The 45-Day Identification Period Explained

A common misunderstanding is that the 45 days start once the exchanger begins actively shopping, or once an offer is accepted on a replacement. Neither is true. The date on the closing statement for the relinquished property is the trigger, and the count runs on calendar days, including weekends and federal holidays, with no extension for a slow title company or a closing that happens on a Friday before a long weekend. In the Park City market, where inventory on commercial and multifamily parcels can be thin and closings sometimes slip by a few days, exchangers who wait until after closing to start their search are often working with fewer than 40 usable days once paperwork and identification formatting are accounted for.

The most commonly used counting method allows identification of up to three replacement properties, regardless of their combined value. Most exchangers only need one or two candidates, but naming three gives a buffer if financing falls through on the first choice or a seller pulls out of contract. The written identification has to unambiguously describe each property, typically by street address or legal description, and has to be signed and delivered to the qualified intermediary or another party to the exchange before midnight on day 45; a verbal mention to a broker or an email that only references a property informally does not satisfy the requirement.

Exchangers who want to identify more than three properties have two other options. The 200% rule permits any number of properties as long as their combined fair market value does not exceed 200% of the value of the relinquished property, which is useful for someone comparing several smaller multifamily or retail assets against one larger sale. The 95% rule removes the value cap entirely but requires the exchanger to actually acquire at least 95% of the total value identified, a threshold that is difficult to hit in practice and is generally reserved for exchangers who intend to close on nearly everything on the list rather than using it as a shopping window. Choosing between the three counting rules is usually a function of how many candidates the exchanger has already lined up by day 45, not a strategic decision made in isolation from the actual state of their search.

If day 45 passes with no written identification on file, or with an identification that names a property loosely enough that it can't be verified, the exchange fails outright, even if the exchanger later closes on a qualifying replacement within the 180-day window. There is no cure once the deadline passes, which is why exchangers working through a qualified intermediary coordination process typically get their initial candidate list drafted in the first two weeks after closing rather than waiting until the deadline is close. A property under contract but not yet identified in writing does not count; the identification has to exist as its own document, separate from a purchase agreement. Exchangers who rely on a purchase contract alone, assuming it doubles as the identification, are often the ones who discover the gap only after the deadline has already passed and there's nothing left to do about it.