1031 Exchange Instructions for Real Estate Closing and Settlement Agents
Thank you for working with Exeter 1031 Exchange Services, LLC. Our 1031 Exchange Specialists have extensive experience in working with institutional, corporate and individual investors and their professional escrow officers, closing or settlement agents, especially in complex and sophisticated 1031 exchange transactions.
We are always available and ready to assist you with any 1031 exchange settlement question or challenge that you may encounter — no matter how difficult.
The Role of the Qualified Intermediary (Accommodator)
Qualified Intermediaries are responsible for (1) preparing the 1031 exchange legal agreements and related documents; and (2) holding, safeguarding and investing the 1031 exchange funds during the like-kind exchange transaction; and (3) coordinating the overall tax-deferred exchange transaction; and (4) keeping the tax-deferred exchange in compliance with all applicable 1031 exchange income tax laws, regulations, and related rulings.
Communication is Critical
Constant communication between the Qualified Intermediary and the escrow officer, closing or settlement agent is critical to the successful closing of a tax-deferred exchange. The anticipated closing procedures should be reviewed by both parties to ensure there are no problem issues that need to be addressed prior to closing or settlement.
Information and Documentation Needed
We will need the following transactional documents, agreements and information in order to begin preparing our 1031 exchange agreements and related documents:
1) Copy of the Purchase and Sale Contract;
2) Copy of the Preliminary Title Insurance Report or Title Insurance Commitment;
3) Copy of the Escrow Instructions, if any, and when available;
Investor's contact information, including:
a) full legal name of each Investor;
b) name in which title is being held, if different from item a above
c) mailing address;
d) office or home, mobile and facsimile phone numbers;
e) email addresses;
f) federal taxpayer identification number for each Investor; and
g) Additional contact information that might be relevant.
5) Settlement, closing or escrow agent's file number
6) Settlement, closing or escrow agent's estimated closing statement (HUD-1)
Our 1031 exchange file number should appear on all correspondence to us in order to expedite the processing of the tax-deferred exchange transaction.
1031 Exchange Agreements Sent to Escrow Officer or Settlement Agent
We will forward the following 1031 exchange agreements and documents to either you and/or our mutual client (as instructed by you or the client) for execution prior to closing:
Tax Deferred Exchange Agreement
The Tax Deferred Exchange Agreement must be signed by your Exchangor (Seller) and Exeter 1031 Exchange Services, LLC as the Qualified Intermediary prior to closing. This agreement structures the 1031 exchange and defines the duties and responsibilities of the parties involved in the tax-deferred exchange transaction.
Assignment, Acceptance, Notice and Direction to Convey
The Assignment, Acceptance, Notice and Direction to Convey must be signed by your Seller, your Buyer and Exeter 1031 Exchange Services, LLC as the Qualified Intermediary prior to closing. This agreement assigns the Purchase and Sale Agreement and Escrow Instructions (if any) to Exeter 1031 Exchange Services, LLC. The buyer also signs this agreement to acknowledge the 1031 exchange transaction. This is the only document the Buyer is required to sign.
Exchange Closing Instructions
The Exchange Closing Instructions should be signed by you as the escrow officer, closing or settlement agent prior to closing. This document provides you with the necessary instructions to ensure the tax-deferred exchange documents have been processed and distributed correctly. It also provides you with funds disbursement instructions to ensure compliance with all IRS income tax codes, regulations and rulings. It is important to remember that the Qualified Intermediary has been assigned into your transaction as the Seller and all instructions must now come from the Qualified Intermediary.
Non-Resident Sellers of California Property
We will provide California mandatory withholding form 593 for the clients completion. Please have the client complete and return to us. Information regarding California's mandatory withholding requirements can be obtained from our Forms and Documents Web page.
Like-Kind Replacement Property Identification Form
We will provide a like-kind replacement property identification form to be used by our mutual client in the identification of his potential like-kind replacement properties. This form should be forwarded to and completed by the client and faxed to Exeter 1031 Exchange Services, LLC at (619) 615-4205 within the 45 calendar day deadline after the transfer of title of the relinquished property.
Standard Document Revisions
The escrow officer, settlement or closing agent will need to make changes to several standard closing documents once the transaction has closed.
Final Closing Statement (HUD-1)
List Exeter 1031 Exchange Services, LLC as the seller or the buyer on the final settlement statement and, where applicable, escrow instructions. Acceptable language would be:
Exeter 1031 Exchange Services, LLC, as Qualified Intermediary for (client's name)
Exeter 1031 Exchange Services, LLC and the client must sign and approve any and all escrow instructions, preliminary title reports or commitments and estimated closing statements.
IRS Form 1099S
IRS Form 1099S should be prepared in the name of the client using the client's Federal taxpayer identification number or social security number.
Property is direct deeded from the seller to the buyer.
Please have the taxpayer review and sign all applicable documents before returning them to Exeter 1031 Exchange Services, LLC for signing. Contact Exeter 1031 Exchange Services, LLC with any 1031 exchange questions that you might have. We are happy to be of service.
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