Exchange Case Study 1

Delayed Exchange (Existing Property) Direct Format

This diagram is for illustrative purposes, some essential steps are not shown.

1. The Exchange Agreement with Edmund & Wheeler, Inc. which governs the overall transaction. This document MUST be in force before the closing.
2. The Purchase and Sale Agreement to sell the Relinquished Property. This step may take place before Step 1 (the only out-of-sequence exception).The closing of the Relinquished Property; if several are involved, the first in chronological order. In this step, the deed to the property is given to the Buyer.
3. The closing of the Relinquished Property; if several are involved, the first in chronological order. In this step, the deed to the property is given to the Buyer.
4. Rather than going to the Exchangor, the Buyer’s funds are used to pay all of Exchangor’s expenses (including mortgages, if any), with the NET going directly to a money center bank into a separate, interest-bearing account established in the Exchangor’s name and Social Security number.
5. This is an interactive step encompassing all communications post-closing with the Exchangor and Edmund & Wheeler, Inc. Included are the 45-day Identification Letter, instructions on how much of the account to be expended on particular properties, and final approval to close on the final choice(s).
6. These are the precise instructions to Exchangor’s attorney, bank or Title Company for the closing of the Replacement Property, and the wire transfer of approved funding.
7. This is the Exchangor’s receipt of the direct deed from the owner of the Replacement Property (C); the Exchangor achieves a Section 1031 Exchange between Steps 3 and 7, where in Step 3 a deed is given and in Step 7 a deed is received, and in between the Exchangor had no control (or Constructive Receipt) of funds.