Here’s a comprehensive list of potential questions about the Buyer’s Intent to Exchange Addendum, along with explanations for each:

1. What is the purpose of the Buyer’s Intent to Exchange Addendum?

It is used when the buyer plans to complete the purchase as part of an IRS Section 1031 like-kind exchange, allowing deferral of capital gains taxes by replacing one investment property with another.

2. Does the addendum make the seller obligated to participate in the exchange?

No — it simply notifies the seller of the buyer’s intent. The seller is not responsible for costs, liability, or tax consequences related to the buyer’s exchange.

3. Does the seller have to sign additional paperwork for the buyer’s exchange?

The seller may be asked to sign additional documents required by the qualified intermediary (QI) handling the exchange, but these do not add costs or liability for the seller.

4. Can the escrow officer act as the qualified intermediary?

No — escrow officers cannot act as the QI. The buyer must hire a separate QI to handle exchange funds and paperwork.

5. Does the exchange affect the purchase price or terms in the Residential Purchase Agreement?

No — the RPA terms remain the same. The exchange is handled as part of the buyer’s tax strategy and does not change agreed-upon price or conditions.

6. What is the seller’s risk if the buyer is doing a 1031 exchange?

There is generally no risk if the addendum specifies the seller will not incur extra costs or liability, and closing will proceed as scheduled.

7. Can the transaction still close if the buyer’s exchange fails?

Yes — the addendum should clarify that the buyer remains obligated to close regardless of whether the exchange is successful.

8. Is the buyer’s lender affected by the 1031 exchange process?

The buyer should coordinate with the lender to ensure the loan and funding timeline fit the exchange deadlines.

9. Does this addendum give the buyer any right to delay closing?

Not unless both parties agree in writing. Standard language requires closing per the RPA unless an extension is mutually agreed upon.

10. Should escrow be informed about the 1031 exchange?

Yes — escrow needs to coordinate with the buyer’s QI to ensure proper handling of funds and paperwork in compliance with IRS rules.

11. What deadlines must be considered with a 1031 exchange?

The IRS requires identification of replacement property within 45 days of closing the sale of the relinquished property, and purchase must be completed within 180 days.

12. Can the seller also be doing a 1031 exchange at the same time?

Yes — in that case, both parties may have separate Intent to Exchange Addendums, and escrow would coordinate with both qualified intermediaries.

13. What happens if the QI documents are not ready by closing?

The parties should ensure all exchange documents are prepared early to avoid funding delays or missed IRS deadlines.

14. Does the buyer’s earnest money deposit go through the QI?

No — the EMD is handled normally by escrow. Only the funds from the sale of the relinquished property are handled by the QI.