Structuring Tenants in Common Real Estate for Section 1031 Exchanges: Balancing Tax Law, Securities Law, and Mortgage Lender Requirements

Recording of a 90-minute premium CLE video webinar with Q&A

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Conducted on Thursday, July 14, 2022

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This CLE course will discuss the legal and structuring issues associated with tenants in common (TICs) real estate investments, focusing on financing requirements and Section 1031 exchanges. The panel will discuss the entity, due diligence, and loan document provisions needed for the TIC borrower, the potential securities law issues associated with sponsored TICs, and how TICs should be structured to comply with federal tax law for a Section 1031 exchange.

Description

TIC transactions can offer real estate investors deferred taxation on their capital gains via Section 1031. Sponsored TICs additionally provide investors with the opportunity to diversify their investment portfolio and to own an interest in larger real estate assets. However, sponsored TICs not only must comply with Section 1031 but also usually are securities and must comply with federal and state securities laws. Complying with these legal requirements can create challenges in meeting mortgage lender requirements.

Listen as our authoritative panel discusses the financing, securities, and tax issues associated with TIC transactions.

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Outline

  1. Section 1031, Rev. Proc. 2002-22
  2. Use of disregarded special purpose entities in TIC transactions
  3. Key terms of the TIC agreement
  4. Securities law compliance with sponsored TICs
  5. Addressing mortgage lender requirements in a TIC transaction

Benefits

The panel will review these and other critical issues:

  • When should a real estate investor consider a TIC investment for their Section 1031 exchange?
  • Structuring a TIC investment that complies with both tax and securities laws
  • Preparing the TIC agreement
  • Addressing securities law concerns in a sponsored TIC offering
  • Negotiating mortgage loan documents for a TIC
  • Exiting a TIC structure upon property disposition or for a troubled asset

Faculty

Katkov, Steven
Steven P. Katkov

Shareholder
Cozen O’Connor

Mr. Katkov represents and counsels clients in a broad range of commercial real estate transactions, including...  |  Read More

Whitman, Elizabeth
Elizabeth A. Whitman

Managing Member
Whitman Legal Solutions

Ms. Whitman has over 30 years of experience as a business and real estate attorney. Her varied experience includes...  |  Read More

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