SAMPLEREAL PROPERTY
EXCHANGE AGREEMENT
TABLE OF CONTENTS
1. EXCHANGE OF PROPERTIES 1
2. DISPOSITION OF RELINQUISHED PROPERTY 1
3. EXCHANGE BALANCE 1
4. ACQUISITION OF REPLACEMENT PROPERTY 2
5. OWNER'S AGREEMENTS REGARDING REPLACEMENT PROPERTY 2
6. DIRECT DEEDING OF TITLE 2
7. INTERMEDIARY'S FEES 2
8. OWNER'S RIGHT TO RECEIVE BOOT 2
9. PLACEMENT OF FUNDS; INTEREST 3
10. FIRST AMERICAN CLOSING PROTECTION GUARANTEE 3
11. OWNER'S INDEMNIFICATION OF INTERMEDIARY 3
12. SCOPE OF INDEMNIFICATION 3
13. OWNER'S REPRESENTATIONS REGARDING ENVIRONMENTAL RISK 3
14. INTERMEDIARY'S RESERVATION OF RIGHTS 4
15. NO AGENCY 4
16. TIME OF ESSENCE 4
17. AMENDMENTS 4
18. NOTICES 4
19. PARAGRAPH HEADINGS 5
20. SEVERABILITY5
21. GOVERNING LAW AND VENUE 5
22. COUNTERPART EXECUTION 5
23. SUCCESSORS AND ASSIGNS 5
24. THIRD PARTY BENEFICIARY 5
25. INTEGRATED AGREEMENT 5
26. ASSIGNMENT 5
27. WAIVER 5
28. ATTORNEY'S FEES 5
29. EXHIBITS 5
30. TITLE INSURANCE 5
31. NO TAX ADVICE 5
32. RISK OF LOSS 6
33. TAXPAYER IDENTIFICATION NUMBER 6
34. FIRPTA EXEMPTION 6 LIST OF EXHIBITS
A: FEE SCHEDULE
B: PROPERTY IDENTIFICATION FORM
C: SUBSTITUTION AGREEMENT AND NOTICE - RELINQUISHED PROPERTY
D: SUBSTITUTION AGREEMENT AND NOTICE - REPLACEMENT PROPERTY
E: CLOSING PROTECTION GUARANTEE
SAMPLEREAL PROPERTY
EXCHANGE AGREEMENT
This Real Property Exchange Agreement ("Agreement") is entered into by and between
___________________________________("Owner") and FIRST EXCHANGE CORPORATION, a California
corporation ("Intermediary"), in consideration of the following:
A. Owner is presently the owner of certain real property located in the County of
_________________, State of _______________, commonly known as Assessor's Parcel # _________, located at
_____________________________, ____________________ ("Relinquished Property").
B. Owner desires to acquire in exchange as replacement property certain other "Like-kind" real
property by way of an Internal Revenue Code ("Code") Section 1031 exchange (an "Exchange Transaction").
C. Intermediary has agreed to act as a qualified intermediary to facilitate the Exchange Transa ction
by discharging the contractual obligation of Owner to transfer the Relinquished Property to one or more third-party
buyers (the “Buyer"), acquiring other United States real property (the 'Replacement Property") of "like kind" (within
the meaning of Section 1031 of the Code) to the Relinquished Property from one or more third-party sellers (the
"Seller"), and causing the transfer of the Replacement Property to Owner pursuant to the terms of this Agreement.
D. 1. Title to Relinquished Property shall be deeded directly from Owner to the Buyer, and title
to the Replacement Property shall be deeded directly from the Seller to Owner.
E. The parties intend to achieve a valid exchange as set forth in applicable law and regulations,
including Treasury Regulations Section 1.1031(k)-1, now and as it may be amended or modified.
F. Owner shall bear the sole and exclusive risk of whether the transactions contemplated by this
Agreement qualify under Section 1031 of the Code. Intermediary, its agents, and its counsel shall have no
responsibility or liability concerning such qualification.
NOW, THEREFORE, in consideration of the recitals above, and the other agreements set forth in this
Agreement, the parties agree as follows:
1.EXCHANGE OF PROPERTIES. Subject to the terms of this Agreement, Owner agrees to
transfer to Intermediary the Relinquished Property, and Intermediary agrees immediately after this transfer t o
retransfer the Relinquished Property tot he Buyer. In consideration of and in exchange for this transfer, subject to
the terms of this Agreement, Intermediary shall acquire and transfer to Owner one or more Replacement Properties
of "like kind".
