Legal and IRS Stuff...
...The Starker Exchange
Acknowledgement: Attorney James M. Marlin
State Counsel for First American Title Insurance Company (1-800-441-9119)
The contents of this report are from the seminar manual titled: "Section 1031 Tax Deferred Exchanges."

A. DEFINITIONS
1. Exchanges under IRC § 1031 are variously referred to as "tax free", "tax deferred" or "nontaxable" exchanges. IRC § 1031 provides an exception only from current recognition of realized gain. This gain is deferred until the property acquired in the exchange (the replacement property) is sold in a subsequent taxable transaction. The gain, therefore, is only potentially taxable. Each of the names (i.e., "tax free", "tax deferred", or "nontaxable") are acceptable so long as they are properly explained or qualified.
2. EXCHANGOR - This is the term which the real estate industry uses to refer to the party intending to seek nonrecognition treatment by utilizing § 1031. The IRC calls this person or entity the "taxpayer" (whether or not the transaction results in tax liability or tax avoidance). The attorney will, of course, refer to this person as his/her client.
3. RELINQUISHED PROPERTY - This is the property that the Exchangor disposes of in the tax-deferred exchange. The sale of this property starts the clock on the time periods. Other terms for this property have been "downleg property", "first leg property", and/or "old property".
4. REPLACEMENT PROPERTY - This is the property received by the Exchangor in the Exchange. This is the property purchased with the proceeds of the sale of the relinquished property. Other terms for this property have been "target property", "exchange property", 'second leg property", and/or "new property".
5. BUYER - This is the term used by the real industry to designate the party acquiring the relinquished property from the Exchangor (the "buyer" at the first sale).
The party is virtually unaffected by the whole process. He/she leaves the closing of the sale of the relinquished party with a deed to that property. His money, which would normally go to the seller, instead goes to the escrow intermediary. The Exchangor need only give notice to the buyer of the exchangors assignment of rights under the Offer to purchase to the escrow intermediary and obtain the buyers agreement to cooperate. No additional liability or expense is incurred by the buyer.
6. SELLER - This is the term used by the real estate industry to designate the owner of the replacement property. The seller is given notice of the Exchanger's assignment of interest under the Offer to Purchase to the escrow intermediary but is then given notice to deed directly to the Exchangor.
7. ESCROW INTERMEDIARY - The party who facilitates the closings by taking assignments of interests under the Offer to purchase and holds the money from the sale of the relinquished property in order for the Exchangor to purchase the replacement property.
All documents should correctly and uniformly identify the parties, roles and properties. Multiple parties using different terminology result in misunderstandings or worse.
A diagram of the exchange transaction goes a long way in helping all parties understand who the players are, the properties involved and the steps which need to be taken.

STEP 1 - OFFER TO PURCHASE FOR RELINQUISHED PROPERTY

STEP 2 - EXCHANGE AGREEMENT
Provides that Exchanger will "exchange" relinquished property for a replacement property to be purchased by escrow intermediary with the proceeds of the sale of the relinquished property.
Provides appropriate identification rules for replacement property (45 day notice/180 day closing).
Includes disclaimer by escrow intermediary for tax treatment, or tax advice.
Is accompanied by blank forms to use for identification, notice and assignments.

STEP 3 - ASSIGNMENT

STEP 4 - SALE OF RELINQUISHED PROPERTY

STEP 5 - IDENTIFICATION OF REPLACEMENT PROPERTY
Must be within 45 days of closing on relinquished property.
Form Letter for this provided with exchange agreement from title company.
Identification can either identify a maximum of 3 properties or any number of properties as long as their combined value does not exceed 200% of the value of the relinquished property.
Designation can be revoked; you can change your mind so long as you ultimately designate the correct replacement property within 45 days.

STEP 6 - OFFER TO PURCHASE FOR REPLACEMENT PROPERTY
Exchanger also gives notice to Seller of the assignment of the exchanger's rights under the Offer to purchase to the escrow intermediary. Seller also receives notice to deed replacement property directly to exchanger.

