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.
Frequently Asked Questions about Owner’s Affidavit
What is an Owner’s Affidavit?
An Owner’s Affidavit is a legal document signed by the seller of a property affirming ownership and disclosing any liens, agreements, or legal matters (such as bankruptcy) that may affect the property’s title.
Why is an Owner’s Affidavit important in a property sale?
It provides legal assurance to the buyer and title company that the seller owns the property, has disclosed all relevant encumbrances, and is not subject to bankruptcy or legal claims that could affect the transaction.
What kind of information does the Owner’s Affidavit include?
The affidavit typically includes:
Confirmation of property ownership
Disclosure of liens, easements, or legal judgments
Statement of bankruptcy status
Affirmation of the accuracy of previous disclosures
How was the Owner’s Affidavit used in the Willow Grove Shopping Plaza example?
Lakeview Real Estate Partners used the affidavit to verify clear ownership and ensure no undisclosed liens or bankruptcy proceedings would affect the $12 million acquisition of the shopping center. It served as a safeguard during the title review process.
What happens if a lien is revealed in the affidavit?
If a lien (e.g., $500,000) is disclosed, the buyer can require the seller to resolve it before closing, reduce the purchase price, or set aside funds in escrow until it is cleared.
Does the Owner’s Affidavit offer legal protection to the buyer?
Yes, any misrepresentation in the affidavit could make the seller legally liable for damages. This provides buyers with an additional layer of legal protection beyond the title search.
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