The purpose of ERP systems is to combine internal and external management data that reach throughout an entire business or corporation by using unique and sophisticated software applications specifically designed for realtors. Facilitating such information keeps all business roles organized and information readily available to everyone within the company from Senior Administrators all the way up to the acting President.

One of today’s industry leaders in Enterprise Resource Planning systems and business systems software is Syntax. Since 1972, Syntax has partnered with world-renowned technology leaders to offer refined operating software that encompasses cloud computing, ERP, and JD Edwards managed services. Since 1997, the primary focus of Syntax, as well as the partner company Oracle, has been on developing EnterpriseOne Real Estate Management.

This integrated application suite is a comprehensive resource planning software package that is designed to integrate every piece of information about your properties while documenting the financial details of each specific real estate transaction. Through EnterpriseOne Real Estate Management, real estate office managers and property owners will be able to make better decisions regarding property investments, share and organize all of the documents relating to a real estate transaction, and access information about various customers, vendors, landlords, and company employees all in one place.

JD Edwards managed services, specifically EnterpriseOne, presents clients with more database, operating systems, and hardware alternatives than the competition, which allows your company to fully meet your business goals and demands. In addition, EnterpriseOne is the very first EPR solution to be compatible on your Apple iPad. So whether it’s financial management, project management, order management, mobile solutions, manufacturing management, or something as simple as reporting on business trends, let Syntax, Oracle, and JD Edwards managed services operate your business through customized, state-of-the-art software that will surely take your company to the next level.

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The title company acts as an independent third party to the transaction.  They have no vested interest in either the buyer or the seller and therefore work objectively, similar to a judge in a courtroom.  However in reality this is not always the case.

A title company works like other businesses that depend on referrals to generate income.  The title company’s clients consist of mortgage lenders, realtors and property investors.  These people send the title company their deals on a regular basis.  They also expect the title company to make sure their deals close so everyone makes money.  If the title company can’t close these deals then they will send them somewhere else.  This gives the title company a vested interest in making sure the closings from their regular clients go smoothly, even if it means stretching a few rules.

Real estate title law is governed by statutes passed by that State’s legislature and Departments of Insurance or Professional Regulation.  However, a title company has some leeway in how they interpret those laws and regulations.  Everything is not always black and white.  For example some title companies will ignore a lien against a property if it is more than ten years old while others will insist it be satisfied.  Some title companies will hold money in escrow if something can’t be cleared up on title before closing and others will not.  The determining factor in these decisions is normally what will make the title companies client happy.

Title companies will cut corners and rush a deal to closing if their client is threatening to pull all their business from them if they don’t.  They will take added risks which could cost you time, money and aggravation in the future.  Let’s say the title company finds a lien against the property and does not hold enough money in escrow to satisfy it fully then that lien will stay on your title.  Even though you have title insurance that does not make it instantly go away and clean up the cloud on your title.   You still have claims to file against the original title companies underwriter and might need to hire an attorney.  Also if you are selling the property and this lien comes up then you may lose your potential buyer.  They may not want to wait around until you get things straightened out and decide to purchase something else.

If you are involved in a real estate transaction you always want to use your own title company whenever possible.  If the contract states that a party other than yourself has the right to choose the title company than you can still hire your own, it just means you will have to pay for their services in addition to what the other company will charge.  This fee is well worth it.

Your own title company will tell you if a lien on title can be covered by escrow funds and how much should be held.  Or they will tell you the lien must be paid off or satisfied before you close.  They will also tell you if the other parties company is charging you too much money for their services.  Many times a title company will have an agreement in place with their client’s wherein they pass many of their fees onto the other side of the transaction and charge their client’s nothing.  If this is happening on your closing then you can dispute the amounts you are being charged.  The savings from this alone can offset the cost of hiring your own title company to protect you.

Title searches are not always perfect.  I am surprised at how often title companies miss things when they search for liens.  Your own title company may find liens on title the other company missed.  Having two independent searches done will benefit you.

