I have a 1031 exchange question about Commercial ppty.

[Payam Shirazi]

Hello all.

I have a very confusing situation that requires your expert opinion. Bellow I will itemize it hoping to receive some direction.

1- My client bought a commercial property 30 yrs ago for $250K.

2- He sold it in November 2013 for $1.2M

3- Returned bank's loan for $700K and he is left with $500K cash held with a 1031 exchange accommodator.

4- He likes to buy a replacement commercial/income property but due to his current bad credit, banks wont lend him money.

Q: What are his choices? How can he optimize his gain?

Thank you in advance

[Bill Exeter]

I wanted to respond to the above post. It is not a "title company" requirement, but a requirement contained in the Treasury Regulations. Qualified Intermediaries can only release funds at certain points during the transaction, and if the client has identified property during the 45 day period and then choses not to or can not close on any of them, the Qualified Intermediary must retain the proceeds until the end of the 180 day period.