STEP 7 - PURCHASE OF REPLACEMENT PROPERTY
MUST TAKE PLACE WITHIN 180 DAYS OF CLOSING ON RELINQUISHED PROPERTY
*It is not 45 days plus 180 days; both time periods begin at closing of relinquished property; 45 days to give notice, 180 days to close. 180 day period may be shorter (180 days or due date for filing of Exchanger's federal income tax return for the sale year, whichever is earlier).

B. TESTS TO DETERMINE NON-RECOGNITION TREATMENT
(There must be an exchange of qualifying property, for like kind property which is held for a proper purpose)
NOTE: The escrow intermediary title company or agent makes no guarantee that the transaction will qualify for tax-deferred exchange treatment. The escrow agreement so provides.

TEST #1
An exchange is a transfer of property for property, as opposed to a transfer of property for money. THERE MUST BE AN EXCHANGE.
Note: a sale of property followed by a purchase of property (though like kind) does not qualify for nonrecognition. (An aforethought is too late)

TEST #2 (Qualifying property) (Trade, business, investment)
The nonrecognition under § 1031 does not apply to exchange of interests in partnerships. A partnership interest cannot be exchanged for a fee. An exchange of tenancy in common interest in real estate for a fee qualifies for nonrecognition. These rules have resulted in various IRS interpretations of "partnership" and have resulted in a variety of methods to produce nonrecognition (e.g., termination of partnerships prior to exchange). Further discussion of this topic is beyond the scope of this outline and exceeds the role of the escrow intermediary. For further information, consult § 1031(a)(2)(D).

TEST #3 Like Kind Property
- Real estate for real estate (improved or unimproved)
- Cannot be personal property for real estate

TEST #4 Holding Requirement
No specific time period is set forth for either relinquished or replacement property.
The IRS position is if the exchangor acquired the relinquished property immediately before the exchange, property was acquired with the intention to dispose of it rather than hold it for productive use in trade, business or investment. The courts take a more liberal view. Likewise, the IRS takes the same position with respect to replacement property sold immediately after the "second leg". (It was not "held" for a "productive" purpose other than not paying taxes).

Time is only one factor considered in an ultimate determination of nonrecognition treatment. There is no automatic period to "hold" property for safety. The shorter the time period during which either property is held, the stronger other facts and circumstances must be to establish the proper intent.

C. CONSTRUCTION
The Replacement property can be under construction at the time it is identified; the property received will be considered to be substantially the same as identified if it constitutes real property and construction is completed substantially in accordance with plans at identification stage.

D. SAFE HARBORS § 1.1031(k)-1(g)
Only "safe harbors" until and unless Exchangor has an ability or unrestricted right to receive money (i.e., no "exchange").

FIRST SAFE HARBOR - COLLATERAL
The obligation of the Exchanger's buyer or intermediary to transfer the replacement property to the Exchangor is permitted to be secured by a mortgage or security interest (other than cash or cash equivalent).

SECOND SAFE HARBOR - CASH ESCROW
The obligation of the Exchanger's transferee to transfer the Replacement property is permitted to be secured by cash or cash equivalent if held in a qualified trust account. "Qualified" means not the exchangor or a disqualified person and the Exchanger's rights to receive the benefits of the cash held must be limited to certain specified circumstances.

THIRD SAFE HARBOR - QUALIFIED ~TERM~EDIARY
(a) Tax-deferred exchanges can be facilitated through the use of a Qualified Intermediary so long as the Exchanger's rights to receive money or other property are limited to certain circumstances.

