Research guide

Delaware Statutory Trust 1031 Reviews: A Document Checklist for Reviewing a Proposed Exchange Investment

By Sequoia ResearchPublished Read as Markdown

What Is This Article About?

This article shows how to build a document checklist for a proposed DST exchange investment. It covers the offering, sponsor, property, loan, purchase, and exchange files. It then shows how to record what each reviewer checked and what they left open. An invented case shows why a full folder can still leave a key question unanswered. The aim is a usable record of evidence, review scope, and next steps before a decision is made.

Table of Contents

Start With the Decision and the Exact Interest

A useful checklist starts with the choice you face. Are you screening an offering or choosing between two reviewed options? Are you about to identify property or check a planned closing? A first screen needs a different set of facts from a final purchase check. State the step you plan to take.

Write the exact issuer name and interest or class at the top. Add the planned dollar amount and review date. Include the property details and the name of the person or entity that plans to buy the interest. Keep this short cover record with every document bundle you send for review.

Do not let a sponsor's brand stand in for the specific issuer. The sponsor may appear across many offerings, while the investor is buying one defined interest. A report about another property can help ask questions, but it cannot silently fill a gap in the current file.

Adapt the list below to the deal and the review task. It does not state which files every investor has a legal right to receive. Some items may be inside the private placement memorandum, or PPM. Others may be separate files. Access may be limited, a file may not exist, or an item may not apply. Record that state. Do not add a checkmark based on a guess.

The SEC explains that private offerings can provide less disclosure than registered offerings. A PPM does not show that a regulator approved the deal. Regulators typically do not review these offering documents. You still need to assess the evidence in a file that looks polished and complete. SEC Private Placements Bulletin

Also state the decision's boundary. A file may support an initial investment screen while leaving the investor's tax treatment open. A closing coordinator may confirm that a packet has been received while the investment review is still incomplete. Those are useful facts when stated at their proper scope.

Create a Document Register With Separate Review Fields

Give each requested item a stable ID. An item can be one document or a clearly defined bundle, such as a loan agreement with its schedules. Define the bundle before counting it. Receiving the cover agreement alone should not mark a request for the full loan package complete.

Use separate fields for receipt, review, and the resulting question. These record different events. A file can be received and unread. It can be reviewed and raise a serious issue. It can also be reviewed for one narrow purpose while another reviewer still needs to examine it.

Register field What to enter
Item ID and requested scope The exact document or defined bundle requested
Entity and interest The issuer, property, borrower, or holder the item concerns
Version and source date The document's own date and any revision label
Received from and on The person or route that supplied it and receipt date
File and location A stable reference, plus the page, section, or exhibit used
Review assignment Named person, agreed task, and requested response date
Review performed Actual reviewer, review date, scope, and response reference
Open issue The unanswered question and why it matters to the decision
Next action Person responsible, requested evidence, and timing

Keep the received date separate from the document's issue date. A report delivered today may describe facts from last year. A new filename does not make the underlying information new. If the source is undated, preserve that gap.

Avoid a single “approved” column shared by everyone. It can hide a tax review, a form check, and a merits review under the same label. Use short statements such as “reviewed identity fields only” or “cash-flow assumptions reviewed; lender terms pending.” Those statements are easier to use than a green cell with no explanation.

The register also needs a place for work not done. Ask each reviewer to state key limits on the task. For example, their work may exclude reading the contract for its legal effect or inspecting the property. Write that down. Do not imply that someone else has filled the gap unless you have a record of that work.

DST Offering Documents: Understand What Is Being Sold

Private Placement Memorandum and Supplements

Request the current PPM and the list of supplements supplied for the specific offering. Preserve each version in the file. Start with who issues the interest and what it gives the buyer. Then check how the money will be used, the major risks, fees, and planned exit terms.

The PPM is a starting map. When a claim depends on an attached agreement, note that dependency. A paragraph about fees may summarize a separate contract. A discussion of financing may describe an expected loan rather than an executed loan. The checklist should show whether you have the supporting agreement and what stage it has reached.

Treat the supplement list as a question that needs a dated response. Record who stated which versions were current for the review. Do not infer that the largest PDF contains every change simply because it has many pages.

Trust Agreement and Ownership Terms

Keep the governing agreement with the PPM. Ask the reviewer to find the terms that define investor rights. Who manages the trust? What rules govern transfers, cash payments, and the end of the trust? Note the pages used, the interest covered, and any linked sections left unread.

A summary of a right should preserve who holds it and the conditions on it. “An election is described” leaves too much open. A useful note names the holder, event, response process, and provision that supports the reading. A document clerk's confirmation that the page exists is different from counsel's review of its effect.

