Step-by-step Basics of a 1031 Exchange
1. Exchanger enters contract to Sell the property that is to be relinquished, to a 3rd party - the Buyer.
2. Exchanger then enters a formal 1031 Exchange agreement with an Intermediary - the Exchange Company.
3. Settlement agent (Title company or attorney) then closes on the relinquished property and the exchange funds (the net gain from the sale) are wired to the Exchange Company
4. The Deed is transferred to the Buyer by the Settlement Agent.
5. Exchanger has 45 days from the date of the Settlement on the relinquished property to notify the intermediary in writing of the selected Replacement property or properties.
6. Exchanger then has 180 days (or until filing deadline for the year of the sale of the exchanged property) to acquire ALL replacement properties.
7. Exchanger enters contract on replacement properties and assigns rights to the Settlement agent.
8. When the Replacement properties close the Intermediary wires funds to Settlement agent.
9. The Deed on the replacement properties are transferred to the Exchanger.
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