A delayed exchange is the most commonly used exchange type. It provides investors the flexibility of up to a maximum of 180 days to purchase a replacement property. The use of a Qualified Intermediary is required to complete a valid delayed exchange. The Qualified Intermediary prepares the necessary exchange documents to assist the Exchangor with meeting the many detailed requirements of the Code, as well as avoiding numerous destructive pitfalls.
Prior to closing the sale of the relinquished property, the Exchangor enters into the Exchange Agreement with Pioneer 1031 Company. Pursuant to the Exchange Agreement, an Assignment is executed prior to closing, and Pioneer 1031 Company assumes the Exchangor's Purchase and Sale agreement. Pioneer 1031 Company instructs the closing/escrow officer or closing attorney to directly deed the property from the Exchangor to the buyer. Proceeds are transferred directly to the Qualified Intermediary, thereby protecting the Exchangor from actual or constructive receipt of funds. A separate interest bearing account will be set up for the exchange funds.
The Exchangor has 45 days to identify "like-kind" replacement property plus an additional 135 days to acquire property, which is on the identification list, for a total of 180 calendar days in the exchange. The exchange period begins when the deed records on the relinquished property and ends on the 180th day, or the exchangor's tax filing date whichever is earlier. Prior to closing on the replacement property, the Exchangor assigns the Purchase and Sale Agreement to the Qualified Intermediary. After the Assignment is executed, the exchange is completed when the Qualified Intermediary purchases the replacement property with the exchange proceeds. The property is transferred to the Exchangor by a direct deed from the seller.