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Handling All Your Property Exchanges

At PEC, we serve as a qualified intermediary in deferred, simultaneous, reverse, construction, and property exchanges. Contact us today to learn more about our dedication to our clients.

Deferred Exchanges

It is unusual to both sell and buy property simultaneously. Thus, deferred exchanges are by far the most common type of exchange.


Here's how the structure works: You have an agreement to sell your property. You enter into an Exchange Agreement with PEC and assign the sales agreement to us. At the closing, the proceeds will be paid directly to PEC for your account. You then have 45 days within which to find and identify replacement property. Assuming replacement property is found, you enter into an agreement to purchase that property -- and, at closing, PEC pays the exchange funds it is holding for you to purchase that property. The replacement property must be acquired within 180 days after the sale of your relinquished property or by the due date of your tax return, whichever is earlier.

Simultaneous Exchanges

Simultaneous exchanges are rare. An example of a simultaneous exchange is a true swap, where two people swap titles to their properties. What most people mean when they refer to a simultaneous exchange, however, is an exchange structured identically to a deferred exchange, but all to happen on the same day. Here, you already know what you're going to buy and you're going to use the proceeds from your sale to buy it. Don't make the mistake of assuming that you can accomplish a simultaneous exchange by having money from the closing on your sale wired to the closing on your purchase without using an intermediary: If the funds are deemed to be under your control for even a second, your exchange may fail. An exchange that is anything but a two-party swap, even if simultaneous, requires the use of a QI.

Reverse Exchanges

There will be times, especially when the market is hot, when you may need to acquire your new property before you've managed to sell your old property. You are then in a position to do a reverse exchange. The IRS has specifically authorized this type of exchange as long as special rules are followed.


Using a qualified exchange accommodation agreement (QEAA), the property that you will ultimately acquire is "parked" with an entity formed by PEC. The parked property will be conveyed to you after the sale of your old property is completed. While you are waiting to close on the sale of the relinquished property, you may enter into a lease or management arrangement with the intermediary to make use of the replacement property.


There are many issues (including financing, conveyancing, insurance, and leasing), that make a reverse exchange more complicated than a standard deferred exchange. Hence, a reverse exchange requires advance planning.

Improvement Exchanges

  Another common exchange scenario is the following: a business owner wants to sell the property in which his present facility is located and replace it by constructing a new building on a vacant piece of land. Section 1031 does not simply allow you to sell your old facility, buy a piece of land, put up a building, and defer the tax on all of that money. Instead, Section 1031 requires that acquisition of the replacement property be the last thing that happens. This means that the improvements will have to be constructed on the new parcel before you purchase it. Again, an intermediary can facilitate such exchanges by acquiring the new property, constructing the improvements, and then exchanging it for the old property.