1031 when the selling exchanger builds to suit

[Mike Miller]

I own a lot currently worth about $850,000. I want to sell it for $1,75 mil with a contingency that I would design and build a house on the property to suit the purchaser. I would ask a down payment of $300,000 followed by subsequent payments appropriate to the degree of completion of the house. When completed, I would turn over to the 1031 intermediary $1,25 mil (= total paid to me by the purchaser less $500,000 spent on the construction of the house), and purchase a replacement rental property for $1.25 mil or more. Could this arrangement comply with 1031 requirements?