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Daily Archives: May 4, 2016

Formation Of A Delaware Statutory Trust

Formation Of A Delaware Statutory Trust

Savvy investors understand that real estate ownership through a Delaware Statutory Trust brings unique benefits not found in other forms of investing that involves real estate. While many investors will simply participate in already-formed DSTs, some will choose to create their own. In either case, it is helpful to understand how such trusts are formed. Four key elements are required for a valid Delaware Statutory Trust. The Governing Instrument – This is the written documentation that specify the creation and internal affairs of the trust, as well as govern the conduct of trust activities. This must be in writing and executed on or before filing the Certificate of Trust. Certificate […]

What Is A “Drop And Swap” Exchange?

Often times, real property held by a partnership or limited liability company is subject to a sale but there is disagreement among the partners as to how to handle the sale proceeds. Some investors want to conduct a 1031 exchange while others simply want to sell for cash. To satisfy these competing interests, the partnership or LLC initiates what is known as a “drop and swap” exchange. In such a transaction, before the exchange the property ownership title is changed to reflect individual partner names and their partitioned interests rather than the partnership or LLC itself. This title change is the “drop.” Thereafter, the exchange occurs and some members defer […]