When you’re starting a 1031 exchange the qualified intermediary needs to jump into the transaction and get to know all the key details really quickly. This might be a transaction that you’ve been negotiating and working on for months or even years, and a qualified intermediary needs to become familiar with these details quickly.
So, here’s what the qualified intermediary needs to get their arms around all of these details and begin the 1031 exchange.
Information on the Seller
First we’re going to need information on the seller. The seller’s address, contact information, and EIN (federal employer identification number) or social security number as the case may be. So we need to know who the seller is and their pertinent information.
Purchase Agreement and Sale Contract
Next we need to get a full copy of the purchase agreement or sale contract for the sale of the relinquished property and any amendments or addendum to that agreement so that we know who the parties are and what the property is.
In addition to that we need to be able to determine exactly how the seller is vested in title and what the legal description of the property is. How do we find that out? Oftentimes the buyer will have the title company prepare a title commitment or an attorney’s opinion of title or other title report that the intermediary can you use to verify the legal description and the vesting of how the seller is entitled. It’s important to know who’s entitled because that party or parties that are listed are those that need to do the exchange.
If a taxpayer is married their spouse may or may not be on title. If the taxpayer is elderly they may have the property in a trust or they may own it in their own individual name, or they may have placed it into some kind of business entity.
All of these details need to be determined quickly and accurately by the intermediary so that we can prepare the 1031 documents for circulation and review to the taxpayer’s attorney, accountant, and any other professionals involved in the transaction to make sure that the exchange documents correlate with the details and specifications of the transaction.