2.DISPOSITION OF RELINQUISHED PROPERTY.
a. At least (5) business days prior to the closing of the sale of Relinquished Property to
Buyer ("Initial Closing Date"), Owner shall provided Intermediary with a copy of the final agreement for the sale of
the Relinquished Property to Buyer.
b. Prior to Initial Closing Date, Owner shall cause the Intermediary to be substituted as
seller of the Relinquished Property, using the assignment attached as Exhibit "C", and Intermediary shall cause the
transfer and conveyance of the Relinquished Property to Buyer by direct deed in accordance with Paragraph 6.
3. EXCHANGE BALANCE. Owner and Intermediary agree that the gross fair market value of
Owner's interest in Relinquished Property is that value shown on the purchase contract or exchange instructions
signed by Owner in connection with the transfer of Relinquished Property (the "Exchange Value"). Intermediary
shall credit Owner, in exchange for the transfer of Relinquished Property, with an amount ("Exchange Balance")
equal to such Exchange Value, plus any additional cash deposited by Owner with Intermediary for the acquisition of
Replacement Property and any prorations credited to Owner, less all of the following:
a. The amount of all principal and accrued interest on any obligation secured by
relinquished Property as of the Initial Closing Date of Relinquished Property (including any prepayment penalty).
b. All settlement costs, prorations, and other transactional expenses charged to Owner or
Intermediary in connection with the exchange, acquisition and disposition transaction contemplated by this
Agreement,
c. Any actual direct costs and expenses incurred or expended by Intermediary to third
parties pursuant to this Agreement (less any of such amounts returned to Intermediary),
d. Any amount of tax that Intermediary shall have been required to withhold pursuant to
state oInitial Closing Date and subject to the time limits set forth in the next sentence, as Owner locates each
Replacement Property, Owner shall give written notice to Intermediary ("Identification Notice") using the
Replacement Property Identification Form attached as Exhibit "B" that such property is to constitute Repl acement
Property. This shall occur during the identification period beginning on the Initial Closing Date (the "Identification
Period"). Owner shall have the right to rescind any such Identification Notice at any time during the Identification
Period by written notice to Intermediary. Upon entering any agreement for the acquisition of Replacement Property
(and in no event less than two (2) business days prior to the closing of such agreement), Owner shall promptly
provide Intermediary with copies of such final agreement for Intermediary's review. Prior to the closing of the
acquisition of Replacement Property (which shall be within the "Exchange Period", which is the period beginning on
the Initial Closing Date and ending at the close of the one hundred eightieth (180th) day after the Initial Closing
Date), Owner shall cause Intermediary to be substituted as purchaser of the Replacement Property, using the
assignment attached as Exhibit "D". If all conditions to the transfer of the Replacement Property have been sati sfied
or waived, Intermediary shall cause the transfer of the Replacement Property to Owner by direct deed in accordance
with Paragraph 6 in consideration of and in exchange for the transfer by Owner of Relinquished Property pursuant to
the terms of this Agreement.
b. Obligation limited to Exchange Balance. Intermediary shall participate in the acquisition
of Replacement Property upon specific terms and conditions as negotiated and specified in writing by Owner and
agreed to by Intermediary. In the event that additional cash or other consideration is required by Intermediary to
acquire Replacement Property, all of such additional cash and otntermediary by Owner through the Exchange
Transactions. Intermediary shall have no obligation to participate in the acquisition of Replacement Property unless
all such additional consideration has been deposited in the Exchange Transaction by Owner. Owner agrees that
Owner must approve in writing all final terms and conditions for the acquisition of Replacement Property.
c. Intermediary shall not be in breach of its obligations under this Agreement, nor shall
Intermediary incur any liability under this Agreement, on account of Intermediary's inability to acquire any
Replacement Property on the terms and conditions specified by Owner in any Identification Notice or on account of
Intermediary inability to perform under any Replacement Property purchase agreement unless such failure shall
arise out of the willful default by Intermediary under this Agreement. If notwithstanding Intermediary's good faith
attempts, Intermediary is unable to acquire a Replacement Property, Intermediary shall, within five (5) busine ss days
following Intermediary's or Owner's written notice tot he other assign to Owner (without recourse and without any
warranty or representation in connection therewith) all rights, claims, causes of action, or other rights that
Intermediary may have under such Replacement Property purchase agreement.
