STEP 1 - Purchase contract-relinquished property

After you've found a buyer for your property (which is known as relinquished property), you and the buyer enter into a Purchase Contract. The Relinquished Property Purchase Contract should contain a "cooperation clause" which obligates the buyer to cooperate with you in structuring the transaction as a Section 1031 Exchange.

STEP 2 - Exchange documents - agreement, assignment, notice and instructions

Next, simply contact DWB and we make arrangements for an exchange contract to be opened for you. We'll assist you in finding a qualified intermediary, with whom you'll open an account with a qualified intermediary. The Q.I. will prepare an Exchange Agreement, an Assignment of Relinquished Property Purchase Contract, a Notice of the Assignment (for delivery to the buyer), and instructions to the settlement agent necessary to complete the transaction.

STEP 3 - Closing the relinquished property

When the conditions of closing have been met, your property - the relinquished property - will be conveyed to the buyer. While the conveyance will be directly from you to the buyer, at no time should you be in either actual or constructive receipt of the cash proceeds.

STEP 4 - Investment of cash proceeds and identification forms

Following the relinquished property closing, the qualified intermediary will invest the cash proceeds in an account and provide you with forms to assist with your identification of potential replacement properties within the 45-day identification period.

STEP 5 - Purchase contract - replacement property

After you've identified suitable "like-kind" replacement property and made a decision as to which identified replacement property you intend to acquire, you will enter into a Purchase Contract with the seller. This Replacement Property Purchase Contract should also contain a "cooperation clause" obligating the seller to cooperate with you in completing your Section 1031 Exchange.

STEP 6 - Exchange documents - assignment, notice and instructions

The Q.I. will then have an Assignment of the Replacement Property Purchase Contract prepared, a Notice of Assignment (for delivery to the seller) and instructions to the settlement agent necessary to complete the transaction.

STEP 7 - Closing the replacement property

When the conditions of closing have been met, the Q.I. will have the funds in the account delivered to the settlement agent to acquire the replacement property. The seller will convey the replacement property directly to you. This conveyance will represent a purchase between the seller by a qualified intermediary and a transfer to you in completion of the exchange. Remember that this closing must occur within 180 days of the closing on the relinquished property (or by your tax return due date, if earlier), or the exchange won't qualify for Section 1031 treatment.

STEP 8 - Keeping you informed and final reconciliation

Throughout the process, our DWB exchange professionals will keep you and your legal, tax, real estate and other advisors informed. In the end, a complete reconciliation of funds received and paid to the qualified intermediary will be prepared and delivered to you.