California 1031 Exchange Company Closes Doors

Added August 7, 2008 by Ilyce R. Glink

Print Articles

Summary: A real estate investor asks what to do now that his 1031 exchange company in California has closed its doors. The real estate investor may not be able to get his funds back. Who can the real estate investor contact regarding the 1031 exchange company that went out of business?

Q: We bought an investment property in California and used a 1031 exchange company. Today we found out that the company is closed for business. We would like to know what we should do now.

A: I'm so sorry. There have been a number of cases recently reported where the owners of 1031 exchange companies have either used investors' funds for personal use or absconded with the money or invested it poorly and lost it.

You should contact the California Dept. of Real Estate and the California Attorney General's office to see what they are doing with this company and to let them know you are an injured party.

To avoid the possible loss of all of your funds, you should contact an attorney in California immediately. That attorney may advise you to sue the 1031 company as soon as possible.

The reason you need to move quickly is that under the IRS rules, if you don't complete your exchange within the required timeline, even if the company has not released the funds, you'll owe taxes on your 1031 exchange. To avoid that double-whammy, you need to see what you can do from the California end to protect your funds, if possible.

Your accountant or tax advisor can advise you further.

Good luck. Please let me know what happens.

We have over 5000 articles on Real Estate Advice, Personal Finance Advice and Consumer Advice on our site. We encourage you to look at these articles. As always, if you have a comment on our articles, please post your comment below. We thank you for coming to ThinkGlink.com.

If you'd like to help us out, you can contribute to our site and keep the site free of charge. Thanks.

© Ilyce R. Glink. All rights reserved. This content may not be used, distributed, syndicated, compiled or excerpted in any medium or form without written authorization from Think Glink, Inc. For information on syndicating ThinkGlink.com please contact us.

Previous article Next article