5.OWNER'S AGREEMENTS REGARDING REPLACEMENT PROPERTY. Owner agrees
as follows:
a. Every designation of Replacement Property, and any Identification Notice delivered to
Intermediary by Owner, shall be made on the basis of Owner's own investigation of the physical condition of the
land and improvements, including subsurface conditions and environmental conditions; and
b. Each and every transfer made by Intermediary to Owner of any Replacement Property
shall be conveyed to Owner "as-is" and with all defects, whether latent or patent, and Owner shall assume all risks
relating tot he Replacement Property, including adverse physical conditions which may not have been reveal ed by
its investigation.6.DIRECT DEEDING OF TITLE. Owner and Intermediary agree that Intermediary shall cause
the Relinquished Property to be directly conveyed to Buyer from Owner and the Replacement Property to be directly
conveyed to Owner from Seller of the Replacement Property, in both cases using the services of First American
Title Insurance Company or its underwritten agent.
7.INTERMEDIARY'S FEES. Owner agrees to pay as consideration for the activities undertaken
by Intermediary pursuant to the terms and conditions of this Agreement, the fees calculated pursuant to the schedule
attached as Exhibit "A". Such sums shall be disbursed to Intermediary directly from the funds held by Intermediary,
and charged against the Exchange Balance, without the requirement of authorization or further approvals by Owner. 8.OWNER'S RIGHT TO RECEIVE BOOT.
a. All funds received by Intermediary from the transactions described in Paragraph 2 shall
be utilized by Intermediary to acquire the Replacement Properties or for the charges permitted under Paragra ph 3
and Paragraph 7. Owner shall have no right to receive, pledge, borrow or otherwise obtain the benefits of such
funds or other consideration held by Intermediary or anything other than "like kind" real property other than as set
forth under Paragraph 8.b.
b. Notwithstanding the foregoing, Intermediary shall distribute any unexpended portions of
the Exchange Balance and accrued interest to Owner (i) after the end of the Identification Period, if there a re no
identified Replacement Properties which have not been acquired, (ii) upon or after the receipt by Owner of all of the
Replacement Properties identified within the Identification Period, (. Section 1.1031(k)-1(g)(6)(iii), or (iv) after the
end of the Exchange Period, if there shall be any remaining Exchange Balance.
c. Owner acknowledges that no Exchange Balance shall be distributed prior to the
occurrence of events listed in Paragraph 8.b.
9.PLACEMENT OF FUNDS; INTEREST. Owner and Intermediary agree that, during the term
of this Agreement, all funds held by Intermediary shall be placed in an interest-bearing account with a financi al
institution or institutions approved by First American Title Insurance Company, with all interest in such account or
accounts to accrue to the account of Intermediary and to be added to the Exchange Balance. Owner shall receive
interest on the funds to be utilized by Intermediary pursuant to this Agreement in an amount equal to the interest
earned by Intermediary on such funds. Owner shall have no right tot receive, to pledge, borrow or otherwise obtain
the benefits of such interest before the end of the Exchange Period, except as otherwise provided in Paragraph 8.
All monetary obligations of Intermediary under this Agreement are specifically limited to the avail ability of funds
from such account or accounts, and Intermediary (as distinguished from First American Title Insurance Company
under Paragraph 10) shall have no liability on account of the failure or delay of any depository financial institution
(or other party holding funds( in repaying any deposit or interest on deposits.
10.FIRST AMERICAN CLOSING PROTECTION GUARANTEE. Notwithstanding anything
this Agreement to the contrary, if First American Title Insurance Company approves the financial institution holdi ng
the funds comprising the Exchange Balance, as an additional protection in this transaction, Owner shall be provided
with an Exchange Closing Protection Guarantee in the form of Exhibit "E".
11.OWNER'S INDEMNIFICATION OF INTERMEDIARY. Owner releases, indemnifies, holds
harmless, and agrees to defend Intermediary from any and all loss, costs, expenses, liability, damage or injury,
including actual attorneys' fees (as defined in Paragraph 28), in any manner arising out of or incident to
Intermediary's participation in the acquisition, ownership, and/or disposition of any interest in the Relinquished
Property or the Replacement Property or Intermediary's holding or holding or disposing of funds or other
consideration pursuant to this Agreement. This rmediary's participation in any aspect of the Exchange Transac tion,
including, without limitation, any and all consequential damages arising therefrom, except liabilit y arising directly
from Intermediary's own willful misconduct or gross negligence. The parties further agree that Intermediary is
participation in the disposition of Relinquished Property and the obtaining of the Replacement Property in
furtherance of Owner's desire to accomplish an Exchange Transaction.
