Two real estate investors were selling an office building for $2.0 Million that they had owned as co-tenants for many years. One of the owners wanted to cash out at the time of sale and the other owner wanted to do a 1031 Exchange into a replacement investment property.
The owner who wanted to complete the 1031 exchange (Exchangor) entered into an exchange agreement with TVPX to facilitate the exchange of Exchangor’s 50% undivided interest in the old property into a replacement property. TVPX prepared the exchange documents for execution by all of the parties prior to closing. At the closing for the sale, the closing agent distributed 50% of the net proceeds to the owner who was cashing out, and the other 50% of the net proceeds to TVPX as the Qualified Intermediary for Exchangor.
The Exchangor identified the replacement property in writing to TVPX within 45 days, as required under IRC Section 1031. The Exchangor then executed a purchase and sale agreement with the seller of the replacement property and subsequently closed on the purchase to complete the exchange. The proceeds held in the exchange account were released at the closing for the replacement property and applied toward the purchase price. A third-party lender provided the additional funding needed to close.