We suggest that the following addendums be added to the sale and purchase contract for the properties that are to be part of the exchange.
This addendum is for the property to be sold by the exchanger and provides for the following requirements:
- to document the owner’s intent to do a like-kind tax-deferred exchange in accordance with IRC Regulation Section 1.1031(k)-1;
- to permit assignment of the contract to the qualified intermediary; and
- to ensure the purchaser they will be held harmless and there will be no additional expense as a result of the exchange.
When a contract offer is made on a desired replacement property, it is suggested that a Like-Kind Replacement Property Addendum be added which states that the transaction is part of a like-kind exchange, that the contract may be assigned to the qualified intermediary, and there is no liability or expense to the sellers.