What Are They Exactly?

A simultaneous exchange is a transaction in which the disposition of the relinquished property and acquisition of the replacement property are accomplished in reciprocally interdependent escrows.  One cannot close without the closing of the other.  It also requires that the buyer and the seller mus execute an Exchange Agreement & Escrow Instructions that tie all property transfers together.

Potential disadvantages with the simultaneous lie in practicalities:  both properties must be ready to perform at the same time, proximity can also be a factor, as well as whether or not it is a multiple exchange or there are multiple target properties.

A DELAYED EXCHANGE refers to both a Delayed Forward Exchange or a Delayed Exchange.  In either it only requires the execution of Substitution Agreements to accept the Qualified Intermediary as the seller or as buyer of the properties in question. The closings of the respective properties are not tied to each other.


End Results

THERE ARE ADVANTAGES to each type of Exchange, but Simultaneous has one distinct advantage: The replacement property becomes the property of the Exchangor on the date of closing of relinquished property. This process removes all uncertainty of future events as the closings are mutually dependent. With an unsuccessful Simultaneous Exchange, the Exchangor still has  the  relinquished  property. In a failed Delayed Exchange, he no longer has the property and is subject to a tax  liability. 

How Do You Decide?

      • LOCATION: distance makes a Simultaneous hard to accomplish
      • TIMING: can the two properties perform at same time
      • LENDING & TITLE ISSUES can delay closings, making Simultaneous impossible
      • MULTIPLE PROPERTIES: It’s not impossible, but multiple exchanges or target properties increases difficulties for Simultaneous transactions to be completed
      • PROPERTY AVAILABILITY: is the replacement property found/available to purchase?
      • RISK ASSESSMENT: is Exchangor willing to risk tax liability and losing relinquished property due to failed exchange?

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