(b) Qualified Intermediary is a person/entity who:
; is not the Exchangor or disqualified person (disqualified person examples are:
1) corporation or partnership if Exchangor owns over 10% of the equity
2) "agent" of Exchangor at time of transaction
3) attorney who has represented exchangor within 2 years prior to sale of relinquished property is treated as an agent
4) person who bears a relationship described in either IRC ~ 267(b) or ~ 707(b) but substituting 10% for 50% interest - family members, fiduciary and beneficiary of same trust, etc.)
; who, for a fee:
1. enters into a written agreement with the Exchangor for the exchange of properties pursuant to which the Intermediary acquires the Relinquished Property
2. transfers the Relinquished Property to the Buyer
3. acquires the Replacement Property and
4. transfers the Replacement Property to the Exchangor

An intermediary acquires and transfers the relinquished and replacement property either on its own behalf or as agent of any party to the transaction. Rights of parties can be assigned to the Intermediary so long as all parties to the agreement are notified in writing prior to the date of relevant transfer.

FOURTH SAFE HARBOR - GROWTH FACTOR
Exchangor is permitted to receive interest with respect to the deferred exchange provided his right to receive such interest is limited to the length of time elapsed between transfer of the Relinquished Property and receipt of the Replacement Property.

SAFE HARBORS - SAFE FROM WHAT?
Safety from constructive receipt. "Boot" will exist if the Exchangor actually or constructively receives money or other property in the full or partial amount of the consideration for the Relinquished Property before he receives the Replacement Property.

As rules of constructive notice may be unclear or uncertain, certain safe harbors have been recognized. If one of the foregoing "safe harbors" are utilized, there is no constructive receipt.

("Boot" is not used in the IRC but it is a term commonly used to describe the money or "other property" received by the Exchangor which does not qualify for nonrecognition treatment.)

E. THE EXCHANGE AGREEMENT

PREAMBLE
- Identifies parties (Exchanger and Intermediary)
- describes relinquished property (address/legal)
- describes accepted offer to purchase for relinquished property and identifies buyer
- Intermediary agrees to facilitate by accepting assignment of Exchangors rights under Offer to purchase, agrees to acquire and transfer both relinquished and replacement property
- Intermediary agrees to hold funs from sale of relinquished property to acquire replacement property.

ARTICLE I
1.1 Assignment and Agreement to Exchange
1.2 Notification (to buyer)
1.3 Transfer of Proceeds and Warranty Deed (proceeds into escrow account and warranty deed from Exchangor to Buyer)

ARTICLE II
2.1 Proceeds Account (Exchanger cannot have funds released except under terms of the agreement
2.2 Proceeds Deposit (in an escrow account)
2.3 Investment of Proceeds (interest to become part of proceeds/escrow funds)

ARTICLE III
2.1 Intermediary to Purchase Replacement Property
Intermediary agrees to:
a. accept assignment of rights under Offer to Purchase
b. consummate transaction
c. exchange replacement for relinquished property - direct deeding provision (intermediary does not want to actually take title)
3.2 Purchase Money - Exchangor will add to funds, if necessary, to acquire replacement property
3.3 Identification of replacement property (45 days) - including holidays -written (address and/or legal description) -revocation and substitution permitted
3.4 Failure of Exchangors to identify Replacement Property -after identification period expires, funds returned upon written demand (not before)
3.5 Purchase of Replacement Property (180 days) or due date (including extension) for filing of Exchanger's federal income tax for the year of sale, whichever is earlier. Funds disbursed at written direction from exchangor for purpose of acquiring replacement property
3.6 Acquisition Agreement -Intermediary agrees to comply with terms of Offer to Purchase for replacement property by accepting assignment. Exchangor agrees to notify seller of assignment
3.7 General Matters Concerning Acquisition Agreement
- no unilateral amendment by intermediary
- exchanger agrees to add additional funds, (in a separate account), if necessary, to purchase replacement property
- cooperation, no duty of intermediary to enforce terms of Offer unless indemnified by Exchangor
- right to substitute replacement property (within time period)
- intermediary not agent of exchangors
3.8 Balance of Proceeds -if "leftovers" from purchase of replacement property, to exchangor upon written notice
3.9 Failure to Acquire Replacement Property -escrow funds returned upon written notice

ARTICLE IV
Fees of Depository -paid by Exchangor to Depository (not out of escrow funds) treatment.)

