Does an agent have to disclosed purchase is part of 1031?

Question

Hello,

Buying a property as part of a 1031 exchange, trying to go on contract with closing on the replacement property 2 days after closing of the relinquishing property. Trying to avoid issues with the time lines of the 1031 that way.

On offers for the replacement properties, does an agent have to disclosed that this purchase is to be part of a 1031?

or is that just relevant, if we were under the ticker of the 45 days to identify? and 180 days to close?

Basically, if for some reason I closed on my relinquishing property and 2 days after, the replacement property does close, not sure why, could we at that time say... "hey we agree clearly on all things and now we have to close within 180 days or else"

my agent is saying it is the law to disclosed we are part of a 1031 and I am worried the sellers might see that and identify potential things they can use as leverage on their favor.

thanks for your time

Dave Foster · Answer

@Michelle Meyer, Good plan to get a jump on the timelines!! All parties to the transaction have to be notified that a 1031 is occurring. But there is so specific regulation on when that has to be. We provide all of the necessary notifications at the closing so if you want to keep it anonymous you can.

Many local board of realtor contracts already have an addendum baked into their templates. So it really doesn't matter. And if all you do is make the contract assignable that will allow your intermediary to do everything they need for the 1031.

Alex Olson · Answer

My clients have always disclosed it at some point during the contract or contract negotiations. You only have to legally disclose this at any point during the contract before it is closed. At times it is an advantage to disclose it early and others it is not an advantage. Do whatever you, your agent, and QI are most comfortable with regarding your situation.

Bruce Lynn · Answer

Since the 1031 is the purchaser of the property I always think it is good to disclose that up front most intermediaries have language they want you to put in the contract about the seller cooperating with the exchange at no additional cost to them.

You could do an amendment later, but what if for some reason they refuse to sign or can't sign.

I'd say avoid the surprises and unknowns with this and just get it done up front.

I suppose you might loose some of your negotiating power as they know you have a time crunch to spend your money, but that could be the case anyway when you pop the amendment on the seller too, if not disclosed up front.

Kelly Asmus · Answer

Yes, disclose it. And get yourself an exchanger right away to handle the 1031. The exchanger can answer all your questions and help you through the process. I'm licensed in OR and WA. DM me if I can help you or you need a referral to an exchanger. I have a great one in Portland.

Michelle Meyer · Answer

Thanks Dave, do you mean "But there is no specific regulation on when that has to be"?

Would correct it so I can show this to my agent... I feel like I am going to have to educate them on every step of the way, even though I asked if they had done it before.

With that, do you know any good agents in WA state that has done and is knowledgeable about 1031s? not just have done them. I am a new investor, going from 1 SFM rental, to hopefully small multi family, and have been listening non stop to investor videos etc that give me a bit of info, but of course can't be sure of things.

Does an agent have to disclosed purchase is part of 1031?

Does an agent have to disclosed purchase is part of 1031?

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