Justice is Served & 1031 Exchange Deadlines Extended

Remember MV Realty? These were the folks that marketed "Homeowner Benefit Agreements" to thousands of homeowners in Florida and nationally. The HBAs had a term of 40 years and provided that if homeowners breached the agreement, MV Realty would be entitled to collect 3% of the market value of the property. A breach would occur if the homeowner listed their home with someone other than MV Realty, transferred the ownership to someone else and was binding on the owner's heirs, successors and assigns. A Memorandum of Homeowner Benefit Agreement was recorded in the public records and contained an agreement that the HBA constituted a "covenant running with the land." Yikes. Now do you remember?

Florida's Attorney General filed suit against MV Realty along with 3 of the individual principals of the firm. The suit alleged that MV Realty violated the Florida Deceptive and Unfair Trade Practices Act, seeking injunctive relief, restitution, civil penalties, attorneys fees and courts costs (and some other bad stuff). On September 24, 2024, the Honorable Darren Farfante, Circuit Judge in the 13th Circuit, Hillsborough County, entered a Summary Judgment against MV Realty and the individual defendants. It's a great read and one that will restore or affirm your belief in our judicial system. Here is a link to the Order on Cross Motions for Summary Judgment. https://www.thefund.com/TheFund/media/PDFs/GeneralCounsel/1024-MV-Realty-SJ-Order.pdf

1031 Exchange deadline extensions. A big thank you to Janet Schaum with Old Republic Exchange for this information about possible extensions as a result of the hurricanes we have recently experienced. If you have more questions, please contact Janet at jschaum@OR1031.com.

The IRS has issued Tax Relief Notice IR-2024-253, which permits the postponement of tax-related deadlines for taxpayers affected by Hurricane Helene. I am confident this will be updated after Hurricane Milton, but this email contains a link to all of the Tax Relief Notices issued by the IRS, and you can sort by state.

Under this Notice, taxpayers affected by Hurricane Helene in all of Alabama, Georgia, North Carolina, and South Carolina, as well as 41 counties in Florida, eight counties in Tennessee, and six counties and one city in Virginia, may be eligible for postponement of their 45-day and 180-day 1031 exchange deadlines.

Depending upon the circumstances, there are two possible postponement dates for 45-day and 180-day deadlines: (1) postponement until the “general postponement” date of May 1st, 2025; or (2) postponement by 120 days.

Option 1: General Postponement to May 1, 2025 — APPLICABLE TO “AFFECTED TAXPAYERS” ONLY

Under this option, “affected taxpayers” only (those who live in the covered disaster area or whose principal place of business is in the covered disaster area) are entitled to postpone their 45-day and 180-day deadlines to May 1, 2025. This postponement is permitted regardless of the date the Relinquished Property was transferred.

Option 2: Alternative Postponement—the later of 120 days or May 1, 2025 — APPLICABLE TO “AFFECTED TAXPAYERS” AND “OTHER TAXPAYERS”

Under this option, “affected taxpayers” and “other taxpayers who have difficulty meeting their exchange deadlines due to the disaster” (see definition under Section 17 of Rev. Proc 2018-58) are entitled to postpone their 45-day and 180-day deadlines by 120 days or until May 1, 2025, whichever is later. However, this option is ONLY available if relinquished property was transferred on or before the disaster date of September 22, 2024, in Alabama; September 23 in Florida; September 24 in Georgia; September 25 in North Carolina, South Carolina, and Virginia; and September 26 in Tennessee. Under those circumstances, only deadlines that fall on or after the Disaster Date are entitled to this postponement.

See Revenue Procedure 2018-58, Sections 6 and 17, and check for updates to the scope of the disaster area and the Notices: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations.

That's all for this week. 

Let me know how we can help you. 
 

Melissa Jay Murphy
Executive Vice President, Chief Legal Officer,
and General Counsel