The Cooperation Clause

It’s true that there are no statutory requirements that a contract or purchase and sale agreement contain language specifying that one of the parties is taking part in an IRC §1031 tax deferred exchange, there are reasons to consider including the language.

Sample examples of language which may be added to a sale or purchase contract follow:

Sale Contract Language:

Buyer hereby acknowledges that it is the intent of the Seller to structure its sale as a tax deferred exchange under IRC §1031. Seller covenants that this will not delay the close of the subject transaction nor cause the Buyer any additional expenses. The Seller’s rights under the purchase and sale agreement may be assigned to Legal 1031 Exchange Services, LLC, a Qualified Intermediary for IRC §1031 Tax Deferred Exchanges. Buyer agrees to cooperate with the Seller and the Qualified Intermediary to complete the exchange.

Purchase Contract Language:

Seller hereby acknowledges that it is the intent of the Buyer to structure its purchase as a tax deferred exchange under IRC §1031. Buyer covenants that this will not delay the close of the subject transaction nor cause the Seller any additional expenses. The Buyer’s rights under the purchase and sale agreement may be assigned to Legal 1031 Exchange Services, LLC, a Qualified Intermediary for IRC §1031 Tax Deferred Exchanges. Seller agrees to cooperate with the Buyer and the Qualified Intermediary to complete the exchange.

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