Include a chart of the parties and their roles when one is available. Link the issuer, property owner, borrower, and firms that provide services. Add any master tenant. That is the party that leases the property under a master lease. It need not be the same party as the actual occupants or the property manager.

Tax Opinion and Its Limits

Retain any tax opinion supplied with the offering and its assumptions. Ask the tax professional what it addresses and what it does not address for this investor. The author, date, addressee, reliance terms, and facts assumed are part of that review.

Revenue Ruling 2004-86 gives its Section 1031 holding for the trust described there. The other exchange requirements must also be met. The ruling does not say that every investment called a DST qualifies. Ask how the actual structure fits the tax adviser's reading. Keep the investor's own exchange facts in a separate part of the file. IRS Revenue Ruling 2004-86, Holdings

The presence of an opinion is one fact. Whether the opinion covers the current documents and can be relied on for the intended purpose is another. Do not mark both complete from the same receipt email.

DST Sponsor Research: Ask for the Evidence Behind the Summary

Experience and Prior Results

Keep a sponsor's track-record summary with the definitions behind it. Ask which programs are included, which remain active, and which ended through sales or other events. Save any list that lets the reviewer connect an aggregate figure to its underlying programs.

A return figure needs a clear meaning and a stated time period. It may be a current payment rate, an annualized return, or a total that includes returned capital. Ask how fees, investor classes, and partial exits affect the figure. Was any part paid in something other than cash? If you cannot get the source records, say which parts of the claim could be checked and which could not.

The checklist is not complete because a marketing page contains a success claim. It may still be useful evidence of what the sponsor states. Keep the claim attributed and avoid relabeling it as an independently verified result.

Request financial records for the entity named in the claim. If the plan relies on a guarantee or an advance, which entity has that duty? A group summary may include assets held by several firms. It may not show what one firm can use to meet its own duty.

Separate the promise from the ability to perform it. The agreement may show a defined support obligation, while the financial evidence addresses capacity. Neither one should substitute for the other. If the reviewer has seen only one, record the unfinished part.

Keep material affiliate arrangements and fee agreements with the role map. Ask what service is provided, who receives the fee, which base sets it, and whether a payment is shared downstream. A second recipient's name does not always mean the investor is charged a second fee.

FINRA's notice calls for covered firms to investigate material claims. It also calls for care with third-party work. That includes the third party's independence, incentives, and qualifications, plus follow-up on gaps or conflicts. This checklist can record questions. It cannot certify that a firm met those duties. FINRA Regulatory Notice 23-08

Property and Financing Documents: Connect the Plan to Its Constraints

Operating Evidence and Property Reports

Keep the business plan and the evidence used to support its assumptions. That may include leases, a dated rent roll, operating results, budgets, and available property reports. A rent roll is a list of tenant or unit rent information as of a stated date. It is not, by itself, proof that every listed amount was collected.

Ask the reviewer to connect each major assumption to a source. If income depends on lease renewals, which leases and dates support that assumption? If the plan includes repairs, which report or estimate describes the work? If a budget assumes a higher rent, is that signed rent, an asking rent, or a forecast?

Retain the report's scope. A property condition report may have limits on the areas inspected, tests performed, or parties allowed to rely on it. The same applies to other specialist reports. Record the limitation that matters to the decision rather than treating a report title as a guarantee of coverage.

Do not merge different reporting periods into an unexplained total. A twelve-month operating statement and a three-month budget answer different questions. Ask for a bridge when one is used to support the other. Keep the bridge with the source files so another reviewer can reproduce it.

Loan Documents and Funding Evidence

Request the loan terms and supporting agreements needed for the review. Record whether each is a proposal, commitment, draft, or executed document. An executed document has been signed as required. Note what shows that the required signatures are in place. A filename alone does not establish that state.

The financing file may need to address rate terms, maturity, required payments, reserves, lender controls, extension conditions, prepayment charges, and guarantees. The relevant reviewer should state which of those matters were checked. A loan amount on a fact sheet does not answer all of them.

A covenant is a required promise or limit under an agreement. If a covenant affects access to property cash, record the actual provision and the facts needed to test it. A forecast may meet a stated ratio. That does not show that the borrower now meets every loan term.

Keep any rate hedge in the financing bundle when the plan relies on it. A cap or swap can have its own parties, term, amount, and conditions. Record the source used to understand that instrument. A general statement that the loan is “protected” should not close the request.

Capital Budget and Cash Allocation

Save the sources-and-uses schedule. Sources show where the closing money is expected to come from; uses show where it is expected to go. Keep property price, fees, reserves, debt, and equity distinct.