ARTICLE V
5.1 Indemnification -intermediary not liable for action in good faith (unless willful misconduct or gross negligence)
5.2 No obligation for taxes
5.3 Survival (of obligations and agreements)

ARTICLE VI
6.1 Notices (names/addresses)
6.2 No Representation Regarding 1031 Treatment (by intermediary)
6.3 Right to Terminate Agreement Early (by intermediary) -bankruptcy of exchangor or similar court order reordering debts and obligations of exchangor; appointment of receiver, etc. -commencement of action naming intermediary as party
6.4 Entire Agreement
6.5 Descriptive Headings
6.6 Binding Nature; Assignment (shall not be)
6.7 Governing Law (Wisconsin)
6.8 Counterparts
6.9 Amendments (written)

FORMS WITH AGREEMENT
1) Notice of Assignment to Buyer of Relinquished Property
2) Cooperation Clause (Addendum)
3) Identification of Replacement Property
4) Acceptance of Assignment by Intermediary
5) Assignment of Replacement Property Offer to Purchase
6) Notice of Assignment to Seller of Replacement Property
7) Notice for Direct Deeding

F. CHECKLIST
1) Offer to Purchase (Exchanger/Buyer/Relinquished Property)
2) Exchange Agreement (Exchanger/Intermediary)
3) Assignment Notice - Relinquished Property (rights under Offer from Exchangor to Intermediary)
4) Closing of Relinquished Property and deposit of sales proceeds into escrow account of Intermediary
5) Identification of Replacement Property (45 days)
6) Offer to Purchase (Exchanger/Seller/Replacement Property)
7) Assignment Notice - Replacement Property (rights under Offer from Exchangor to Intermediary)
8) Direct Deed Notice (Intermediary to Seller of Replacement Property)
9) Closing of Replacement Property and payment of escrow funds to Seller

Thank you for referring your proposed Section 1031 tax deferred exchange matter to our office to be handled by us as intermediary. This letter will serve to describe our services and our charges, and tell you how an exchange proceeds.

Exchange Agreement
We enclose a sample of the Exchange Agreement you will be asked to sign at or prior to the closing on your property to be relinquished. Please review this document and consult with your independent tax advisor and/or attorney regarding its provisions. They may call us to discuss the agreement if they have any questions or comments. We are willing to consider the use of their proposed exchange agreement.

Intermediary Fees
Our basic fee for a standard 2-property exchange is $___________________
($ _____________________ for each property, i.e., the property you dispose of and the replacement property). In the event you go out of more than one property, or into more than one property, there is an additional fee of $ ______________ for each additional property. Our fees are deducted from the funds as they come into and go out of our escrow account.

In complex transactions such as where improvements are to be made by the intermediary to the replacement property, additional fees will be negotiated.

Cancellation Fee
If we have prepared the documents for the first leg, there will be a cancellation fee of $ ___________ if the exchange is terminated for any reason without a sale taking place, or if you terminate our services as Intermediary.

Investment of Exchange Funds
Funds are invested in ___________________________ Bank,____________________ Branch, in Money Market accounts insured by the Federal Deposit Insurance Corporation up to $100,000.00.

If the amount to be credited to you exceeds $100,000.00 and you wish to have one or more additional accounts opened in other federally insured institutions, we will charge an additional fee of $________________ for each such account opened.

If you request that all your funds be invested in some institution other than _______________________________ Bank, we will charge an additional fee of $______________ If the foregoing is acceptable,. please sign and return one copy of this letter, with your Employer Identification or Social Security Number filled in where indicated. If you have any questions, please do not hesitate to call.

