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Agreement Between Donor and Donee of Interest In Income Producing Property
AGREEMENT made [date], between [name], residing at [address] (the Donor) and [name of institution], an educational institution chartered by [State], having its principal offices at [address] (the Donee).
WHEREAS, the Donee is a tax-exempt educational organization under Section 501(c)(3) of the Internal Revenue Code; and
WHEREAS, the Donor owns an office building located at [address], in fee simple, more fully and completely described as [description] (the Property); and
WHEREAS, the Donor wishes to contribute an undivided 25 percent interest in and to the Property to the Donee;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Conveyance of an Undivided Interest in the Property. The Donor will convey an undivided interest in and to 25 percent (25%) of the Property to the Donee by deed duly executed and suitable for filing with the appropriate recording officer on or before [date].
2. Payment of Filing Fees and Taxes. All recording fees, transfer taxes, attorney fees, and all other expenses incurred in connection with the conveyance of a 25 percent (25%) undivided interest in and to the Property to the Donee shall be paid by the Donor.
3. Management of Property. For so long as the Donor or the Donor's estate retains an undivided interest in or to 50 percent (50%) or more of the Property, the Property shall be managed by the Donor or the Donor's estate or their designees. If the Donee at any time holds an undivided interest of more than 50 percent in or to the Property then at such time the Donee shall have the option of managing the property or designating others to do so.
4. Payment of Taxes, Maintenance, and Other Ownership Costs. The Donor will pay all the expenses of ownership of the Property including, but not by way of limitation, real property taxes, special assessments, maintenance, repairs, and management. The Donor also will maintain fire and liability insurance of the Property in an amount sufficient to save the Donee from harm.
4. Payment of Taxes, Maintenance, and Other Ownership Costs. All the expenses of ownership of the Property including, but not by way of limitation, real property taxes, special assessments, maintenance, repairs, insurance, and management, shall be paid from the gross income of the Property. If the gross income in any calendar quarter is insufficient to pay such expenses the Donee upon the Donor's request, will pay to the Donor _______percent (_______%) of the deficit.
5. Division of Income From the Property. Twenty-five percent (25%) of all gross receipts derived from the rental or any other use of the property shall be distributed to the Donee quarterly. The Donee may use such receipts for its general purposes so long as such use does not adversely affect the Donor's right to deduct the fair market value of the conveyance to the Donee or the payments of the Donee's share of the expenses of ownership of the Property as charitable contributions.
5. Division of Income From the Property. (To be used with Alternative Paragraph 4, above.) No later than [number] days following the end of each calendar quarter the Donor will account to the Donee in writing for the financial results of the Property's operation during such calendar quarter setting out the gross rentals, all expenses (exclusive of depreciation), and net profits for the calendar quarter. Together with the accounting the Donor will distribute 25 percent (25%) of the net profit to the Donee. The Donee may use such distribution for its general purposes so long as such use does not adversely affect the Donor's right to deduct the fair market value of the conveyance to the Donee. The Donor, at his [or her] sole option, may withhold from this distribution 25 percent (25%) of any sums the Donor requires for reinvestment in the Property for working capital or capital expenditures. If any quarterly accounting shows a deficit, the provisions of Paragraph 3 shall apply.
6. Sale of the Property. At any time following the conveyance to the Donee of an undivided 25 percent (25%) interest in the Property, the Donor, at his [or her] sole option, may elect to sell the Property for such price and on such terms as he alone deems proper. Should the Donor so elect, the Donee shall execute any and all documents that are necessary to complete the sale. The Donor will pay all the expenses involved in the sale including, but not by way of limitation, attorney fees, brokers' commissions, and transfer taxes.
7. Disposition of Proceeds of Sale of the Property. The Donee shall receive 25 percent (25%) of the net proceeds of the sale of the Property. If the terms of the sale require the seller to take back a purchase-money mortgage from the purchaser, such mortgage and any note or bond executed by the purchaser shall provide that the Donee has an undivided 25 percent (25%) interest therein. The Donee may use its share of the gross proceeds of the sale of the Property or its income from the purchase-money mortgage for its general purposes so long as such use does not adversely affect the Donor's right to deduct the fair market value of the conveyance to the Donee or the payments of the Donee's share of the expenses of ownership of the Property as charitable contributions.
8. Appraisal. The Donor has had the Property appraised by [name of appraiser], a person qualified to appraise commercial property, on [date]. [name of appraiser] has found the Property to be worth _______ dollars ($_______). A copy of the appraisal is annexed hereto as Schedule A [omitted]. On or before [date], the Donor will submit a completed Internal Revenue Form 8283 to the Donee containing a summary appraisal of the Donee's 25 percent (25%) interest in the property showing its value to be _______ dollars ($_______) signed by [name of appraiser]. The Donee will promptly sign the submitted Form 8283 and return it to the Donor so that the Donor may attach the Form to the Donor's Federal Income Tax Returns for 20--.
9. Agreement Binding. This agreement is binding upon the parties thereto, their heirs, personal representatives, successors, and assigns.
IN WITNESS WHEREOF, the parties hereto have signed the Agreement the day and year first above written.
[name of institution]
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