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NOTICE FEDERAL FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT OF 1980 (FIRPTA) Upon the sale of United States real property, by anon-resident alien, Foreign corporation, partnership or trust, the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), and as revised by the Tax Reform Act of 1984 (26 USCA 897 (C) (1) (A) (1) and 26 USCA 1445) requires the transferee (Buyer) of real property to withhold Internal Revenue Service income taxes in an amount equal to ten (10%) percent of the sale price from seller's proceeds, if ANY of the fallowing conditions are met: (1) The selling price is greater than $300,000.00 (2) The selling price is less than $300,000 AND the purchaser does not intend to occupy the property as his residence for at least 50% of the fime of the first two 12 month periods following the date of transfer. Withholding is not required if both of the following conditions are met: (1) The selling price is less than $300,000 and (2) The Buyer is acquiring the property as his residence, and the buyer or other qualifying family member will occupy the property for at least 50% of the time during each of the fast 12-month periods following transfer of title to the buyer. If the purchaser who is required to withhold income tax from the seller fails to do so, the purchaser is subject to fines and penalties as provided under Internal Revenue Code Section 1445. The seller may request a waiver or a reduced withholding amount by submitting a written request fora "qualifying statement" or "withholding certificate" (Form 8288-B) to: Director, Internal Revenue Service Philadelphia Service Center P.O. Box 21086 Philadelphia, PA 19114-0586 Escrow Holder will, upon written instructions from the purchaser, withhold Federal Income Tax from the seller and will deposit said tax with the Internal Revenue Service, together with IRS Forms 8288 and 8288-A. The fee charged for this service is $25.00 payable to the escrow holder. CALIFORNIA WITHHOLDING In accordance with Sections 18662 and 18668 of the Revenue and Taxation Code, a transferee (Buyer) maybe required to withhold an amount equal to 3 ]/3 percent of the sales price or an alternative withholding amount certified to by the seller in the case of a disposition of California real property interest by either: 1. A seller who is an individual or when the disbursement instructions authorize the proceeds to be sent to a fmancia] intermediary or the seller, OR 2. A corporate seller that has no permanent place of business in California. The buyer may become subject to penalty for failure to withhold an amount equal to the greater of 10 percent of the amount required to be withheld or five hundred dollars ($500). However, notwithstanding any other provision included in the California statutes referenced above, no buyer will be required to withhold any amount or be subject to penalty for failure to withhold if: 1. The sales price of the California real property conveyed does not exceed one hundred thousand dollars ($100,OD0.00), OR 2. The seller exceutes a written certificate, under the penalty of perjury, of any of the following: A. The property qualifies as the seller's (or decedent's, if being sold by the decedent's estate) principal residence within the meaning of Infernal Revenue Code (IRC) Section 121; or B. The seller is (or decedent, if being sold by the decedent's estate) last used the property as the seller's (decedent's) principal residence within the meaning of IRC Section 121 without regard to the two-year time period; or C. The seller has a loss or zero gain for California income tax purposes on this sale; or D. The property is being compulsorily or involuntarily converted and the seller intends to acquire property that is similar or related in service or use to qualify for non-recognition of gain for California income tax purposes under IRC Section 1033; or E. If the transfer qualifies for non-recognition treatment under IRC Section 351 (transfer to a corporation controlled by the transferor) or IRC Section 721 (contribution to a partnership in exchange for a partnership interest); or F. The seller is a corporation (or an LLC classified as a corporation for federal and California income tax purposes that is either qualified through the California Secretary of State or has a permanent place of Business in California; or G. The seller is a partnership (or an LLC that is not a disregarded single member LLC and is classified as a partnership for federal and California income tax purposes) with recorded title to the property in the name of the partnership of LLC; or H. The seller is atax-exempt entity under either California or federal law; or I. The seller is an insurance company, individual retirement account, qualified pension profit sharing plan, or charitable remainder trust; or J. The transfer qualifies as a simultaneous like-kind exchange within the meaning of IRC Section 1031; of K. The transfer qualifies as a deferred like-kind exchange within the meaning of IRC Section 1031; or L. The transfer of this property will be an installment sale that you will report as such for California tax purposes and the buyer has agreed to withhold on each principal payment instead of withholding the full amount at the time of transfer. The Seller is subject to penalty for knowingly filing a fraudulent certificate for the purpose of avoiding the withholding requirement. PTAP'PA.TFIII CS