ASSIGNMENT:

A past client of ours returned to us with a unique situation. In 2020 he had entered into a lease option to buy a charter school which consisted of the real estate and the business. The assignment we received was then the result of a recent property that he had sold whereby he was now exercising his right to perform a 1031 exchange and planned to use the funds to finish off these lease options to buy.

CHALLENGE:

What the borrower had not realized was that his funds held by his accommodator could not entirely be used as he had wanted. He could use a large portion towards the purchase of the real estate, but to purchase the business he had to take some of the held funds as boot or taxable income, which then allowed him to consummate the purchase of the business.

SOLUTION:

There were other borrower loan qualification hurdles that we had to overcome but ultimately this is why it ended up best for us to place the borrower into a SBA 7a program. We had him go back and have his realtor renegotiate terms on the Lease options, so that we could close his 1031 exchange real estate transaction and then immediately afterwards he could then close the purchase on the business sale.