How it works
The exchangor transfers their property to the intermediary, who completes the sale to the buyer and collects the proceeds. Then the intermediary substitutes for the exchangor in purchasing the replacement property with the proceeds of the original sale. Finally, the intermediary transfers the replacement property to the exchangor, and the transaction is completed.
MII sells exchangor's property
The exchangor transfers their property to the intermediary, who completes the sale to the buyer and collects the proceeds.
MII purchases replacement property
Then the intermediary substitutes for the exchangor in purchasing the replacement property with the proceeds of the original sale.
MII transfers property to exchangor
Finally, the intermediary transfers the replacement property to the exchangor, and the transaction is completed
The Exchange Process
Exchangor arranges sale of exchangor's original property to a buyer ready to purchase.
Using independent tax advisors, exchangor contacts MII to arrange preparation of Exchange Agreement before closing sale of original property.
MII and exchangor execute detailed Exchange Agreement.
MII is substituted for exchangor as seller of original property and completes sale to the buyer.
MII receives proceeds of sale paid by the buyer for the original property, with responsibility to acquire replacement property when designated by exchangor.
If desired, MII can arrange for issuance of a standby letter of credit to secure MII' s performance of exchange contract.
Exchangor identifies replacement property and arranges purchase agreement with the seller, and escrow or other closing arrangements desired.
Exchangor notifies MII of designated replacement property and delivers copy of purchase agreement to MII.
When all purchase contingencies have been satisfied, MII is substituted as buyer of the replacement property.
MII purchases the replacement property and concurrently conveys the property to exchangor to complete the exchange process.