Hiring your own title company gives you piece of mind.  You know they have no one’s interest before yours.  They will make sure any gray areas in handling the closing are done in your favor.  Think of it as hiring your own attorney.  You would not want to use another person’s attorney to represent you in the same matter.  It would be a conflict of interest.  Hiring your own title company protects you the same way hiring your own lawyer protects you.

Daniel Doran is a 20+ year veteran in the real estate industry. He is a previous owner of a law firm, mortgage and title company. Daniel has also written several books on mortgage modification, short sales and real estate investing. He currently specializes in Commercial Finance and Real Estate Development and is a graduate of Manhattanville College and Brooklyn Law School. You can contact Dan at Buildings By Owner.

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Many other factors go into determining your basis.  For example any long-term maintenance you did or permanent additions or other structures you made to the property.  Regardless, the end result is a tax of some amount when you sell.  However, while this tax cannot be totally avoided, it can be deferred almost indefinitely using a vehicle from the IRS known as a 1031Exchange.

What is a 1031 Exchange?

In a real estate transaction, the property owner is taxed on any capital gain realized from the sale. However, using a Section 1031 Exchange, the tax on the gain is deferred until some future date. Section 1031 of the Internal Revenue Code provides that “no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business, or for investment.” A 1031 tax-deferred exchange allows a property owner to trade one or more of their recently sold properties for one or more replacement properties of “like-kind”.  The capital gains tax on the sale of these properties is deferred until either the seller liquidates his investments or dies.

The legal reasoning behind the Section 1031 exchange deferment is when a property owner has reinvested the sale proceeds of one property into another, the economic gain of the seller has not been realized in a way that gives the seller actual money to pay a tax. So the taxpayer’s overall investment is the same, it has just changed form.  The seller has not at this time received any cash benefit from the sale.  The IRS determined it would not be fair to tax the investor on just a paper gain so they created the 1031 exchange.

What are the requirements for a 1031 Exchange?

• Proper Purpose – Both the sold property and the newly purchased property must be held for productive use in a trade or business or for investment. Property bought for immediate resale such as a flip doesn’t qualify for this tax exemption.
• Like Kind – The replacement property acquired in an exchange must be “like-kind” to the property being relinquished. As an example, all qualifying real property located in the United States is like-kind to all other property located in the United States.  Property located outside the United States would not be considered like-kind to property located in the United States. However you can do a 1031 Exchange for property outside the United States to another property that is also outside the United States.
• Exchange Requirement – The relinquished property must be exchanged for other property, and cannot be liquidated and then the cash used to buy the new property.  This means the 1031 Exchange requires an intermediary to facilitate the transaction.

Who is involved in a 1031 Exchange?

• Investor/Taxpayer/Exchanger As the person selling your property, you can be referred to by any of these names.
• Buyer. The person buying your property. This person pays money to the intermediary and then receives the deed.
• Intermediary. This is any qualified neutral third party not related to the transaction such as a title company or attorney.  The intermediary ensures that all of the regulations are followed and places the funds in an escrow account until the exchange is completed.
• Seller. The person selling their property to you. This might not be the same person who is purchasing your property in the exchange.  In other words you can sell your property to one party and buy a property from a different party and still qualify for a 1031 Exchange.

What are the specific timing rules for an exchange?

The investor has a maximum of 180 days from the closing of the relinquished property or the due date of that year’s tax return, whichever occurs first, to acquire the replacement property. This is called the Acquisition Period. The first 45 days of that period is called the Identification Period. During the 45 days, the investor must identify the property that will be used for replacement. This identification must be in writing, signed by the investor, and received by the intermediary within the time period allotted.  If this does not occur then the 1031 Exchange will be considered null and void and all capital gains owed on the sale will be immediately due…

So long as you keep rolling over your investments into new, like-kind properties, you can defer the capital gains taxes owed indefinitely and still reap the benefits from your new properties.