What is a Reverse 1031 Deferred Exchange?
A “reverse” exchange occurs when the Replacement Property is purchased prior to closing on the sale of the Relinquished Property. The Exchange Party uses the Qualified Intermediary to purchase the property he wishes to acquire while he markets and attempts to close on the Relinquished Property. Most “reverse” exchanges are facilitated through parking the title with a Qualified Intermediary. In one variation of the parking arrangement, the Exchange Party enters into an agreement with a Qualified Intermediary who acquires the Replacement Property and holds title until a buyer is found for the Relinquished Property. When the Relinquished Property is ready to close, the Qualified Intermediary enters into a simultaneous exchange with the Exchange Party, transferring ownership of the parked Replacement Property to the Exchange Party and acquiring ownership of the Relinquished Property, which the Qualified Intermediary then sells to the third-party buyer. Alternatively, the Relinquished Prope
