Many people ask about the basic procedures for a §1031 exchange and how to get started. As every transaction is different, the amount and nature of consulting we offer to you (the Exchanger) varies but basic procedures to start remain somewhat the same. Listed below are basic first steps to start an exchange through closing on the first property:

1. Initial Consultation to Determine if it is Worthwhile to do an Exchange and if your Property is Eligible
   The first step in starting an exchange is determine if it is worthwhile to start one based on tax savings and eligibility. If you already know it is and want to skip this step, please let us know, otherwise we feel compelled to at least determine the potential tax savings and ask if there are other tax actions going on that would preclude eligibility or any benefits being derived from section 1031.
   
   
2. Basic Mutual Information
   Clients find it helpful if we discuss the basics of real estate investments, 1031 exchanges and your financial and non-financial objectives right away. We have created hundreds of handouts on various aspects of an exchange to help educate you on the items that would increase your understanding of this flexible financial tool. We mail pamphlets and email or fax certain information sheets to help increase your education in this area. We strive to be understandable and not talk in jargon, but can deal in advanced concepts as we frequently do. We believe your exchange is one very important step in preserving your wealth and achieving your overall financial plans. We also need to know about you. The more you communicate to us about your unique situation the more we know how to help you. The more we can communicate section 1031 insights the more you know what to ask us.
   
   
3. Consider Replacement Options
   We prefer to start consulting upfront before you have sold the property you are relinquishing. As there is no cost until we have issued instructions for the first leg of your exchange we encourage you to call us months or years in advance. We are able to work comfortably in this timeframe with you and/or your financial advisors. One of the most challenging areas of 1031 regulations is finding the replacement property within the 45 days identification period, so we like to work with you upfront on many of the options available so you can begin thinking about that at the onset.
   
   
4. Purchase and Sale Agreement
   About the time you execute a purchase and sale agreement on your property we need to get officially involved. Your first obligation is to insert 1031 language into the purchase and sale agreement either by using our 1031 Addendum found on this web site, or having an “exchange cooperation” clause in the agreement along with the seller being you “and/or assigns”. Your second obligation is to supply us with:
   1. The name, company, and contact information for your real estate broker.
   2. The name, company, and contact information for your escrow officer and your escrow number if it has been issued.
   3. Any other professionals and their contact numbers that you’d like us to work with. Other parties could be loan officers, county and state tax officers, CPA's, attorneys, consultants, bankers, friends, and relatives.
5. Escrow Company
   We then create and send an initial packet to your escrow agent that includes the following information:
   1. A Facilitator Agreement for you to sign at closing.
   2. An Assignment Agreement to us for the Purchase and Sale Agreement. (Technically we are able to step into your shoes at closing as a 1031 agent for your property by virtue of this assignment.)
   3. A 1445 FIRPTA form certifying non-alien status.
   4. Instructions for what escrow must do for you to qualify as a 1031 exchange.
6. Preliminary Documents
   We coordinate documents with your title and escrow company. We work with the title company to assure that ownership is held properly for the contemplated exchange and to advise you of any concerns with respect to uses and ownership which may cause problems in the future. Your escrow agent prepares the preliminary sales documents on your behalf and e-mails or faxes them to us for review and approval. We approve, sign them, or give further instructions. What we are looking for are the right names on the title, the 1031 language, the inclusion of us as the exchange facilitator, etc.
   
   
7. Final Sale Documents
   When ready the escrow agent then sends us the final documents as part of closing. We approve and sign off on the HUD, the Escrow Instructions, the Statutory Warranty Deed, and the Escrow Services Statement as they pertain to a tax-deferred exchange. Additionally we check the Real Estate Excise Tax Affidavit, Form 1099-S and other documents as appropriate. Closing does not occur until you also have approved all these documents.