Suggested Exchange Language for Purchase & Sale Agreement

The following language is suggested for inclusion on the Purchase and Sale Agreement to document the intent to complete an exchange. Further documentation for the exchange will occur after the signing of the Purchase and Sale Agreement, but using this suggested language would give you the ability to obtain the cooperation necessary to properly document the exchange. This language reflects the Final IRS Regulations for 1031 exchanges and is current as of September 15, 1995.

Where the Exchanger is Selling the Property

"Seller anticipates completing this transaction as part of an IRC Section 1031 tax-deferred exchange. Purchaser agrees to cooperate with Seller in documenting and completing such exchange by agreeing that Seller may transfer Seller’s rights and obligations under this Purchase and Sale Agreement to Seller’s qualified intermediary. Purchaser shall incur no additional expense or liability by such cooperation."

Where the Exchanger is Purchasing the Property

ALWAYS MAKE THE PURCHASE AND SALE AGREEMENT WITH EITHER: (“THE EXCHANGER’S NAME AS PURCHASER”) OR “AND/OR ASSIGNS” AND USE THE FOLLOWING LANGUAGE:

"Purchaser anticipates completing this transaction as part of an IRC Section 1031 tax-deferred exchange. Seller agrees to cooperate with Purchaser in documenting and completing such exchange by agreeing that Purchaser may transfer Purchaser’s rights and obligations under this Purchase and Sale Agreement to Purchaser’s qualified intermediary. Seller shall incur no additional expense or liability by such cooperation."

Because tax laws, regulations and court cases interpreting such laws and regulations are in constant flux, it is important to verify that the suggested wording is still appropriate at the time of its use.

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