AMERICAN EQUITY EXCHANGE, INC

Specializing in Tax-Deferred Property Exchanges

1-800-237-1031

Build to Suit

Build to suit, or construction-to-suit, exchanges are increasingly utilized where the taxpayer is able to exchange out of the relinquished property but is unable to find a replacement property that is suitable for their purposes. The taxpayer can find the replacement raw land or perhaps a building, which require certain structures or other improvements to be constructed as part of the exchange. In those situations, it is possible to enter into an agreement with the seller of the replacement property, a developer or the exchange accommodator, to construct the improvements on the property prior to the closing on the replacement property. When the improvements are complete, the taxpayer then closes on the replacement property to complete the exchange. Great care must be taken in structuring these construction-to-suit exchanges to avoid agency or related party issues. Special care must also be taken to insure the construction process can be completed within the 180-day exchange period. That can be tricky, especially in many areas in the United States where the building season is shortened by adverse weather conditions and problems in obtaining materials. The help of qualified real estate professionals, including the professionals in our company is instrumental in making sure a build-to-suit exchange is successfully completed.