Closing on a property in under 30 days may appear like a daunting task, making the time limit enforced by the IRS in a 1031 exchange seem like an hourglass that’s running out of sand. Using a Fractional Ownership DST (Delaware Statutory Trust) structure enables investors to easily close a 1031 exchange upleg, or replacement, property acquisition in under a month.
The Initial Work Is Already Done
Sponsors of DST 1031 properties frequently close on the purchase of the subject property in advance, typically acquiring high-credit quality, NNN properties , or multifamily properties. They’ve also already secured the permanent financing, and inventoried the property for 1031 exchange buyers. That means that the 1031 investor does not have to qualify for the existing loan in place, and the paperwork can be completed as quickly as two business days.
A DST investor executes only three documents: a trust agreement, a purchase agreement and a purchaser questionnaire. There are no loan documents for investors to sign and no environmental or carve-out guaranties for them to execute. There are no recourse obligations of any kind.