Spyglass Partners, Richard E. Shea, Tax Matters Partner, et al. - Page 18

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          Alternatively, the seller could declare the installment notes               
          due, tender title to the buyer, and foreclose under the laws of             
          the State of Utah.  If the seller defaulted, the buyer's sole               
          remedy was to terminate and rescind the agreement, whereupon the            
          seller was to return all sums paid to the buyer, along with 6-              
          percent interest.  Under those circumstances, the escrow agent              
          was required to record the quitclaim deed from the buyer to the             
          seller, leaving the buyer and seller with no further obligations            
          to each other.                                                              
               We are unable to find the substance of the agreements                  
          between the parties here to be options solely because of the size           
          of the downpayment in relationship to the agreed-upon purchase              
          price.  The circumstances here are not equivalent to the parties'           
          having the option to walk away.  The buyers (partnerships) would            
          be subject to a penalty if the first installment was not made.              
          That is so because the seller had the choice of accepting                   
          liquidated damages ($10,000 downpayment plus $50,000 per unit) or           
          declaring the installment notes due and then foreclosing.  In               
          that regard, the $60,000 damages approach 40 percent of the first           
          installment.  Although the damages represent a smaller percentage           
          of the second installment, that installment must be converted to            
          a present value.  Such conversion would cause the damages to be             
          relevant and proportionate to both installments.                            
               One can argue that the sellers were able to walk away from             
          the bargained-for price.  That argument, however, is wholly                 



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