All Forum Posts by: Account Closed

An offer to purchase short sale property must not only be accepted by the homeowners, but must also be accepted by the mortgage lender for the homeowner and a number of other individuals who are associated with the mortgage lender. The time and complications involved in getting all of these people on the same page as far as an acceptable purchase price goes can be complex and take a great deal of time. The process of working towards a mutually acceptable purchase price for short sale property may take months and months.

This is a common question, but specifically for a 1031 exchange, there needs to be a sale of investment real estate followed by a purchase of investment property. It is the trade of real properties that are the same in nature or character, even if they have different qualities - two lots of the same approximate size, value, and location could be exchanged.

1031 exchanges allow you to change the form of your investment without cashing out or recognizing a capital gain. Your investment can continue to grow tax-deferred. You can also roll over the gain from one piece of investment real estate to another to another. Even if you profit on each swap, taxes are avoided until you sell for cash, which could end up being years later. Hopefully, that means paying one tax at a long-term capital gain rate.

I agree, Dave's advice is spot on. For a 1031 Exchange, it has to be a sale of investment real estate followed by a purchase of investment property. 1031 Exchanges involve a trade of real properties that are the same in nature or character, even if they have different qualities. So, for example, two lots of the same approximate size, value, and location could be exchanged under Section 2031 even if one was improved and the other unimproved.

Depending on the situation, I agree with multiple previous suggestions. Working carefully to define your contract may be the right course of action. Illinois has developed an entire body of common law surrounding the purchase and sale of property. State law also limits the legal and financial remedies that are available to real estate buyers or sellers who find themselves in the unfortunate position of a deal that has fallen through.

An inter vivos trust provides many possible benefits: it allows you to maintain control of your property during your lifetime, avoid probate after your death, and plan your estate. To create an inter vivos trust, you as the grantor place as many assets as possible into a trust to fund it. You must choose a trustee to manage your property for your benefit during your lifetime. If you name yourself as the trustee, you also choose a successor trustee to manage your estate for the benefit of your beneficiaries after your death. An additional benefit of inter vivos trusts is privacy. 

A type of living trust, a revocable living trust can be changed or terminated during your lifetime. Like other living trusts, you can avoid probate with a revocable living trust and keep long-term control over your assets. You will also have a fair degree of control over how your assets they will benefit your beneficiaries. However, a revocable living trust also protects you from anyone with eyes on your assets in the rare event that you become mentally incapacitated. Under this mechanism, if you become mentally incapacitated or incompetent, your spouse or children are able to immediately access your assets for your benefit, without going through an arduous guardianship proceeding.

Another potential option is a pour over will. The big benefit here is that it can be integrated into a larger estate plan designed to avoid costly probate issues. Probate is a notoriously lengthy, expensive, and stressful process. It typically requires your loved ones to go through an arduous court process to prove the validity of what you set forth in your will. After proving their case regarding your final intentions, your beneficiaries will then have to wait out the administrative process required by the court system before your assets are disbursed.

Unlike with a traditional trust, a pour over will allows you to maintain your property in your name during your lifetime. This is useful because a trust must be funded with existing assets. Thus, if for whatever reason you do not wish to put all your assets into a living trust while you are alive, a pour over will funds the trust after your death. 

@Jay Kumar There are some nuisances that have to be ironed out to actually use the suggested HOA contingency, but perhaps in some situations either that or the rental contingency could be a solution per Vincent's suggestion.

The Illinois legislature has been looking to consider passing a rent control bill, as rent control has been barred in our state since 1977. So, we will have to watch and see what happens with that in this next session anyway.

I have a couple names I can suggest. DM me if you are still looking and interested.

@Robert D. the next steps are complicated and so you should contact a good attorney to pursue collection work. You may want to consider filing a citation to discover assets. Collections work is a whole field of law in and of itself. Good luck!

I, too, agree with most of what has been mentioned above - get someone who works for you. But that also means getting a QI who you can trust, as 1031's can be complex and potentially be riddled with pitfalls, working with people you trust will make the process that much smoother.

Just to provide additional information: to meet the requirements of the like-kind exchange, the seller must inform the intermediary within 45 days which property is being exchanged and acquired. Under Section 1031, once the sale of a property occurs a qualified intermediary must receive the cash from the sale (a critical fiduciary duty), similar to an escrow arrangement. A qualified intermediary is a third party entity or person that facilitates a Section 1031 exchange, and in my personal experience, often a trusted real estate attorney.