UPDATED STORY: Wall Street Journal story

LandAmerica files for bankruptcy protection, to sell 3 units to Fidelity National Financial
Bad news, you need to be careful when completing a 1031 exchange, and be very diligent about where your money is being kept! Call John for more info on which intermediaries to use and to make sure your assets are insured and protected at all times!

NEW YORK (AP) — Title insurer LandAmerica Financial Group Inc. said Wednesday it will file for bankruptcy protection, while competitor Fidelity National Financial Inc. said it will acquire three of LandAmerica’s subsidiaries.

The bankruptcy filing of LandAmerica’s holding company and subsidiary LandAmerica 1031 Exchange Services Inc. and sale of the subsidiaries comes just days after Jacksonville, Fla.-based Fidelity National canceled an agreement to purchase all of Richmond, Va.-based LandAmerica. That deal called for Fidelity National to acquire LandAmerica in an all-stock acquisition for about $128.4 million.

A subsidiary of Fidelity National, Chicago Title Insurance Co., will acquire Commonwealth Land Title Insurance Co. for $158.6 million. Fidelity National Title Insurance Co., another of Fidelity National’s units will acquire Lawyers Title Insurance Corp. and United Capital Title Insurance Co. for $139.4 million.

The units Fidelity National is purchasing remain solvent and continue to operate.

The acquisitions are expected to close as early as late December.

Nothing illustrates the power of this tool better than an example, even a highly simplied one like I am using here.  Call 573-302-2320 if you have any questions.

A 1031 Exchange allows your clients to sell his or her investment property and defer the capital gains tax into a new investment property of equal or greater value.

The true power of exchanging is found in being able to meet investment objectives without losing equity to taxes.  This allows clients to leverage their purchases to build greater wealth many times the amount of their initial investment. 

Investor Jack Smith owns a building that he purchased 10 years ago for $500,000.  His basis, the amount he paid for the building, was $100,000.   This is what his transaction looks like with no 1031 exchange: 

Here’s the same sale using a 1031 exchange.  This is a highly simplified example, it doesn’t even consider the considerable savings of depreciation recapture and avoiding the Alternative Minimum Tax (Click here to read more about these).