Then connect the schedule to the loan and offering documents. Ask whether the stated loan is its face amount or the cash actually available after deductions. Ask whether a reserve is part of the stated investor contribution or a separate source. These are document questions before they are spreadsheet questions.

A reconciled budget does not establish fair value or a successful investment. It does establish that the reader can trace the stated money without an unexplained gap. That is a useful foundation for the next review.

Subscription and Closing Documents: Trace the Proposed Purchase

Keep the version of the subscription agreement that applies to the proposed interest. A subscription agreement is the investor's application and agreement to buy under the offering's terms. Check the stated amount and purchaser name. Ask who has the right to sign and what statements the buyer must make. Have the people assigned to this work review the process for accepting the purchase.

Keep a separate list of the supporting forms requested in the actual packet. These may concern identity, tax facts, the buyer's entity, or the right to sign. Mark each as supplied, sent back for a fix, accepted for processing, or still needed. Do not assume that one standard packet fits every offering.

The checklist should distinguish a completed form from acceptance of the purchase. A saved signature page proves only what the page and its status support. It should not silently become proof that the issuer accepted the investor, that funds arrived, or that ownership began.

Give acceptance and funding records their own place in the file. Note who issued each set of instructions. Link the version used and the dollar amount to the planned purchase. Keep private payment details in the protected deal file. A shared research table does not need to expose those details.

After closing, obtain the records that establish what was acquired and when. Compare the final amount and ownership record with the proposed purchase reviewed earlier. If something changed, identify it for the relevant reviewer. A checklist that stops at “wire sent” leaves the final purchase evidence open.

This is a record of the process, not a promise that the process will finish. Availability, acceptance, funding, and closing can each depend on their own facts and conditions. Use the actual offering terms and written responses to name those dependencies.

1031 Exchange Documents: Keep the Personal Transaction File

Keep a personal exchange file alongside the investment packet. Save the sale records for the property you gave up, called the relinquished property. Add the exchange agreement, property identification, funding records, and tax inputs your adviser requests. The sponsor may not have those facts. Calling the purchase an exchange investment does not show that it does.

The qualified-intermediary rules require a written exchange agreement and other conditions. The rule also limits the taxpayer's access to exchange money. List the actual agreement reviewed in the checklist. The intermediary's name alone does not tell a reviewer which terms apply. 26 CFR 1.1031(k)-1(g)(4)

Record the date the relinquished property was transferred. Keep the source that shows it. The usual identification period starts with that transfer. The date a DST brochure arrived does not start that clock. The IRS instructions describe written identification within 45 days after the transfer. Receipt of replacement property is due by the earlier of 180 days after transfer or the transfer-year return due date, including extensions. Have the responsible professional confirm the applicable dates and any relevant special rules. IRS Form 8824 Instructions, Lines 5 and 6

Keep a copy of what was identified and the signed record. Add proof of when and how it was sent, and to whom. Ask the adviser assigned to this task to check the description against the rules that apply. A file named “identification” does not prove on its own that the rules were met.

The tax adviser may also need basis records, debt information, transaction costs, ownership facts, and details of other replacement property. Keep each supplied input tied to a source. If a figure remains an estimate, label it as one and state who is expected to confirm it.

The 2025 Form 8824 instructions are the edition cited here. They are not presented as final 2026 filing instructions. Preserve the rules and source dates used during planning, then use the appropriate current filing materials when the return is prepared.

Record Each Professional's Actual Review Scope

Ask the people involved to agree on their tasks. Do not assign a legal duty merely by placing a title in a spreadsheet. An investment professional may have agreed to a narrower task than the investor expects. The same can be true of a tax adviser, attorney, intermediary, or closing coordinator. Ask each person to confirm the scope of their work.

Use one row for each meaningful review task. A person who reviewed one loan provision should not appear to have approved the whole offering. A person who checked the exchange calendar should not appear to have endorsed the property's projected return.

Review task Named reviewer Documents and versions Actual work performed Response, date, and limits
Investment merits Enter the assigned person Enter the evidence set Record the claims and assumptions examined Link the conclusion and remaining questions
Personal tax treatment Enter the engaged adviser Enter the personal and offering records used Record the tax questions addressed Preserve assumptions and excluded issues
Contract meaning Enter the engaged counsel Enter the agreement and sections Record the rights or duties interpreted Preserve reliance and scope limits
Exchange coordination Enter the responsible person Enter agreement and transaction records Record the steps and dates checked Identify work still needed from others
Purchase processing Enter the responsible person Enter the actual subscription packet Record receipt, correction, or acceptance evidence Distinguish processing from closing

These are places to record work, not promises that every role performs every task. Confirm assignments before relying on them. If one person fills several roles, keep the scopes separate so the basis of each response remains clear.

