Taxpayers doing a 1031 exchange, especially a reverse exchange, often ask “who should sign the purchase agreement for the replacement property?” That’s our topic for this 1031 education article.
1031 Purchase Agreement
The easiest way to tackle this issue is to have the name of the taxpayer that owned the old relinquished property enter into the new replacement property purchase agreement.
That way when we need to switch the name of the purchaser right before the closing of the replacement property to an exchange accommodation title holder, which is typically an LLC owned directly by the qualified intermediary, we have the right under the purchase agreement to assign the purchase agreement to that actual purchaser.
Modifications & Amendments
However, all of that time before closing it will be the taxpayer who is on the purchase agreement, so if there needs to be a modification to the purchase agreement or some amendment needs to be made, the taxpayer that originally signed the purchase agreement is in the driver's seat to make modifications and to make negotiations that change the purchase agreement right up until the moment before closing.
Start Your 1031 Exchange: If you have questions about the 1031 purchase agreement, feel free to call me at 612-643-1031.
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