Delayed/Forward Exchanges

A delayed exchange, also called a "Forward" exchange, is the basic exchange scenario which was allowed following the groundbreaking results of the Starker Case. A delayed exchange can be used for real estate and/or personal property and basically starts with the sale of a property with a gain, followed by the purchase of new property to replace it. You are allowed a 180-day time period between the sale of your "relinquished" property and the purchase of the "replacement" property. A delayed exchange is covered under an IRS "safe harbor", which means the IRS will not challenge your exchange provided the guidelines were followed properly. See Basic Requirements for more detail on the guidelines that need to be followed.

HOW THIS EXCHANGE WORKS

Phase 1 - Selling Your Relinquished Property

You accept a contract, containing a Buyer's Cooperation Clause, to sell your Relinquished Property.

You request Summit 1031 Exchange, Inc. to act as Qualified Intermediary.

Summit 1031 Exchange, Inc. reviews all aspects of the exchange including any information on the Replacement Property (if known at the time) to avoid any of the problems that occur when exchanges are structured improperly.

1. Summit 1031 Exchange, Inc. obtains:
   • Copy of the sale contract
   • Preliminary title report
2. Summit 1031 Exchange Inc. prepares exchanges documents:
   • Exchange agreement
   • Assignment of Seller's position
   • Notice of Assignment
3. You sign exchange documents and review and approve all closing documents.
4. Summit 1031 Exchange, Inc. closes on the sale of the Relinquished Property as part of the closing, Summit instructs the closing agent to deed the property directly from you to the buyer.
5. Closing agent wires the net proceeds to the exchange account of Summit 1031 Exchange, Inc. for the benefit of the exchanger.

Phase 2 - Buying Your Replacement Property

1. From the closing date of your relinquished property, you have:
   • 45-days to identify the Replacement Property (or Properties)
   • 180-days to purchase the Replacement Property (or Properties)
2. You create a contract, containing a Seller's Cooperation Clause, to purchase the property identified.
3. Summit 1031 Exchange, Inc. obtains:
   • Copy of the sale contract
   • Preliminary title report/commitment
4. Summit 1031 Exchange, Inc. prepares exchange documentation:
   • Assignment of Buyer's position
   • Notice of Assignment
5. You sign exchange documents and review and approve all closing documents.
6. Summit 1031 Exchange, Inc. closes on the purchase of the Replacement Property. As part of the closing, Summit instructs the closer to deed the property directly from the seller to the exchanger.
7. Summit 1031 Exchange, Inc. provides a detailed accounting of the exchange proceeds.