12.SCOPE OF INDEMNIFICATION. For purposes of this Agreement, the indemnification by
Owner shall include the active defense by attorneys selected by Intermediary of any claim made against
Intermediary, all legal expenses and costs incurred by Intermediary in connection therewith, including the expense
of duplication of the rate of Fifteen Cents ($0.15) per page in response to any summons subpoena, judicial or
administrative process or any correspondence, and an allowance at the rate of One Hundred Fifty Dollars ($150.00)
per hour for the time of any employee of Intermediary (plus actual attorneys' fees of Intermediary) who is required
or asked to prepare or respond to summons, complaints, applications, discovery, motions, demurrers, answers,
affirmative defenses, counterclaims, crosscomplaints, and administrative proceedings, or for time that is spend in
negotiation toward settlement, or in traveling to or from and attending hearings, trials, depositions, meetings or other
proceedings related to matters indemnified against pursuant to this Agreement, or for time that is incurred in
connection with any governmental tax audit or proceeding regarding the Exchange Transaction.
13.OWNER'S REPRESENTATIONS REGARDING ENVIRONMENT RISK.
a. Owner represents and warrants to Intermediary that there are no underground storage tanks on
Relinquished Property and, as to any Replacement Property, that there shall not be any such tanks, nor shall there be
any evidence on the Relinquision by any hazardous or toxic materials as defined by any governmental agency, and
that Owner has no reason to suspect the existence thereof in or upon Relinquished Property, nor shall Owner shall
such suspicion to exist as to any Replacement Property. For the purposes of this paragraph "hazardous or toxic
materials" shall include by not be limited to substances defined as "hazardous substances," "hazardous material," or
"toxic substances" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq.; the Resources Conservation and Recovery Act, 42 U.S.C. 6901, et seq.; and corresponding statutes enacted by
any state in which either Relinquished Property or any Replacement Property is located, as any of the above
mentioned laws may be amended from time to time, and in the regulations adopted and the publications promulgate d
pursuant to such laws.
b. Intermediary is expressly relying upon these representations by Owner in entering into
this Agreement. Owner agrees that the indemnity and hold harmless provisions of Paragraphs 11 and 12 shall
specifically include any liability arising by reason of any contamination found to have existed on Relinquished
Property or on any Replacement Property which in any way jeopardizes or causes liability to Intermediary. Owner
assigns to Intermediary any and all rights to indemnification which Owner may have against any third party to the
extent Intermediary suffers any damage, liability and/or cost as a result of the presence of environmental
contamination or hazardous or toxic materials upon Relinquished Property or any Replacement Property.
14.INTERMEDIARY'S RESERVATION OF RIGHTS. Intermediary reserves the right, in its
absolute discretion, to resign as an intermediary pursuant to this Agreement. Intermediary also reserves the right, in
its absolute discretion, to withhold acceptance and participation in the assignment of rights substituting Interm ediary
in the contract for disposition of Relinquished Property or the contract to acquire of this paragraph, Intermediary
shall immediately cease to act as intermediary, Intermediary shall return to Owner any remai ning balance of the
Exchange Balance and Intermediary shall have no further obligations under this Agreement. Notwithstanding the
resignation of the Intermediary, the indemnification provisions of Paragraphs 11, 12, and 13, and the provisions of
Paragraphs 21, 28, 31, and 32 shall survive the resignation of Intermediary.
15.NO AGENCY. Intermediary shall not have any obligations to Owner as an agent of Owner nor
shall Owner have any obligations to Intermediary as a principal of Intermediary.
16.TIME OF ESSENCE. Time is of the essence of each and every term and provision of this
Agreement.
17.AMENDMENTS. This Agreement m party may be required or desires to serve upon the other
parties under the terms of this Agreement shall be in writing, and shall be served upon the other parties at the
following addresses:
If to Intermediary, to: If to Owner:
First Exchange Corporation
930 Laguna Street
Santa Barbara, CA 93101
Telephone: (805) 962-2264
Fax (805) 965-599619.PARAGRAPH HEADINGS. Paragraph and other headings contained in this Agreement are for
reference purposes only and are in no way intended to describe, to interpret, define or to limit the scope, extent or
intent of this Agreement or any provision of this Agreement.
