A 1031 exchange specifically refers to Section 1031 of the Internal Revenue Code (IRC), which allows an owner to sell their property and not pay taxes if they buy a “similar” property after closing. Brokers often worry that an unscrupulous seller may try to avoid paying a commission while waiting for the listing to expire before entering into a contract with a potential buyer introduced into the property during the term of the listing. For this reason, most listing contracts stipulate that the seller is required to pay his commission to the broker if, after the expiration of the listing, the seller enters into a contract with a buyer who has been introduced into the property during the term of the listing. While such a provision is conceptually reasonable, the seller must ensure that it is appropriate when applied. For good reason, brokers have been able to force many state legislators and some courts to enact laws or jurisdictions to protect the broker`s right to receive a commission. This protection is often granted by conditioning the broker`s right to receive a commission not at the end of a sale, but only on presentation by a finished and capable buyer willing to pay the seller`s price. Whether this result is required by law or case law or not, the registration agreement often provides for it contractually. While paying a commission in these circumstances protects a broker, it creates the possibility that the seller owes the broker a commission even if the seller does not sell their property, an outcome that is clearly not expected or acceptable to the seller. In addition, the seller will want mutual damages from the broker. The seller wants the broker`s consideration to cover the broker`s failure to comply with the broker`s obligations under the registration contract, as well as any claim arising from the broker`s actions that go beyond the broker`s area of responsibility as set out in the registration agreement. And there is another problem that the seller must take into account.

The broker can negotiate or work with another broker representing a potential buyer. Unless a co-broker agreement is specifically addressed in the listing agreement, the seller will likely feel that the potential buyer`s broker will be compensated from the commission the seller pays to the seller`s broker. The seller will not want to be in a position where he will be sued by a broker representing the buyer, especially if that broker is upset due to a disagreement over the distribution of the commission between that broker and the seller`s broker. The seller therefore wants the broker`s indemnification provision to require the broker to indemnify the seller if another broker makes a claim against the seller, unless that claim arises from the seller`s actions. Many listing contracts require the seller to provide written information about the property, and some require the seller to provide disclosures or representations or warranties regarding the condition of the property. Both provisions could cause problems for the seller. For example, the wording that the seller provides “all documents relating to the property” is too broad and could result in possible liability on the part of the seller if the seller inadvertently fails to disclose the documents in its possession. Such language could also be interpreted as requiring the seller to provide documents that are in the possession of the seller`s lawyers, engineers or management company. And in the absence of an explicit limitation, the Seller could be held liable if any of the documents, including those created by third parties, contain false or false statements or information. If the broker does not agree to completely remove the seller`s obligation to provide documents, the seller should limit the requirement to use the seller`s “good faith efforts” to deliver documents and provide that the seller`s obligation relates only to documents that are “in the seller`s possession”. The registration agreement should also provide that the broker must rely on all of these documents and their contents at its own risk. As a buyer, the art of buying commercial real estate is about finding the investment that suits your needs.

The purchase price is usually a reflection of current market conditions and the income it generates when there are tenants on the property. For the broker or agent, it is determined how to fulfill his obligations under this agreement by signing individually on behalf of the broker, another holder of a real estate licence issued by the broker who is either the broker or agent individually, or an associated permit holder (a person holding a real estate seller`s permit or a broker working under the broker`s real estate licence). Of course, this is subject to the consent of the customer, which cannot be unreasonably refused or delayed. The Broker and the Client will agree that the Broker`s obligations are limited by the terms of these Terms. According to IRC 1.1031(a)-1(b), the term “of the same nature” is more the “nature” and “character” of the property than its quality or quality. For example, if the property sold is a 4-unit apartment building, the seller will likely have to purchase a residential property as part of a 1031 exchange. The two (2) properties must have generic similarities. The conclusion is when the parties meet and the financial transaction is completed. This is usually done in a law firm or title company that processes the required documents and verifies that the funds were sent and received during the administration of the new deed. If there are real estate agents, they owe their commission as written in their registration contract. Most sales of commercial properties begin when the seller hires a broker.

The seller`s choice of broker may depend on a number of factors, such as .B. the past relationship, background and skills of the broker in relation to the particular property and the amount of the commission. The next step after choosing the broker is to execute a registration contract, which the broker usually prepares by adapting its standard form to the proposed transaction. Registration agreements vary considerably from state to state and broker to broker. However, most enrollment contracts deal with similar issues, and many of these issues can be very important to the seller. Some of these problems are obvious and others are not. Almost all of them are negotiable. Below are seven of the most important points that the seller can negotiate in the broker`s listing contract. The seller does not want to argue with the broker over whether the seller thwarted the broker`s efforts to sell the property because the seller arbitrarily rejected a particular buyer or offer. In order to avoid such litigation, the listing agreement must expressly provide that seller retains absolute control over the process of selecting a potential buyer, negotiating with that buyer, and entering into or failing to complete the transaction (subject to state, federal and other anti-discrimination laws). Some registration contracts contain language that can be interpreted as creating an implied obligation for the seller to accept an offer if it meets the offer price or otherwise proceeds in a commercially reasonable manner during the sale process. .

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