Tenant in Common (TIC) Investing

An investor's initial contact with our company is with a Principal of Exchange Equity. The purpose of the contact is to establish the investors' goals and investment strategy. After understanding the investor's goals, the Principal will present a detailed investment strategy specific to the investor's objectives. The strategy will include details of the relinquished real estate transaction, specific investor's requirements and an introduction to the Co-Ownership structure Exchange Equity uses in placing an investor in a replacement property. A Co--Ownership transaction is capable of meeting the full range of investment requirements.

Essential to the strategy is a review of the proposed property prospectus costume selected to the investor's requirements. The prospectus will contain a comprehensive review of the investment including financial projections and market conditions.

1. Executive Summary
   The Executive Summary is the preliminary document, which discloses everything an investor needs to know to make an informed investment decision.
2. Intent to Purchase
   Offered Questionnaire. This form must be filled out in its entirety to ensure potential purchasers are qualified investors.
   
   Earnest Money Deposit Agreement\lD Language:
   Upon the execution and receipt of Earnest Money Deposit Agreement you are agreeing to begin the process to acquire a Co-Ownership in one of our properties. This document also gives authorization to your Qualified Intermediary to transfer funds to Exchange Equity as a non-refundable deposit to secure your position in the property. We will use this deposit to cover LLC formation fees and other closing costs.
   
   The regulations under IRC §1031 require specific language for the identification of an undivided interest in real property, which can be found on the Letter of Direction. It is critical to utilize the appropriate language when notifying your qualified intermediary.
3. Earnest Money Deposit Consent Form.
   This consent form gives Exchange Equity the authority to form and register your Single Purpose Entity (SPE) LLC. The formation of an SPE LLC for every property is a requirement of the IRS and our lender(s) in issuing a non-recourse mortgage.

The SPE LLC is a disregarded entity for tax purposes. It is another method to ensure compliance with IRC §1031.

1. Interest Purchase & Sale Agreement:
   This document is the sales contract for the investment property you have identified. It begins the final steps to the closing process and binds the investor and Exchange Equity into an agreement to purchase and sell, respectively. Several critical forms are included as exhibits to this document, including the Call Agreement, Co-Ownership Agreement, Third Party Trust Agreement and the Master Lease described below.
2. Due Diligence:
   Because of the nature of these transactions, the due diligence period is shorter for our transactions than those of a traditional real estate acquisition. Exchange Equity will overnight to you a comprehensive due diligence package for your review and consideration. We believe the first measurement of our relationship is established by providing you with a complete summary of the property. The Due Diligence Report will contain: Operating Statement (current and projected), Lease Summations, Title report, ALTA Survey, Environmental Report(s), a certified property inspection report, neighborhood demographics and aerial photographs.

We use an Escrow Closing rather than a New York style closing for all of our clients. This method does not require you to appear at the escrow/title company at closing. You will need to make arrangements with your Qualified Intermediary prior to closing to deposit the necessary funds with the Escrow Agent. Escrow instructions will be provided to you and your Intermediary when you reach this stage in the closing process. It's fast, easy and can be completed at your convenience.

Once all of the contracts and closing documents are executed and returned to Exchange Equity, together with the receipt of all funds, we will prepare the Warranty Deed and the Closing Agent will close the transaction. In addition to the title company's settlement statement, we also prepare a closing statement that reflects the allocation of assumed debt on your investment.