If the seller is asking you to sign a Structured Installment Sale rider as a condition of the deal, this is exactly what's on the paperwork. Spoiler: nothing changes for you. Same cash, same timeline, same title transfer.
Send me the sale price and rough basis. Within one business day I'll email you the actual number and the Seller's Guide to §453. If it doesn't fit your deal, I'll tell you that plainly.
No retainer · no obligation. Hans Goldstein, a licensed insurance agent (CA Insurance License #4273294), will contact you and may discuss insurance products, including annuities.
You found the property. You agreed on the price. Everything was moving forward. Then the seller’s agent said, “The seller wants to do a Structured Installment Sale. You’ll need to sign a few extra pages.”
You paused. You’ve never heard of this. You wondered if it changes your loan, your timeline, your liability, your title, your tax situation.
It doesn’t change anything for you. Full cash at closing. Standard deed. You walk away the moment the wire lands. This page walks through every document you sign, what each one does, and what it does NOT do.
A 1031 exchange is a property-for-property swap where the buyer ends up with a replacement property of like kind. An installment sale is the seller’s tax-spread strategy on a normal cash sale. You, the buyer, receive standard fee-simple title via a standard grant deed, free and clear. No swap. No replacement-property identification. No 45/180-day deadlines on your side. No qualified intermediary holding YOUR money.
The 1031 mechanics apply to the SELLER’s downstream tax treatment of THEIR proceeds, not to you. You are buying. You wire. You receive title. Done.
Six pieces of paper. Five of them are the same docs you’d sign in any California closing. One is the installment sale-specific assignment acknowledgment.
The same PA you’d sign in any normal sale (CAR Form RPA or commercial equivalent). Same disclosures, same contingencies, same timeline. Your offer + acceptance + earnest money.
One short addendum bolted onto the PA. It says: “The seller is using a Structured Installment Sale to receive proceeds. Buyer agrees to cooperate with escrow’s wire-split instructions at closing. Closing is contingent on the seller’s installment sale paperwork being in place by funding.”
The contingency runs in the SELLER’s direction. If the seller’s installment sale paperwork isn’t ready by closing, the seller cancels, not you. Your earnest money is refundable under that scenario per standard PA terms.
Standard for any all-cash or partially-financed California closing. Your bank letter, brokerage statement, or lender pre-approval (whatever the seller’s side normally asks for). The installment sale doesn’t change this; it’s just confirming you can wire the full sale price on closing day.
This is the document unique to an installment sale deal. One page. Drafted by the assignment company (a regulated third party) before the deal opens. You sign acknowledging it.
What this assignment says in plain English:
What this assignment does NOT say:
Bundled with the assignment. This is the buyer-protection language. It states clearly: “Upon receipt of the wire at closing, the Buyer is fully and irrevocably released from any obligation to make periodic payments to the Seller. All future periodic payments are the sole obligation of the Assignment Company pursuant to its annuity-funded settlement.”
In plain English: the moment your wire lands, you are done forever. No recourse, no future liability, no contingent obligation. The release is signed by the seller and acknowledged by the assignment company, with you as a named released party.
Standard escrow instructions (with one extra wire-split instruction between escrow and the seller, invisible to you). The grant deed (or warranty deed) transfers title from seller to YOU. Recorded by escrow on closing day. You are the legal owner of the property the moment the deed records.
For your attorney’s reference, here are representative excerpts from the kind of language that appears in the installment sale-specific documents. Specific wording is drafted by the assignment company on a per-deal basis and will vary by carrier.
STRUCTURED INSTALLMENT SALE ADDENDUM
This Addendum (the “Addendum”) is attached to and incorporated into that certain Purchase & Sale Agreement dated [Date] between [Seller] (“Seller”) and [Buyer] (“Buyer”) for the property located at [Address] (the “Property”). To the extent of any conflict, this Addendum controls.
1. Periodic Payment Election. Seller elects to receive a portion of the Purchase Price as periodic payments under Internal Revenue Code §453. The Purchase Price shall be paid as follows: (a) $[Cash Amount] in cash to Seller at Closing; and (b) the remaining $[Structured Amount] in periodic installments pursuant to the schedule attached as Exhibit A.
2. Assignment of Payment Obligation. Buyer’s obligation to make the periodic payments described in Paragraph 1(b) shall be assigned at Closing to [Assignment Company], a [State] corporation (the “Assignment Company”), pursuant to a Non-Qualified Assignment Agreement to be executed contemporaneously herewith. Upon such assignment, Buyer shall be fully and irrevocably released from any and all obligations to make the periodic payments described herein.
3. Funding. The Assignment Company shall fund the periodic payment obligations through the purchase of an annuity contract issued by [Carrier Name], a U.S. life insurance company.
4. Buyer’s Closing Obligation. Buyer’s sole obligation at Closing shall be to wire the full Purchase Price ($[Total]) to escrow in accordance with escrow’s standard instructions. Escrow shall disburse the cash portion to Seller and the structured portion to the Assignment Company in accordance with this Addendum.