Very truly yours,

Intermediary
The foregoing is accepted and agreed to:
DATE: ____________________ Exchangor:__________________________
TAX ID NO.:_______________________

EXCHANGE AGREEMENT
This Agreement is made and entered into as of the __________day of _____________,
19 ___, between ____________________________________ referred to as "Exchangor" and _______________________hereinafter referred to as "Intermediary"

WITTNESSETH:
WHEREAS, Exchangors are the owners of certain real property located at ________________, more particularly described as:

WHEREAS, by an offer initially dated _______________________ and accepted _____________________ ,Exchangors entered into a _____________________ offer to purchase (hereinafter referred to as the "Relinquished Property Sales Contract"), a copy of which is attached hereto as Exhibit "A", whereby Exchangors agreed to transfer the Relinquished Property to ___________________________(hereinafter referred to as "Buyers" of the Relinquished Property") for a sales price of ______________________ (hereinafter referred to as the "Purchase Price") and with a closing date scheduled for _______________________(hereinafter referred to as the Relinquished Property Transfer Date); and
WHEREAS, after payment of the costs of sale there will be net proceeds (hereinafter referred to as "Proceeds"); and
WHEREAS Intermediary agrees to accommodate Exchangors by acquiring the Relinquished Property pursuant to an assignment by Exchangors of their interest in the Relinquished Property Sales Contract; and
WHEREAS, Exchangors intend to transfer the Relinquished Property to Intermediary by assignment of their interest in the Relinquished Property Sales Contract with an exchange for heretofore unidentified like-kind property (hereinafter referred to as the "Replacement Property"), in a deferred like-kind exchange pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended; and
WHEREAS, Exchangors do not intend to liquidate their real property holdings, but intend to remain invested in the Replacement Property for use in their trade or business or for investment purposes; and
WHEREAS, in order to implement the aforesaid I.R.C. Section 1031 deferred like-kind exchange, Intermediary has agreed to acquire and transfer the Relinquished Property to the Buyers of the Relinquished Property pursuant to the Relinquished Property Sales Contract and, further, Intermediary has agreed to acquire and purchase the Replacement Property and convey and transfer the Replacement Property to Exchangor; and
WHEREAS, Exchangor directs that the Proceeds be deposited into an escrow account until Intermediary utilizes the Proceeds to acquire the Replacement Property; and
WHEREAS, the parties desire to set forth their understanding in writing in this Agreement,
NOW THEREFORE, in consideration of the premium and mutual covenants contained herein, the parties agree as follows:

1.2 Notification. Exchangors shall notify the Buyer of the Relinquished Property of the assignment of the Relinquished Property Sales Contract in writing prior to the Relinquished Property Transfer Date pursuant to a Notice of Assignment.

1.3 Transfer of Proceeds and Warranty Deed. On the Relinquished Property Transfer Date, Intermediary shall collect the Purchase Price from the Buyer of the Relinquished Property, deposit the Proceeds in an escrow account at Depository and make appropriate application of the balance of the Purchase Price to pay off mortgages and other liens against the Relinquished Property and other expenses of the seller as called for in the Relinquished Property Sales Contract. Upon verification by Intermediary of receipt of the Proceeds, Exchangors shall deliver to the Buyers of the Relinquished Property a warranty deed conveying title to the Relinquished Property pursuant to the Relinquished Property Sales Contract.

In the alternative if the Buyers of the Relinquished Property receives credit for all closing costs and mortgages and liens against the property resulting in a net check to Exchangors, Buyers of the Relinquished Property shall then deliver to Intermediary the net closing Proceeds. Upon verification by Intermediary of receipt of the proceeds, Exchangor shall deliver to the Buyers of the Relinquished Property a warranty deed conveying title to the Relinquished Property pursuant to the Relinquished Property Sales Contract.

2.2 Proceeds Deposit. Upon the transfer of the Relinquished Property to the Buyers of the Relinquished Property on the Relinquished Property Transfer Date, Intermediary shall deliver the Proceeds to Depository for placement into an escrow account to which Exchangors shall not have access.

2.3 Investment of Proceeds. At the direction of Exchangors, the Proceeds shall be invested and reinvested by Intermediary in savings accounts at Depository or certificates of deposit at Depository. The income earned on the Proceeds shall be added to and become part of the Proceeds.

3.2 Purchase Money. Intermediary shall have no responsibility to acquire any Replacement Property with any of its own funds. Such funds are to be taken from the Proceeds and any additional funds, if needed, shall be provided by Exchangors.