20.SEVERABILITY. All paragraphs, clauses and covenants contained in this Agreement are for
reference purposes only and are in no way intended to describe, to interpret, define or to limit the scope, extent t o
intent of this Agreement shall be interpreted as if the invalid paragraphs, clauses or covenants were not contai ned in
this Agreement.
21.GOVERNING LAW AND VENUE. The internal laws of the State of California concerning
contracts made and to be performed wholly within that state (other than its rules for conflict or choice of laws),
without regard to the conflicts of laws principles of such state, shall govern the validity of this Agreement, the
interpretation of its terms, and the rights and duties of the parties (whether a cause of action is asserted in c ontract, in
tort, or otherwise, at equity or at law). Any suit brought in connection with this Agreement, whether in contract,
tort, equity or otherwise, shall be brought in the state courts sitting in Santa Barbara, California, the parties wai ving
any claim or defense that such forum is not convenient or proper. Each party agrees that any such court shall have
in personam jurisdiction over it, consents to service of process in any manner authorized by California law, and
agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner specified by law.
22.COUNTERPART EXECUTION. This Agreement may be executed in any number of
counterparts wit the same effect as if all parties have signed the same document. All counterparts shall be c onstrued
together and shall cod shall inure to the benefit of the respective heirs, successors and assigns of the parties,
provided, however, that Owner shall have no right to assign Owner's interest under this Agreement without the prior
written consent of Intermediary.
24.THIRD PARTY BENEFICIARY. Except as otherwise provided in this Agreement, this
Agreement is made for the sole benefit of the parties signatory to it. Subject to the provisions of Paragraph 23, no
other persons shall have any rights or remedies by reason of this Agreement against any parties signatory to it or
shall be considered to be third party beneficiaries of this Agreement in any way.
25.INTEGRATED AGREEMENT. This Agreement and its exhibits and the Exchange Closing
Instructions entered into pursuant to this Agreement constitute the entire understanding and agreement among the
parties with respect to the subject matter of this Agreement, and there are no agreements, undertakings, restrict ions,
representations or warranties among the parties in writing. In the case of any conflict between this Agreement and
any other agreement entered into between the parties, this Agreement shall prevail.
26.WAIVER. The failure of any party at any time to enforce performance by another party of any
provision of this Agreement shall in no way affect the party's rights to enforce that performance, nor shall the waiver
by any party of any breach of any provision of this Agreement be deemed to be a waiver by that party of any other
breach of that provision or any other provision of this Agreement.
28.ATTORNEYS' FEES. If any legal action, arbitration or other proceeding is brought for the
enforcement of this Agreement, or because of any alleged dispute, breach, default or misrepresentation in
connection with this Agreement, the successful or prevailing party shall be entitled to recover actual a ttorneys' fees
(including fees for paraprofessionals and similar personnel and disbursements) and other costs it incurred in that
action or proceeding, in addition to any other relief to which it may be entitled. The parties agree that act ual
attorneys' fees shall be based on the attorneys' fees actually incurred (based on the attorneys' customary hourly
billing rates) rather than the court or arbitrator making an independent inquiry concerning reasonableness.
29.EXHIBITS. All exhibits are incorporated in this Agreement by reference.
30. TITLE INSURANCE. TITLE INSURANCE SHALL BE REQUIRED IN ALL
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND SHALL BE PROVIDED BY FIRST
AMERICAN TITLE INSURANCE COMPANY OR THEIR UNDERWRITTEN AGENT.
