchase price of $12 million. Lakeview Real Estate Partners is executing a core acquisition strategy, targeting stabilized assets with reliable income streams.

Relevance of the Owner’s Affidavit in This Scenario

The Owner’s Affidavit includes the following key assurances:

• Proof of Ownership: The seller verifies that they hold clear title to the Willow Grove Shopping Plaza and are legally permitted to sell it.
• Disclosure of Encumbrances: The affidavit states whether there are any undisclosed liens, easements, or judgments against the property. This is essential for Lakeview, as any surprise encumbrance could impact the center’s value or operations.
• Bankruptcy Status: The seller affirms they are not involved in bankruptcy proceedings that could complicate the transaction.
• Accuracy of Representations: The affidavit assures that all prior agreements and disclosures about the property are accurate and complete.

Hypothetical Scenario

During the due diligence process, the title company conducting the title search identifies a discrepancy regarding a recently discharged lien that was not yet reflected in public records. The Owner’s Affidavit serves as an additional layer of protection, with the seller legally affirming that the lien was satisfied and will not impact the sale.

Lakeview Real Estate Partners can proceed with confidence, knowing that any misrepresentation in the affidavit would make the seller liable for damages. The document provides peace of mind, ensuring that the buyer receives clear title to Willow Grove Shopping Plaza.

Calculation Example

If the Owner’s Affidavit had revealed an unresolved lien of $500,000, Lakeview Real Estate Partners would likely have demanded that the seller resolve the issue before closing. Alternatively, Lakeview might have negotiated to reduce the purchase price by the lien amount or required a financial escrow until the lien was cleared.

The Owner’s Affidavit thus plays a crucial role in protecting the buyer and ensuring the integrity of the transaction.