WHAT VERBIAGE IS NECESSARY TO CHANGE THE TRANSACTION FROM A NORMAL BUY/SELL TO AN EXCHANGE?
The usual recommended procedure is to set out the Exchanger’s intent to perfect a 1031 Tax-Deferred Exchange in the purchase agreement (contract) between the Seller and Buyer. The following is an example of language that is currently satisfactory to establish the Exchanger’s intent: PHASE I (SALE): Buyer is aware that Seller is to perform a 1031 Tax-Deferred Exchange. Seller requests Buyer’s cooperation in such an exchange and agrees to hold Buyer harmless from any and all claims, liabilities, costs or delays in time resulting from such an exchange. PHASE II (BUY): Seller is aware that Buyer is to perform a 1031 Tax-Deferred Exchange. Buyer requests Seller’s cooperation in such an exchange and agrees to hold Seller harmless from any and all claims, liabilities, costs or delays in time resulting from such an exchange. It is advisable to also have communicated with a Qualified Intermediary and include the following in a purchase, or sale, contract as well: Seller, (or Buyer) has entered