31.NO TAX ADVICE. OWNER HAS RECEIVED THE ADVICE OF AN INDEPENDENT TAX
ADVISOR OF OWNER'S CHOOSING CONCERNING THIS TRANSACTION AND ITS STATUS AS AN
EXCHANGE PURSUANT TO INTERNAL REVENUE CODE SECTION 1031 AND CORRESPONDING
PROVISIONS OF STATE INCOME TAX LAW AND AGREES TO OBTAIN THIS TAX ADVISOR'S
SIGNATURE INDICATING TAX ADVISOR'S REVIEW OF THIS TRANSACTION. OWNER FURTHER
UNDERSTANDS AND AGREES THAT NO EMPLOYEE, OFFICER, AGENT, OR COUNSEL OF EITHER
INTERMEDIARY OR FIRST AMERICAN TITLE INSURANCE COMPANY HAS MADE OR MAY BE
RELIED UPON AS MAKING ANY REPRESENTATIONS OR RENDERED ANY ADVICE CONCERNING
THIS TRANSACTION OR ITS COMPLIANCE, IN WHOLE OR IN PART, WITH THE REQUIREMENTS OF
SECTION 1031 AS A TAX-DEFERRED EXCHANGE FOR FEDERAL OR STATE INCOME TAX PURPOSES.
32.RISK OF LOSS. OWNER SHALL BEAR THE SOLE AND EXCLUSIVE RISK OF
WHETHER THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT QUALIFY UNDER SECTION
1031 OF THE CODE, AND INTERMEDIARY AND ITS EMPLOYEES, OFFICERS AND AGENTS SHALL
HAVE NO RESPONSIBILITY OR LIABILITY CONCERNING SUCH QUALIFICATIONS.
33.TAXPAYER IDENTIFICATION NUMBER. Owner(s) represent(s) that his/its/their social
security/taxpayer/employer identification number is/are______________________.
34.FIRPTA EXEMPTION. Prior to Initial Closing Date, Owner shall provide Intermediary with
satisfactory evidence of exemption from withholding under the Foreign Investment in Real Property Tax Act, and
other federal or state laws concerning tax withholding.
Executed effective _______________________, 20__. INTERMEDIARY
FIRST EXCHANGE CORPORATION,
a California corporation
By: ____________________________
____________, President
By: _____________________________
____________, Vice President
OWNER____________________________________________________________________
I HAVE ADVISED OWNER AS
TO THE TAX RAMIFICATIONS
OF THIS TRANSACTION:
_____________________________ Dated: _________________
Name:
Tax Advisor for Owner
FEE SCHEDULE
Fee Schedule for First Exchange Corporation acting as a Qualified Intermediary in a deferred exchange:Set Up Fee $500
For each month, or portion thereof,
that we hold each $100,000, or portion
thereof $100
Rates apply to either cash or notes held in the name of First Exchange Corporation. In the event of cancellati on of
the transaction prior to the completion of an intended first closing, there is a minimum fee of $500.
NOTE 1: We must have at least five working days notice for processing and documentation or a RUSH FEE of
$500 will apply.
NOTE 2: Should the exchangor acquire more than Two Replacements Properties, there will be an additional
administrate fee of $200 for each additional property.
E X H I B I T " A "
Replacement Property Identification Form
Pursuant to a Real Property Exchange Agreement, dated ________________, 20___, between me/us and
First Exchange Corporation, I/we identify the following United States real property (which I/we certify meets t he
requirements set forth in that Agreement) as Replacement Property:
Replacement Property __________________________________________________
Address/Description __________________________________________________ ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Conditions: _______________________________________________________________ ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
_____ PROPERTY WHICH YOU DESIGNATE
E X H I B I T " B "
SUBSTITUTION AGREEMENT AND NOTICE - RELINQUISHED PROPERTY
This Substitution Agreement and Notice - Relinquished Property ("Agreement") is made by and
between _____________________________________________________________
("Owner"), ____________________ )"Buyer"), and FIRST EXCHANGE CORPORATION, a California
corporation ("Intermediary"), with reference to the following:
A. Owner is presently the owner of certain real property located in the County of
____________________, State of ______________ commonly known as Assessor's Parcel # ____, located at
____________________, ______________ ("Relinquished Property").
B. Owner and Buyer have entered into an agreement ("Purchase Agreement") that provides, among
other things, for Buyer to purchase the Relinquished Property from Owner for such purchase price ("Purchase
Price") as may be agreed to in writing by Owner.
C. Owner desires to structure Owner's disposition of the Relinquished Property by way of an Internal
Revenue Code ("Code") Section 1031 exchange (an "Exchange Transaction").
D. Intermediary has agreed to act as a qualified intermediary to facilitate the Exchange Transac tion.
E. Buyer agrees to cooperate in the Exchange Transaction by permitting Intermediary to be
substituted as the seller of the Relinquished Property.
F. The parties desire that the transfer of Relinquished Property to Buyer shall be accomplished by a
single direct deed from Owner to Buyer.
