Unique Intermediary Arrangements
Metro Interexchange Inc.
(MII) actively participates as an independent party in each step of the delayed exchange process.
Beginning with the execution of a detailed Exchange Agreement between MII and the exchangor, the exchangor's original property is conveyed to MII, and MII completes a prearranged sale of the property to a buyer ready and waiting to purchase.
The proceeds of sale (cash, notes, etc.) from the first transaction are paid and belong exclusively to MII pending completion of the entire exchange sequence within the prescribed time limits.
MII remains responsible for acquiring and conveying replacement property designated by the exchangor in order to complete the process.
MII's sophistication, integrity and experience permit the exchangor to bypass and avoid difficulties caused by reluctant or uncooperative buyers, and to prevent complications and interference which could jeopardize successful completion of the exchange process required to qualify for tax deferral under Section 1031.
Growth Factors Accruals
MII's is willing to credit increases to an exchangor's account based on an agreed interest or "growth factor" rate specified in the Exchange Agreement.
The amount of growth factor may vary depending upon the amount of the original exchange sequence, use of our standby letter of credit arrangements and certain other factors, but usually reflects a majority of the corporate money market rates available to MII.
Experienced lawyers and tax professionals agree that growth factor credits have not been formally approved or accepted by the IRS, and therefore create additional risk of disqualification of an exchange under Section 1031.
Because professional opinions vary concerning the degree of additional risk involved, MII encourages each exchangor to consult with a competent, knowledgeable tax advisor and to carefully consider the advisability of any growth factor increases.
MII will not provide tax advice, and cannot serve as a substitute for competent professional advice provided by the exchangor's lawyer or other qualified tax advisor.
To eliminate any concern of financial solvency or stability MII will provide standby letters of credit issued by a bank. This guarantees security for MII's performance under each exchange agreement.
Letter of Credit
Documentation
MII readily provides suggested forms of Exchange Agreement, Escrow Amendments, Assignments, and various other provisions needed. However, these documents should be reviewed by the exchangor's lawyer or other tax auditor.
MII participation is also available and may be particularly useful in traditional simultaneous exchanges involving many properties or parties.
Using an independent intermediary may help to overcome reluctance, reduce complexity and facilitate successful closings.
Arrangements are determined on a case-by-case basis.