Past Articles

All About Identification

By Brad Jorgenson

Some rules governing exchanges are truly black and white and must be followed exactly for a successful exchange. Identification requirements are included in this short list. To the uninitiated, identification rules can seem complex and restrictive. However, identifying replacement property can go very smoothly if you get help from an experienced accommodator and follow the basic requirements outlined below. The more expertise and knowledge you have working for you, the more comfortable you can be as you set out to find the right properties for your next exchange.

The Identification Deadline

For an exchange to be valid, replacement property must be identified within 45 days of the day the relinquished property is sold. There is NO flexibility on this deadline. You cannot get an extension due to ANY situation, including weekends, holidays, health, detainment, etc. If the 45-day date for your exchange falls on a holiday, weekend, or other non-working day, you want to be sure and identify your properties beforehand.  Although your identification can still qualify if you fax the identification letter to the accommodator before midnight on your deadline date, we don’t recommend waiting until the last second. Try to give yourself a buffer so that equipment failure or other unexpected circumstances won’t blow your exchange.

Sometimes it is difficult for people to find acceptable properties within the 45-day timeframe. This can be especially true if they wait until the relinquished property closes to start looking for replacement properties. We advise our clients to start working with their Realtor® and looking for potential properties as soon as possible. It doesn’t hurt to start looking as soon as you list your property for sale. In fact, it is

perfectly fine to make offers on replacement properties subject to the closing on your relinquished property.  Sometimes, clients in a bind may choose to identify a Tenant in Common property or a parking option as a fallback position. An experienced accommodator can provide you more information on these last minute options.

Submitting Your Identification

Property identification must be in writing and delivered to the accommodator in a manner verifying the date submitted. At Summit, we provide an identification form that can be completed and returned to us. This can be mailed, faxed or personally delivered at any time on or before the 45th day after the closing date of the relinquished property. If the form is mailed, the postmark will serve as date verification, but we recommend the use of certified mail with a return receipt requested. If the form is faxed, ask the recipient to sign or initial the FAX and fax a copy for your records. Although this may seem like extra effort, being sure the accommodator has received the form on time is a much better scenario than paying the cost of a failed exchange.

Identifying to the accommodator is the preferred method in the industry. However, it is also acceptable to identify replacement property to any party involved with the exchange – provided it is in writing with a verifiable date. For instance, if you made a written offer on a property within the 45-day period, this could count as identification. 

When identifying, properties must be described clearly and precisely. “Lot 123 in Austin, Texas” would not be sufficient. Although the most thorough representation is a complete legal description, one may not be available. The main goal is to provide a description that allows the property to be uniquely located. A street address will often suffice in more developed areas. We typically receive a combination of partial legal descriptions and and/or street addresses.

If you have purchased a replacement property before the 45-day deadline is reached, you will not have to identify it. By purchasing it prior to the deadline you are deemed to have identified it.

Making Changes

It is possible to change the properties you have identified by revoking the original identification and submitting a new list of properties. This can only be done BEFORE the 45-day identification period has expired and must be done properly to ensure you have not violated the rules and identified too many properties.  To revoke your previous identification list, you must submit a written revocation notice to the accommodator. 

The skilled staff at Summit can answer all your questions about identification. Call 1-800-909-1031 or e-mail info@summit1031.com with your questions.