NOW, THEREFORE, in consideration of the recitals above, and the other agreements set forth in this
Agreement, the parties agree to amend the Purchase Agreement as follows:
1.SUBSTITUTION. Intermediary shall be substituted for Owner as the seller of the Relinquished
Property.
2.ACCEPTANCE OF PERFORMANCE. Buyer agrees to accept the Relinquished Property and
all other required performance from Intermediary and to render its performance of all of its obligations under the
Purchase Agreement (including the payment offered to Buyer from Owner using the services of First American Title
Insurance Company of their underwritten agents.
E X H I B I T " C "
4. BREACH BY OWNER OR INTERMEDIARY. In the event of the breach of any
representations, warranties, obligations or undertakings by Owner or Intermediary in connection with the Purchase
Agreement or the acquisition of the Relinquished Property by Buyer or in the event of any claim upon any
indemnity of Owner or Intermediary in connection with the Purchase Agreement or the acquisition of the
Relinquished Property by Buyer (whether the representation, warranty, indemnity, obligation or undertaking is
express or implied), Buyer's exclusive recourse shall be against the Owner, and Buyer shall have no recourse of any
type against the Intermediary arising from the Purchase Agreement or the transfer of the Relinquished Property,
except for Intermediary's breach of its agreement to transfer the Relinquished Property to Buyer if Intermediary shall
have acquired it.
5.BREACH BY BUYER. All of Buyer's representations, warranties, obligations and undertakings
(whether express or implied) shall be enforceable by Owner, as if made directly to Owner, without the need to join
Intermediary as an additional party in order to enforce such representations, warranties, obligations or undertakings.
6.REPRESENTATIONS AND WARRANTIES. Owner shall be treated as making directly to
Buyer any representations or warranties concerning the condition of Relinquished Property contained in the
Purchase Agreement or otherwise implied at law.
7.HOLD HARMLESS. Buyer shall hold Intermediary harmless with respect to any condition of
Relinquished Property.
8.COUNTERPART EXECUTION. This Agreement may be executed in any number of
counterparts with the same effect as if al parties have signed the same document.
All counterparts shall be construed together and shall constitute one agreement.Executed effective __________________, 20__.
INTERMEDIAR______
Barbara Hester, Vice President
OWNER____________________________________________________________________
BUYER____________________________________________________________________
SUBSTITUTION AGREEMENT AND NOTICE - REPLACEMENT PROPERTY
This Substitution Agreement and Notice - Replacement Property ("Agreement") is made by and
between ____________________ ("Owner"), _______________________ ("Seller"), and FIRST EXCHANGE
CORPORATION, a California corporation ("Intermediary"), with reference to the following:
A. Seller is presently the owner of certain real property located in the County of ______________,
State of ______________, commonly known as Assessor's Parcel # ____, located at ___________________,
__________________ ("Replacement Property").
B. Owner and Seller have entered into an agreement ("Purchase Agreement") that provides, among
other things, for Owner to purchase the Replacement Property from Seller for the purchase price of
$__________________ ("Purchase Price"), payable at closing.
C. Seller acknowledged that Owner is including this Property in a deferred exchanges transactions
and agrees to cooperate in the exchange transaction by permitting Intermediary to be substituted as the buyer of the
Replacement Property.
D. The parties desire that the transfer of Replacement Property to Owner shall be accomplished by a
single direct deed from Seller to Owner.
NOW, THEREFORE, in consideration of the recitals above, and the other agreements set forth in this
Agreement, the parties agree to amend the Purchase Agreement as follows:
1.SUBSTITUTION. Intermediary shall be substituted for Owner as the purchase of the
Replacement Property.
2.ACCEPTANCE OF PERFORMANCE. Seller agrees to accept the Purchase Price and all other
required performance from Intermediary and shall transfer the Replacement Property at closing to Intermediary or
its nominee.
3.TITLE TO THE REPLACEMENT PROPERTY. At closing, the Intermediary shall cause all
rights of ownership, including title, to Replacement Property to be directly conveyed to Owner using the services of
First American Title Insurance Company or their underwritten agrmediary in connection with the Purchase
Agreement or the acquisition of the Replacement Property by Owner or in the event of any claim upon any
indemnity of Owner or Intermediary in connection with the Purchase Agreement or the acquisition of the
E X H I B I T " D "
Replacement Property by Owner (whether the representation, warranty, indemnity, obligation or undertaking is
express or implied), Seller's exclusive recourse shall be against the Owner, and Seller shall have no recourse of any
type against the Intermediary arising from the Purchase Agreement or the transfer of the Replacement Property,
except for Intermediary's breach of its agreement to transfer the Replacement Property if it shall have acquired it.