3.3 Identification of Replacement Property. Within forty-five (45) days (including all holidays) of the Relinquished Property Transfer Date (hereinafter referred to as the "Identification Period") , Exchangors shall identify the Replacement Property by written notice to Intermediary. This written notice shall be signed by Exchangors and identify the Replacement Property by legal description and/or street address. Revocation of an earlier identification of Replacement Property and identification of new Replacement Property may be made in written notice signed by Exchangors and delivered to Intermediary prior to the end of Identification Period.

3.4 Failure of Exchangors to Identify Replacement Property. Intermediary shall not, under any circumstances, pay the Proceeds to Exchangors prior to the end of the Identification Period. In the event Exchangors fail to identify Replacement Property within the Identification Period, Intermediary shall pay the Proceeds to Exchangors at any time after Intermediary receives a written demand therefor from Exchangors.

3.5 Purchase of Replacement Property. It is the intention of the parties that the Proceeds be used to purchase the Replacement property within one hundred eighty (180) days of the Relinquished Property Transfer Date or the due date (including extension) for filing of Exchangor's federal income tax returns for the year in which the sale occurs, whichever is earlier (hereinafter referred to as the "Replacement Period"). Upon written notification from Exchangors, Intermediary shall disburse the Proceeds, or any portion thereof, as directed, to the owner(s) of the Replacement Property, or as otherwise directed, for the purpose of acquiring the Replacement Property pursuant to the Acquisition Agreement.

3.6 Acquisition Agreement. Subject to the provisions of this Agreement, the Replacement Property shall be purchased and acquired by Intermediary in accordance with the Acquisition Agreement in exchange for the Relinquished Property as provided in this Agreement. Intermediary agrees to enter into and comply with all terms of the Acquisition Agreement unless it has been notified in writing that the form and content thereof is not acceptable to Exchangors. In the alternative, Exchangors may enter into the Acquisition Agreement and assign its rights in the Acquisition Agreement to Intermediary. Exchangors shall notify all parties to the Acquisition Agreement in writing of the assignment before the transfer of the Replacement Property.

3.7 General Matters Concerning Acquisition Agreement(s). The following are certain general conditions concerning the Acquisition Agreements:
(a) Subject to the terms and conditions of this Agreement, Intermediary shall have the right to make, execute or enter into any amendment of Acquisition Agreement, including, without limitation, any amendment or request extending the time for the Intermediary of the Replacement Property under such Acquisition Agreement as shall be permitted under such contract or consented to by the seller thereunder, but in no event shall the date be extended beyond the end of the Replacement Period provided herein. Any such amendment must first be approved by Exchangors.
(b) In the event the Acquisition Agreement for the Replacement Property provides for an aggregate amount to be paid in excess of the Proceeds, Exchangors shall cause the excess to be paid directly to the seller or deposited into a separate escrow established for the purchase of the Replacement Property as required under the Acquisition Agreement.
(c) After entering into an Acquisition Agreement, Intermediary shall take all steps requested by Exchangors reasonably necessary to enforce the same against the seller, provided, however that: (1) Intermediary shall not be required to take or commence any legal action unless Exchangors shall have deposited with it cash or an indemnity in form and/or an amount deemed sufficient by Intermediary to cover anticipated costs, expenses and attorneys' fees (any excess shall be returned to Exchangor or deficiency paid to Intermediary). Intermediary shall not be required to pursue any legal action beyond the end of the Replacement Period nor in any case any action which it reasonably believes may result in any materially adverse consequences to Intermediary in its discretion.
(d) If, for any reason after Intermediary has entered into an Acquisition Agreement and such Agreement shall be terminated or canceled, Exchangors shall have the right to substitute (by designation and pursuant to all of the provisions hereof) a substitute Replacement Property.
(e) Nothing herein shall be deemed to constitute Intermediary the agent of the Exchangors, nor shall Exchangors be bound by any act or omission to act of Intermediary regarding the rights of any third person, the rights and obligations of the parties as between them only, being set forth herein, and, nothing herein shall permit any assertion or claim against Exchangors or make any third person a beneficiary hereof.

