Case Study: Southwest Exchange
Southwest Exchange Corporation specialized in arranging 1031 real estate transactions operating as a "qualified intermediary". A 1031 exchange is a tax deferred property exchange primarily used by investors of rental and commercial properties. Under the IRS rules, a person can sell an investment property and reinvest that money in a new, similar property of equal or greater value within 180 days and completely avoid paying any capital gains taxes. Sellers cannot touch the proceeds of the sale in between the sale of the old property and the purchase of the new property. By law the seller must deposit the money with an independent intermediary such as Southwest Exchange.
Two other software development firms prior to Keene Systems tried and failed to design and implement this system. There were lots of different types of data to be managed and complex relationships between each. The entire workflow process of the exchange had to be managed by the system. The system also needed to be able to handle reverse exchanges. That’s when the seller finds the perfect property and has to buy it before finding a buyer for the old property.
Proposition & Solution
Keene Systems had to first architect a system that would meet the needs of all the constituents in the exchange process. A rock-solid database architecture made traversing a complex network of relationships much easier. We devised a solution where a user of any type could log into the system, then look at the exchanges from their perspective.
For example, a banker could log in and,
1) See all of the exchanges they were involved in and look up the phone number of an exchanger or,
2) An exchange counselor could find out what exchanges were close to a critical deadline.
Other Case Studies:
The Dupont Group
Dartmouth-Hitchcock Medical Center
Results & Benefits
•The following entities were managed in the system: Buyers, Sellers, Exchange Companies, Exchanges, Exchangers, Contacts, Properties, Customers, Brokers, Banks, Bankers and all of their inter-dependent relationships.
Key personnel were notified in advance of critical deadlines during the exchange process such as the 45 day limit to identify a new property and 180 day limit to complete the exchange. This allowed personnel to proactively make sure that deadlines were met.
Exchangers would be walked through the process of a complex exchange and would have access to all of their documents online such as the Funding Report, Their Exchange Agreement and their Escrow Agreement, etc.
Staff then had the ability to run reports and generate lists as well as statistics on the exchanges in process and the historical exchanges that had already completed.
A very complex database schema and was developed in SQL Server. The user-friendly front end was developed in ASP.Net with C# and Ajax to provide more responsive screens.