The 1031 Exchange Institute

Welcome to The 1031 Exchange Institute™. The 1031 Exchange Institute is your complete online resource for 1031 exchange, 1033 exchange, 1034 exchange, 721 exchange, 453 installment sale and 121 exclusion information.  Information will also be provided regarding Self-Directed IRAs, including Traditional IRAs, ROTH IRAs, SEP-IRAs and SIMPLE IRAs. 

The 1031 Exchange Institute is dedicated to educating and informing real estate investors and their advisors on the benefits of 1031 tax-deferred exchanges and other tax deferred and tax exlcusion strategies so they can make better informed investment decisions.

Just Who Is Involved In A TIC Investment Transaction? 

The various parties involved in processing, closing and servicing a tenant-in-common or “TIC” investment property transaction can confuse even the most sophisticated real estate investor.  The structure of these TIC investment property programs necessitates that additional parties be involved for a number of reasons, including certain securities laws for those TIC investment properties that are sold as security interests. 

Real Estate Exit Broker

Tenant-in-common investment properties are usually acquired as like-kind replacement properties in order to complete a real estate investor's 1031 exchange transaction.  However, the real estate investor could purchase a TIC investment property with out-of-pocket cash (i.e. non-1031 exchange money) if they chose to. 

Your own real estate sales agent can serve as your "real estate exit broker" by selling your relinquished properties in order to free up your trapped equity and to be able to acquire more profitable like-kind replacement properties such as TIC investment properties.

Escrow Officer or Closing Agent

The relinquished property closing and subsequent like-kind replacement property closing, regardless of whether it is a TIC investment property or not, still requires a settlement or closing process with an escrow officer or closing agent or closing attorney depending on which state the investment real property is located in.

Once the transaction closes or settles the closing agent delivers the appropriate closing or settlement statements, net settlement funds or proceeds and remaining documents to the principals, agents and/or lenders.  The net settlement funds or proceeds must be disbursed to the Qualified Intermediary if you are completing a 1031 exchange.

1031 Exchange Qualified Intermediary or QI

The Qualified Intermediary or QI is a party to the TIC investment property transaction only if you choose to structure a tax-deferred exchange pursuant to Section 1031 of the Internal Revenue Code ("1031 exchange").

The QI drafts the agreements required to document and structure your tax-deferred exchange, and holds, manages and safeguards the net cash proceeds from the sale of your sale property transaction in order to avoid constructive receipt of your 1031 exchange funds and triggering your income taxes, and helps you through the entire 1031 exchange process.  You can read more about The Role of the Qualified Intermediary and Choosing a SAFE Qualified Intermediary

TIC Sponsor or Syndicator

Tenant-in-common or TIC Sponsors are generally larger real estate investment firms or syndicators who purchase or "take down" large institutional investment properties and then divide the properties into smaller deeded units, referred to as “tenant-in-common” or "TIC" interests, arrange non-recourse financing and then offer to real estate investors for investment through private placement offerings under a Private Placement Memorandum or PPM.

Securities Broker Dealer and TIC Broker 

Securities Broker Dealer 

TIC investment property offerings are generally structured as “Regulation D” offerings, which allows them an exemption to the registration requirements of the Securities Act of 1933, and may only be offered by licensed securities brokers to accredited clients. However, even though the real estate investments themselves are exempt from registration, the people responsible for selling them are not. The Broker Dealer serves in a supervisory role and generally assists the TIC Sponsor to structure prospective securities transactions, identify potential purchasers of securities, marketing specific products and participating in the order taking or order-routing process, such as taking orders from customers. 

TIC Broker

The TIC Broker is a registered securities representative who hangs his or her license with the Securities Broker Dealer, and is responsible for conducting the due diligence on an offering with a prospective real estate investor interested in buying into the particular TIC investment property offering. The TIC Broker will sit down with the prospective real estate investor and their legal and tax advisors and go through the Private Placement Memorandum in order to determine if the TIC investment property offering is suitable for the investor.

TIC Review By Investor's Advisors

TIC investment property transactions are sophisticated real estate investments and should be reviewed by the real estate investor's legal, financial and tax advisors before proceeding with any investment.  There are also certain legal advisors that specialize in reviewing private placement memorandums or PPMs.