1031 Exchangers should anticipate settlement delays with some delays caused by the new TRID Closing Procedures.
A recent NAR survey of real estate agents found nearly one-third of all transactions encounter a delay of some sort. The majority of the delays were from financing issues. Some of the delay is from the new TRID Closing Disclosure (CD) procedures and documentation. Other reasons for delays are primarily appraisal values and home inspections.
1031 exchangers should be aware that there may be a delay in getting their relinquished property to settlement, and this could impact the closing on their new replacement property. With the uptick in housing sales and limited inventory there may be a delay in finding the replacement exchange property. While no fault of the 1031 exchanger, the system is causing delays that 1031 exchangers need to anticipate. 1031 exchanges have strict timelines and the law does not accommodate delays for transactions. It is important that exchangers not cut the 45 day identification and 180 day exchange completion dates too closely, but allow time for possible delays to both find, purchase and finance their replacement property.