3.8 Balance of Proceeds Upon acquisition of the Replacement Property by Exchangors, or any time thereafter, Intermediary shall pay the remaining Proceeds, if any, to Exchangors at any time after Intermediary receives a written demand therefor from Exchangors.

3.9 Failure to Acquire Replacement Property. In the event Exchangors do not acquire the Replacement Property within one hundred eighty (180) days after the Relinquished Property Transfer Date, or, if earlier, the due date (including extensions) of the Exchangors' United States income tax returns for the tax year in which the Re1inquished Property is transferred (hereinafter referred to as the 'Replacement Period"), Exchangors shall notify Intermediary in writing of Exchangors' failure to acquire the Replacement Property prior to the end of the Replacement Period. Upon receipt of said notice, Intermediary shall pay the Proceeds to Exchangors at any time after Intermediary receives a written demand therefor from Exchangors.

5.2 No obligation for Taxes. Intermediary shall have no obligation to pay any income, profit or other taxes.

5.3 Survival. Any and all obligations, agreements, indemnifications, representations, warranties, covenants and conditions made herein by the Exchangors and Intermediary shall survive the termination of this Agreement.

_____________________________ _____________________________

INTERMEDIARY

_____________________________ _____________________________

6.2 No Representation Regarding Section 1031 Treatment. Exchangor hereby acknowledges and agrees that Intermediary neither warrants nor represents that the exchange transaction contemplated hereby will qualify for tax-deferred exchange treatment pursuant to Section 1031 of the Internal Revenue code or otherwise.

6.3 Right to Terminate Agreement Early. Intermediary shall, at its option, have the right to fully discharge and perform its obligations under this agreement prior to the closing date by payment by Intermediary's check to Exchangor of the balance of the exchange account then remaining, immediately upon the occurrence of any of the following events:
(a) The commencement by Exchangor of a voluntary case under any chapter or section of the Federal Bankruptcy Code or any similar law of the United States or any state thereof pertaining to bankruptcy, insolvency or debtor relief;
(b) The commencement against Exchangor if any involuntary case or other proceeding under any chapter or section of the Federal Bankruptcy code or any similar law of the United States or any state thereof pertaining to bankruptcy, insolvency or debtor relief, if any such case or proceeding shall not be vacated or set aside within sixty (60) days after such commencement;
(c) The issuance by any court of any order relieving, staying or reordering the debts or obligations of Exchangor,
(d) The filing by Exchangor of a pleading in any court admitting its inability to pay its debts as they become due;
(e) The making by Exchangor of a general assignment for the benefit of its creditors;
(f) The appointment for Exchangor of a receiver or trustee for all or substantially all of Exchangor's assets;
(g) The occurrence of an attachment, execution or judicial seizure of the rights of Exchangor pursuant to this agreement,
(h) Any action is commenced naming Intermediary as a party, which action relates to any claim concerning the property or any exchange property or any transaction relating thereto or alleged liability of Intermediary in connection therewith Exchangor fails to defend and indemnify Intermediary in connection therewith, with counsel approved by Intermediary.

6.4 Entire Agreement. This Agreement constitutes the entire agreement among the parties hereto and supersedes all prior agreements and understandings, oral or written, among the parties hereto with respect to the subject matter hereof.

6.5 Descriptive Headings. Descriptive headings used in this Agreement are for convenience only and shall not control or affect the meaning or construction of any provisions to this Agreement.

6.6 Binding Nature; Assignment. This Agreement shall not be assigned by Exchangors or Intermediary. This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective personal representatives, heirs, successors and assigns.

6.7 Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Wisconsin.

6.8 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.

6.9 Amendment. Any amendments to this Agreement shall be in writing and signed by all parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the date first above written.

EXCHANGORS:

_____________________________________

_____________________________________

INTERMEDIARY

_____________________________________

BY:

_____________________________________

Assignee named in the above Assignment. accepts the above Purchase Agreement by Assignment and agrees to each and all of the covenants and conditions in such Purchase Agreement.

