June 17, 2021

1031 Exchange: Why It Matters and How It Can Help You

Written by: Michele Fitzpatrick 1031 Exchange Relationship Manager, VP, Northern Bank

Did you know that summer is the busiest season in real estate? According to The National Association of Realtors, “an average of 2.1 million purchase transactions take place during this period.”[1] Northern Bank's Michele Fitzpatrick was recently invited to present a CE credit class for Cotter Law and the WFG Real Estate School, where the hot real estate market was the focal point of discussion. She was joined by Attorney Elizabeth Cotter of Cotter Law and Lisa Stills from WFG National Title Insurance Company.

In general, 1031 Tax Exchange allows a property seller to shift funds from the sold property to a new investment and defer the obligation to pay capital gains taxes. Attorney Cotter discussed the importance of Title insurance, especially when executing a 1031 exchange. Title insurance protects the policyholder from alleged title defects by third parties that were most likely unknown to the policyholder at the time that the property was purchased.[2] Examples of title defects include fraud, lost or forged deeds, and unpaid contractors. Attorney Cotter explained that in the instance of a 1031 exchange, having title insurance can help alleviate any delays in the time sensitive transaction.


Michele discussed the option of completing a reverse 1031 exchange. The ability to purchase a replacement property prior to selling the relinquished property is a worthwhile solution for many investors in this market. In a reverse 1031 exchange, the investor has 45 days from the date of purchase to identify the property to be sold in order to complete the exchange and 180 days from the date of purchase to complete the transaction.[3]


Another major topic of discussion was how 1031 exchanges benefit the economy and aid in the recovery from the pandemic. In a 1031 transaction, many parties benefit: attorneys, banks, realtors, appraisers, insurance agents, even city and state governments. Not to mention that “for every 1031 Exchange, there is a minimum of two transactions, which doubles the number of fees and jobs.”[4]


1031 exchanges bring forth a myriad of benefits for investors, the real estate market, and the economy in general. If you have questions about how to make a 1031 exchange work for you, please contact Michele Fitzpatrick at mfitzpatrick@nbtc.com.


[1] https://www.bankrate.com/real-estate/best-time-to-sell-house/#:~:text=The%20busiest%20four%20months%20(May,a%20house%20is%20the%20summer

[2] https://www.mass.gov/service-details/title-insurance

[3] https://atlas1031.com/exchange-types/reverse-1031-exchange/

[4] https://nerej.com/100-years-of-1031-exchanges-how-they-stimulate-the-economy-by-fitzpatrick

Written by
Michele Fitzpatrick
1031 Exchange Relationship Manager, VP, Northern Bank

Michele Fitzpatrick brings 16 years of banking knowledge and almost 18 years working as a real estate professional to her role as the Vice President of Northern 1031 Exchange. On the Northern Bank team since 2014, Michele has played an integral role in the growth and inception of this wholly-owned subsidiary.

In 2001, Michele earned her Massachusetts Real Estate license and began working for Coldwell Banker, where she focused on buying and selling her own investment properties. With a portfolio of multi-family and vacation rentals, Michele was able to leverage her assets by utilizing 1031 exchange. As the Massachusetts real estate market climbed to record levels in 2003, she shifted her focus to banking and finance, working with Sovereign through the merger of Santander and onto Stoneham Bank, where she worked in both Retail and Cash Management.

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Northern Bank is a full service bank dedicated to providing practical, common sense financial solutions to help our customers’ lives and businesses grow. From deposit products to loans to payment and collections services, we work hands on with our entrepreneurial customers, both locally and across the country, to provide the financial support they need to realize their personal and business goals. Founded in 1960, Northern Bank has assets of $2 billion with 12 locations serving communities throughout Middlesex County. Northern Bank is a Member of the FDIC, an Equal Housing Lender, and consistently ranked among the best performing community banks in New England.

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