• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

[PA] Agreement of Sale & Changes

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

pixelrogue1

Junior Member
Hello everyone,

Wife and I signed an AOS for new construction investment property last year. We are selling an investment property and wanting to do a 1031 exchange (or reverse 1031 depending on timing.) The investment property is in my name, had it long before meeting the wife. 1031 requires the tax structures to be the same, meaning my wife couldn't be on the AOS.

When it comes to Agreement of Sale, we would need to remove her from the document.
1) I would qualify on my own for financing...especially after the 1031.
2) It is only the name change we are looking to accomplish. No changes otherwise.

Curious how others may see this request. Is this something considered a no-no in the world of real estate, or generally ok so long as all parties accept?
 


LdiJ

Senior Member
Hello everyone,

Wife and I signed an AOS for new construction investment property last year. We are selling an investment property and wanting to do a 1031 exchange (or reverse 1031 depending on timing.) The investment property is in my name, had it long before meeting the wife. 1031 requires the tax structures to be the same, meaning my wife couldn't be on the AOS.

When it comes to Agreement of Sale, we would need to remove her from the document.
1) I would qualify on my own for financing...especially after the 1031.
2) It is only the name change we are looking to accomplish. No changes otherwise.

Curious how others may see this request. Is this something considered a no-no in the world of real estate, or generally ok so long as all parties accept?
What is an AOS? Please explain the acronym...
 

LdiJ

Senior Member
Hello everyone,

Wife and I signed an AOS for new construction investment property last year. We are selling an investment property and wanting to do a 1031 exchange (or reverse 1031 depending on timing.) The investment property is in my name, had it long before meeting the wife. 1031 requires the tax structures to be the same, meaning my wife couldn't be on the AOS.

When it comes to Agreement of Sale, we would need to remove her from the document.
1) I would qualify on my own for financing...especially after the 1031.
2) It is only the name change we are looking to accomplish. No changes otherwise.

Curious how others may see this request. Is this something considered a no-no in the world of real estate, or generally ok so long as all parties accept?
A 1031 exchange is possibly not going to work for you. A 1031 exchange requires a third party to manage the exchange as a qualified intermediary. I think that you might already be past that point if you have put any money at all towards the new property. You will want to consult with a real estate attorney who is familiar with 1031 exchanges.

Do some googling and research the role of a 1031 exchange qualified intermediary.
 

pixelrogue1

Junior Member
A 1031 exchange is possibly not going to work for you. A 1031 exchange requires a third party to manage the exchange as a qualified intermediary. I think that you might already be past that point if you have put any money at all towards the new property. You will want to consult with a real estate attorney who is familiar with 1031 exchanges.

Do some googling and research the role of a 1031 exchange qualified intermediary.
1031 immaterial to the question (sorry I added that layer of complication).

Either way we are looking to switch from our personal names to LLC...
1) Property 1 was signed in both our names, looking to use one LLC in my name.
2) Property 2 was signed in both our names, looking to use one LLC in wife's name.

LLC financing would be secured.
 

FlyingRon

Senior Member
To change the AOS you must get the agreement of the other party. There's no other way. If they're not interested in making the change, then what happens next depends on information you haven't provided. Your options are pretty much, go ahead and complete the sale and fix up things at (or just after) closing or deal with the ramification of breaching the contract.

The statement "LLC in xxx's name" makes no legal sense. I suspect what you're trying to say is that you intend to use an LLC with either you or your wife as the sole member.

It's not clear what you are actually attempting to gain through all this subterfuge. I suspect you really need to discuss your desires with an attorney. I agree, with the other posters that a 1031 isn't likely going to be possible here. You're going to have to deal with the gain on the first property.
 

Sponsored Ad

Top