Do I need to eSign a new PPM for a 1031 exchange?

Question

The sponsor has opted to 1031 exchange into a succeeding property upon sale.

However, my investment is roughly 43K which meets the Min investment requirement for the new Syndication but I am not sure it meets the tenancy-in-common (TIC) requirements.

Will a side letter be required to include joint and control rights in the new Operating Agreement?

The reason for the inquiry is when I received the new PPM, it did not already include the proceeds from the sale of the original property.

Dave Foster · Answer

@Adriel Cisneros, As @Percy N. said, if the sponsor has decided to 1031 that would mean that the LP or LLC that owns the real estate is doing a 1031. You don't own real estate. You own an interest in an entity that owns real estate. So you cannot do a 1031 on your portion. But as a member of the LP you can go forward with the sponsor on their 1031. Any extra requirements will be in your operating/subscription agreement

Percy N. · Answer

Assuming the current syndication had an LLC that was the direct owner of the property (on the deed), then that entity is the one that needs to 1031 to the new property, not you as an individual.

As for whether a new PPM is required or not, that is a question for a SEC attorney.

Do I need to eSign a new PPM for a 1031 exchange?

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