What Vesting Issues Should be Examined?

In a 1031 Exchange, the entity beginning the exchange will be the entity concluding the exchange. The Intermediary will prepare exchange documentation reflecting the vesting information as shown on the title commitment or title report of the relinquished property. That entity must be the entity to acquire title to the replacement property.

For Example:

Trustee relinquishes .................... Trustee acquires

Schmidt LLC relinquishes .................... Schmidt LLC acquires

Se Bon Partnership relinquishes .................... Se Bon Partnership acquires

Wife relinquishes ............so........ Wife acquires

The Exchanger's legal relationship to the relinquished property must be the same as the Exchanger's legal relationship to the replacement property. Exchangers must anticipate this issue as part of their advanced planning for the exchange. Business considerations, liability issues and lender requirements may make it difficult to meet this rule.

• If a husband is relying on the wife's income to qualify for financing, then the lender will require the wife to appear on the deed.



• Lenders seldom loan to trustees, they loan to individuals.



• Exchanger's who want different LLC's for each property may not do so within the exchange format.