ASSIGNEE:

_____________________________

BY:__________________________

TO:_______________________________________________
NOTICE is hereby given by the undersigned, who are the designated sellers in that offer to purchase document dated ___________________________, and accepted ___________________________, that all rights of the seller to purchase proceeds have been assigned to ___________________________, as Intermediary for purposes of accomplishing a tax deferred like kind exchange in accordance with the provisions of Section 1031 of the Internal Revenue Code of 1986 and as amended and the regulations promulgated thereunder. All terms, conditions and provisions of the offer to purchase referenced above remain in full force and effect.

Dated this___________ day of ____________, 19

_____________________________

_____________________________

This Identification of Replacement Property (the "Identification") is made by ____________________________________________________________(hereinafter collectively referred to as "Exchangors").

A. Exchangors have disposed of the real property located at __________________, in the City of ______________________, County, Wisconsin (hereinafter referred to as the "Relinquished Property"), pursuant to the Exchange Agreement (the "Exchange Agreement") between Exchangors and _________________________________ (hereinafter referred to as "Intermediary").

B. Exchangors wish to acquire the following property (hereinafter collectively referred to as the "Replacement Property") for and in consideration of the transfer of the Relinquished Property to Intermediary pursuant to the terms of the Exchange Agreement in accordance with the provisions of Section 1031 of the Internal Revenue Code.

EXCHANGORS:

Dated:__________________________ ____________________________

Dated:__________________________ ____________________________

___________________________________________, adult residents of the State of Wisconsin (hereinafter collectively referred to as "Assignors"), pursuant to the Exchange Agreement dated _____________________________, and for consideration of the sum of One and 00/100 Dollar ($1.00) and other good and valuable consideration paid by __________________________________(hereinafter referred to as Assignee/Intermediary), the receipt and sufficiency of which consideration is hereby acknowledged, does hereby sell, assign and transfer to Assignee, its successors and assigns, all of Assignors' rights, title and interest in and to the Purchase Agreement dated _______________________ and accepted ________________________, by and between Assignor as purchaser, and _______________________as sellers, for the sale and purchase of property commonly known as ____________________________________, ________________ County, Wisconsin.

This Assignment shall be governed by, construed and enforced in accordance with the laws of the State of Wisconsin.
IN WITNESS WHEREOF, The Assignors have executed this

Assignment this ___________ day of ____________, 19_____

ASSIGNORS:

__________________________________

__________________________________

TO:_________________________
____________________________
____________________________

Date:______________________________

PLEASE be advised that our interest in that Purchase Agreement dated _______________________, countered and accepted _______________________, a copy of which is attached hereto as Exhibit "A", entered into between you as Seller, and ourselves, as Purchaser, for the sale and purchase of real property located at ___________________________________________, _________________County, Wisconsin, has been assigned pursuant to an Exchange Agreement dated____________.

Please note that we are required to notify you of this assignment under Section 1031 of the Internal Revenue Code.

_________________________________

_________________________________

TO:__________________________
_____________________________
_____________________________

Sellers of Replacement Property

RE :Purchase Agreement dated ________________________________ for the Purchase of ____________________________________________, ____________ County, Wisconsin.

DATED:_______________________

Pursuant to the above Purchase Agreement and the Assignment to ________________________as contained in the Exchange Agreement, I hereby direct you to transfer the subject property by Warranty Deed directly to ____________________________. Accordingly, the title Insurance commitment should state that__________________________________________ are the proposed insureds.

____________________________________

By:_________________________________

Should you have any questions regarding the above, please do not hesitate to contact me.

Some other 1031 Exchange Information:
Realty Exchanger's - 1031 Exchange Information Network
Exchange Tracker - Track your exchanges on-line...
Capital Gains Estimator - Determine the amount of Gains Tax saved with a 1031 exchange
Exchangers Clearing House - A free listing site for exchange real estate