Many times at the courthouse this topic is discussed, but the people in the legal system don’t seem to understand the exchange business.  Why should they?  I certainly don’t understand the legal business.  I thought I would clarify what the Three Sisters is.

Three Sisters is the entity Summit 1031 used for its reverse and construction exchanges.  Three Sisters holds all the SPE’s (all single-member LLC’s) that are used to own exchanger properties in reverse and construction exchanges.  One single-member LLC is set up for each exchanger.  For reverse exchanges, a separate SPE holds properties that must be held by an unrelated third party in order to accomplish a valid exchange.  Sometimes the SPE holds property an exchanger is trying to purchase and other times the SPE holds property an exchanger is trying to sell.  For construction exchanges, the SPE holds the property during construction.  After construction is complete, the property is transferred to the exchanger.  Using SPE’s is a standard business practice for 1031 exchange companies.  These SPE’s are completely separate from the LLC’s to which I was referring.