5. BREACH BY SELLER. All of Seller's representations, warranties, obligations and undertakings
(whether express or implied) shall be enforceable by Owner, as if made directly to Owner, without the need to join
Intermediary as an additional party in order to enforce such representations, warranties, obligations or undertakings.
6.HOLD HARMLESS. Seller shall hold Intermediary harmless with respect to any condition of
Replacement Property existing at the time of closing.
7.REPRESENTATIONS AND WARRANTIES. Seller shall be treated as making directly to
Owner any representations or warranties concerning the condition of Replacement Property contained int he
Purchase Agreement or otherwise implied at law.
8.TAX WITHHOLDING. Prior to closing, Seller shall provide Intermediary with satisfactory
evidence of exemption from withholding under the Foreign Investment in Real Property Tax Act, and other federal
or state laws concerning tax withholding.
9.COUNTERPART EXECUTION. This Agreement may be executed in any number of
counterparts with the same effect as if all parties have signed the same
document. All counterparts shall be construed together and shall constitute one agreement.Executed effective __________________, 20__.
INTERMEDIARY
FIRST EXCHANGE CORPORATION,
a Califo______________
SELLER____________________________________________________________________
CLOSING PROTECTION GUARANTEE
First American Title Insurance Company
(Date)
To: (Exchangor) Re: Exchange Closing Protection Guarantee
Dear ___________________:
First American Title Insurance Company, a California corporation, hereinafter called "First American" and
First Exchange Corporation, a California corporation, hereinafter called "Exchange Corp" have agreed to cooperate
in an effort to allow parties interested in participating in a delayed exchange the opportunity to consummate t heir
transactions, preserve the proceeds of the sale and, consistent with the instructions of all necessary parties, see to the
proper disposition of funds, documents and properties.
The following assurances shall apply subject to the conditions and exceptions hereinafter stated:
A. When Exchange Corp is specified as an intermediary in connection with a delayed exchange of
real estate and First American issues all policies of title insurance on the exchanged properties, it is intended that
First American, either directly or through one of its affiliated companies, will direct the placement of funds resul ting
from the sale of the property described in Exhibit "A" attached hereto and incorporated herein. In such event First
American extends its indemnification to you, as the exchangor, that once proceeds of the sale are placed at the
direction of First American, that First American shall assure their safe keeping and timely availabili ty to
consummate the terms of an intended exchange or other authorized permitted distribution.
B. First American does not, however, guarantee the availability of funds placed with any financial
institution selected by the exchangor that is outside the control of First American including, but no limited to, l oss or
impairment of such proceeds while on deposit with a bank or other similar institution due to the institution's failure,
insolvency or suspension, except as shall result from First American or Exchange Corp's failure to comply with your
written instructions to drse you for the actual loss incurred in connection with the real estate transaction settl ement
and exchange services when such loss arises from the fraud or dishonesty of the Exchange Corp in handling funds or
documents in connection with the such exchange services.
T E R M S A N D C O N D I T I O N S
1. When First American shall have reimbursed you pursuant to this letter, it shall be subrogated to all
rights and remedies which you would have had against any person or property had you not been so reimburse.
Liability of First American for such reimbursement shall be reduced to the extent that you have knowingly and
voluntarily impaired the value of such right or subrogation.
2. Any liability of First American for losses incurred by you in connection with closing of real estate
transaction by Exchange Corp shall be limited to the protection provided by this letter. However, this letter shall not
affect the protection afforded or contract rights of escrow instructions, a title insurance binder, commitment or
policy of First American.
3. Claims shall be made promptly to First American at its principal office at 114 East Fifth Street,
Santa Ana, California 92701. When the failure to give prompt notice shall prejudice First American, then the
liability of First American hereunder shall be reduced to the extent of such prejudice.
The protection herein offered will be effective upon receipt by First American of your acceptance in
writing which may be made on the enclosed copy hereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
SAMPLE ONLY
______________________________________ (Vice President)
Accepted: _____________________, 20__ SAMPLE ONLY
______________________________________
