Where does the money come from to purchase Replacement Property in a reverse exchange situation?
In reverse exchange situations, the Replacement Property will be purchased prior to the sale of the Relinquished Property. As a result, the qualified intermediary will not be in possession of any cash necessary to fund the purchase. Therefore, the purchase price must be financed utilizing a loan from a third party or the Client. In either case, the loan must be in the name of the EAT, on a nonrecourse basis.
