What wording should be used in my documents to indicate my intention to do an exchange?

Most exchanges begin with an Offer & Acceptance Agreement. When such an agreement is used to begin the transaction, it should contain language which establishes the exchanger’s intent and notifies the buyer of the exchange. Examples of such contractual provisions are:


When Selling: This transaction will be a Section 1031 Tax Deferred Exchange at no additional expense or liability to the Purchaser. The intention of the Parties is for the Seller/Exchanger to use Section 1031 of the Internal Revenue Code to postpone taxes by exchanging this property for other property [insert description or “to be designated later and acquired through a trust established at settlement”]. The Purchaser and Seller/Exchanger will execute necessary documents to complete the exchange, including any assignments or trust agreements. The Seller will pay all additional expenses associated with the tax deferred exchange and hold the Purchaser harmless from any liability in connection therewith. All references to “Seller” in the contract shall mean Seller/Exchanger.


When Buying: This transaction will be a Section 1031 Tax Deferred Exchange at no additional expense or liability to the Seller. The intention of the parties is for the Purchaser/Exchanger to use Section 1031 of the Internal Revenue Code to postpone taxes by receiving this property through a delayed exchange for other property. Purchaser/Exchanger will place funds in escrow to complete the exchange. The Seller and Purchaser/Exchanger will execute necessary documents to complete the exchange, including any assignments or trust agreements. The Purchaser will pay all additional expenses associated with the tax deferred exchange and hold the Seller harmless from any liability in connection therewith. All references to “Purchaser” in the Contract shall mean Purchaser/Exchanger.