1031 exchange lease option

Dear 1031x.com: I own some vacant land (with a small income) in New Jersey.  I am working on a contract of sale and want to preserve the 1031 exchange option. The problem is that in NJ the developer needs government approvals that can take up to three years.  So closing would be delayed for a long time.  I have thought about several options that might allow  receiving income during
this three year time, as there certainly are expenses.  Can you please tell
me if any option is OK to preserve the possibility of a 1031 exchange?
Another concern is that purchaser is tying up the land and could back out
during this long time.

Dear A:  The best way for you to handle your situation is with a lease option.  Lease the property to the developer for rent payments.  Also sell the developer the right to purchase the property for a fixed period of time at a determinable price.   Option payments can either be for the option only or can be applied to the sale price if the option is exercised.  This is by negotiation.  Beware of holding the price constant in the option for too long a period of time.  Basically the price you are getting (if fixed) is really going down all the time by the amount of inflation in the economy.  When the option is exercised you do your 1031 exchange then.  Sincerely,

Steve Hickox
Attorney / President

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