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In June 1994, Teruya proposed buying Times’s interest in
“two pad sites” in Waipahu, Hawaii (these properties are
hereinafter referred to collectively as Kupuohi II). Teruya’s
written proposal included these provisions:
The purchase will be subject to a [section] 1031 four
party exchange.
Teruya may cancel the proposed purchase of * * *
[Times’s] pad sites should the Ocean Vista transaction
fail to proceed according to present plans.
Times accepted Teruya’s proposal.
In a letter to Teruya and Golden, dated April 3, 1995, the
Association offered to purchase Teruya’s fee simple interest in
Ocean Vista for $1,468,500.2 Paragraph 9 of the offer to
purchase states:
Tax-deferred Exchange. Teruya may, in its sole
discretion, structure this transaction as a tax-
deferred exchange pursuant to section 1031 of the
Internal Revenue Code.
Paragraph 12 of the offer to purchase states:
Conditions Precedent. The following shall be
conditions precedent to the closing of the transaction
contemplated hereunder: * * *
(h) Teruya shall be in a position to close on
its exchange replacement properties.
On April 27, 1995, Teruya’s board of directors accepted the
Association’s offer.
2 On June 14, 1994, Teruya, Golden, and the Association
executed an “Assignment, Assumption and Release”, wherein the
Association was substituted as a party in place of Golden.
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Last modified: May 25, 2011