5. Contingency. Closing of this transaction is contingent on the timely execution of all documents required by the Assignment Company. If such documents are not in place at Closing, Seller (not Buyer) may terminate this Agreement, and Buyer’s earnest money shall be refunded in accordance with the underlying Purchase Agreement.
6. Tax Treatment. Seller intends to report this transaction using the installment method under IRC §453. Buyer makes no representation regarding the tax treatment of the structure to Seller, and Buyer’s obligations hereunder are independent of any tax outcome to Seller.
NON-QUALIFIED ASSIGNMENT AGREEMENT (Excerpt)
For valuable consideration, Buyer (“Assignor”) hereby assigns to [Assignment Company] (“Assignee”) all of Assignor’s rights, duties, and obligations to make the periodic payments to Seller described in the attached Schedule of Periodic Payments. Assignee accepts the assignment and assumes the periodic-payment obligation.
RELEASE OF ASSIGNOR. Upon Assignee’s receipt of the funding amount at Closing, Seller hereby fully, finally, and irrevocably releases Assignor (Buyer) from any and all obligations, claims, liabilities, or causes of action arising from or related to the periodic payments. Seller acknowledges and agrees that Seller shall look solely to Assignee (and the funding annuity contract issued by [Carrier]) for any future periodic payments, and shall have no recourse whatsoever against Assignor.
NO CONTINUING OBLIGATION. Following Closing, Assignor (Buyer) shall have no further obligation to Seller, to Assignee, or to [Carrier] in connection with the periodic payments. Assignor’s sole obligation under the underlying Purchase & Sale Agreement was the payment of the Purchase Price in full at Closing, which obligation has been fully and finally discharged.
Sample language above is representative and educational only. Actual contract language is drafted by the carrier’s assignment company on a per-transaction basis, varies by carrier, and should be reviewed by buyer’s counsel before signing. We’ll send the actual draft documents to your attorney during escrow at no cost to you.
For the buyer’s comfort, here’s a list of things you will NEVER be asked to sign in an installment sale deal:
No. Your lender sees a standard purchase contract. The installment sale rider is a seller-side instrument that doesn’t affect your loan-to-value, your credit, your debt-to-income, or anything else underwriting reviews.
No. The installment sale paperwork is prepared by the seller + escrow officer BEFORE the deal opens. By the time the PA is signed, everything is ready. Closing runs on the normal 30-45 day California timeline.
If the seller’s installment sale paperwork isn’t ready at closing, the seller cancels the deal under their own contingency. You get your deposit back (if applicable) and walk away. The installment sale contingency doesn’t expose YOU to any risk. Only the seller bears that risk.
No. Your only obligation under the rider is the closing wire. Once that wire lands, you’ve fulfilled every duty the rider imposes. The IRS’s relationship is with the seller (who reports the installment income each year) and the carrier (which makes the payments). You’re out.
No, and your lender is right to be wary of deferred sales trusts. A Deferred Sales Trust is a different (and IRS-challenged) structure. The installment sale uses IRC §453, straightforward installment-sale tax law. Full installment sale vs deferred sales trust clarification.
It’s purely a tax-spread strategy for the seller. Without an installment sale, the seller pays California + federal capital-gains tax on the full gain in Year 1. With an installment sale, that gain gets recognized over 10-40 years at low brackets. Full installment sale explanation. It’s a benefit to the seller; it’s neutral to you.
Yes, your attorney should review every closing document. The installment sale rider is one page of standard structured-settlement language that’s been used for decades. A real-estate attorney reviewing it should be comfortable in 5-10 minutes. If your attorney is unfamiliar with structured installment sales, ask the seller’s side for the IRC §453 and Treas. Reg. §15a.453-1 references. That’s the legal grounding.
From your side, an installment sale deal is identical to a normal California real-estate purchase. Same wire. Same timeline. Same title. Same closing. You sign one extra page acknowledging the seller’s wire-split instructions. Then you walk away with the keys.
The installment sale is the seller’s tax-planning move. It costs you nothing, delays you nothing, and exposes you to nothing. Sign the page, close the deal, and the property is yours.
Hans is happy to walk your real-estate attorney through the installment sale rider directly. Most attorneys are satisfied within 5-10 minutes once they see it’s standard §453 installment-sale language. No charge for the walkthrough.
213-414-2808 Full installment sale explanation
A plain-English guide for sellers on how a structured installment sale can help you net more after tax when you sell a business, practice, or property. It covers the math, the alternatives, and how to tell if your deal fits.
Leave your details and the PDF downloads right away. Within one business day Hans will email a preliminary read on which structure fits your deal. No retainer. On a funded structure, the insurer pays a one-time commission of about 4% of the amount structured to the brokerage firm that places it (Hans’s share is about 2.4%; no trail). It is built into the annuity pricing, not a separate fee.
📞 Hans Goldstein · 213-414-2808 · CA Insurance License #4273294 · Independent §453 specialist · Goldstein & Co. LLC
Hans Goldstein, a licensed insurance agent (CA Insurance License #4273294), will contact you and may discuss insurance products, including annuities.
Hans Goldstein is an Enrolled Agent, admitted to practice before the Internal Revenue Service. Not affiliated with or endorsed by the IRS. General education, not tax or legal advice for your situation.
