Buying 3 Properties via 1031 Exchange and 1 Seller is Backing Out

[Kia Skelton]

This is my first post but I've been a member for several years. I always browse through for the latest trending topics or to find answers to some of my investment questions. This site has always been a great resource to me so I'm hoping someone will be able to provide some guidance on my current situation. I recently sold a multi-family in Brooklyn, NY in January but have been in contract on 3 replacement properties since Nov/Dec. The total value for the 3 replacement properties have satisfied my 'equal and up' requirement under a 1031 exchange. Unfortunately, one of the Sellers is now trying to back out of the deal which will lead to a $235k deficit to my "equal an up" requirement. The Seller insists that because of COVID-19, they no longer have the funds to complete the agreed upon repair list. We've served a Time of the Essence (even accepting the incomplete repairs) and it's still been crickets from the Seller’s end. The Seller is full of it and is using this crisis to try to back out. Despite the money spent on an Inspection, Appraisal, etc., I'm more concerned on the tax obligations I'm now exposed to given I'm past the 45 day identification period to find a suitable 3rd property. I plan to sue this Seller and so does the Realtor because he's being belligerently ignorant at this point despite the threat of litigation. My questions are...(1) has this happened to anyone else, (2) what were the consequences given it was not your fault and (3) were you able to find a suitable investment to avoid the tax obligation? I've been recently reading about Qualified Opportunity Zones but I'm not too excited about this investment option as yet. Any help would be much appreciated. My QI is also trying to work on a solution but they've never came across this type of issue during an pandemic (obviously) and can't predict what exceptions the IRS will allow. Many thanks in advance!