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Contract

Contract
Important Contract Content

What do i put in the contract?

A Purchase and Sale Agreement should contain language establishing the exchangor’s intent and notifying the buyer of the exchange. Examples are:


When Selling Property

It is the intent of the Seller to perform an IRC Section §1031 tax- deferred exchange by trading the property herein with Starker Services, Inc. Buyer agrees to execute an Assignment Agreement at the request of Seller at no additional cost or liability to Buyer.

When Buying Property

It is the intent of the Buyer to perform an IRC Section §1031 tax- deferred exchange by trading the property herein with Starker Services, Inc. Seller agrees to execute an Assignment Agreement at the request of Buyer at no additional cost or liability to Seller.



Real estate agents are acutely aware that an exchange is rarely a swap of properties between two parties. Most exchanges - whether they are simultaneous or delayed - involve three parties: the investor (exchangor) who is doing the exchange, the buyer who is purchasing the exchangor’s old (relinquished) property and the seller who is selling the exchangor a new (replacement) property. Therefore, it is critical to create a contractual document that satisfies all parties.

The steps for completing a §1031 Exchange are relatively simple.

1

The exchangor signs a contract to sell the relinquished property to the buyer.

2

Starker Services is retained to be the Qualified Intermediary and the exchangor assigns the exchangor’s rights in the sale contract.

3

Starker Services, Inc. instructs the escrow officer/closer to transfer the deed directly from the exchangor to the buyer. At the closing of the relinquished property the exchange funds are sent to Starker Services.

4

The exchangor must identify possible replacement properties in writing to Starker Services within the 45-day identification period.

5

The exchangor has a maximum of 180 days in the exchange period (or until the tax filing deadline, including extensions, for the year of the sale of the relinquished property), to acquire all replacement properties.

6

The exchangor signs a contract to purchase the replacement property with the seller. At closing, the exchangor assigns the exchangor’s rights in the purchase contract to Starker Services.

7

At the closing of the replacement property, Starker Services wires the exchange funds to complete the exchange and instructs the escrow/closing officer to transfer the deed directly from the seller to the exchangor.