A useful review note can be brief. In a fictional file, it might say: “Reviewed the interest name and purchaser capacity on pages 1–3; did not review the investment forecast.” That note says more than “legal reviewed,” even though it is shorter than a formal opinion.

Also record who must respond to each question. The person collecting the file may not be the person able to answer it. A single coordinator can track the request without claiming to have performed the underlying analysis.

Use the Brook Vale Checklist Example

Brook Vale is an invented offering used only to show the record structure. The fictional reviewer defines 21 requested items. Some are bundles, so this is not a count of PDF files. Each bundle counts as received only when its stated requested contents have arrived.

The example uses three short states. “Reviewed” means the stated task has a recorded response; it does not mean the investment passed. “Received” means the item arrived but that task has not been completed. “Missing” means the defined item is not yet in the review file.

ID Requested item or defined bundle Example state
D01 PPM for the exact interest Reviewed
D02 Governing trust agreement Reviewed
D03 Supplied supplement list and listed supplements Reviewed
D04 Issuer, property, borrower, and service-role chart Reviewed
D05 Offering tax opinion and stated assumptions Reviewed
D06 Sponsor prior-program summary Reviewed
D07 Relevant support entity's requested financial evidence Missing
D08 Definitions and program list behind prior results Reviewed
D09 Requested affiliate service and fee agreements Reviewed
D10 Property business plan and budget Reviewed
D11 Requested current leases and rent-roll bundle Missing
D12 Historical operating results for the stated period Reviewed
D13 Requested property reports with scope pages Received
D14 Executed loan package with requested schedules Missing
D15 Sources-and-uses schedule Reviewed
D16 Subscription agreement for the proposed purchase Received
D17 Requested purchaser supporting forms Received
D18 Written acceptance and applicable funding record Missing
D19 Personal exchange agreement Received
D20 Identification record and transmission evidence Received
D21 Relinquished-property sale and tax-input bundle Received

There are 17 received items and four missing items. Of the 17 received items, 11 have a recorded review response and six still await review. Among the 11 reviewed items, seven have no open question within the stated task, while four have open questions. Those four are D05, D08, D10, and D15.

The counts reconcile: seven reviewed items without an open question, four reviewed items with questions, six received items awaiting review, and four missing items make 21. Each item appears in one of those states. This avoids counting a received-and-reviewed item twice.

The missing items are not equal in importance. Without the requested loan schedules, the financing review may lack a material condition. Without written acceptance, the proposed purchase may still be unconfirmed. The numerical count cannot decide which gap must be resolved before the next step.

There is also work outside these 21 pre-purchase requests. The final ownership and closing record does not yet exist in this example. It is listed as a later deliverable, not marked missing as though closing had already occurred. A useful checklist distinguishes a late document from a document that can arise only after a later event.

Reconcile Numbers Across the Documents

The Brook Vale file contains an invented capital budget. It shows a $25 million property purchase, $1.4 million in stated costs, and $1.6 million in reserves. Total uses are $28 million. Sources are $12 million of equity and a $16 million loan, also totaling $28 million.

The arithmetic ties, but the review is not finished. A separate funding memo lists $1.8 million in reserves while keeping the same purchase price, other costs, equity, and loan. That memo implies $28.2 million of uses against $28 million of sources, leaving a $200,000 gap.

The checklist should link D15 to the two exact passages and ask which schedule applies. It should not choose the larger reserve because that number looks more cautious. Nor should it quietly reduce another use to force the sheet to balance. Possible explanations remain questions until the source provides an answer.

This example also shows why the denominator belongs in the review note. The $16 million loan is 64% of the stated $25 million purchase price. It is about 57.14% of the $28 million total budget. Both ratios can be arithmetically correct while measuring different things. Neither is an appraisal-based loan-to-value figure unless the stated denominator is also the applicable appraised value.

For each ratio, note the amount on top and the amount below the line. Keep both source locations and say what the ratio measures. One file may use property price while another uses the total budget. That can explain a difference without either calculation being wrong. It also keeps a price-based ratio from turning into a claim about value.

Use the same discipline for operating figures. Suppose another fictional worksheet shows $1.2 million of rent collected and $480,000 of operating costs for one year. The subtraction leaves $720,000 before the other items excluded from that worksheet. If a second page labels the same $720,000 “investor cash,” ask where debt payments, other fees, capital work, and reserve movements are addressed. The label needs support even when the subtraction is correct.

These examples are reconciliation tests, not forecasts. They do not establish a reasonable purchase price, adequate reserves, or an expected investor return. The result is a precise question attached to the documents that created it.

Handle Missing, Restricted, and Conflicting Evidence

A missing item needs a consequence statement. Write which conclusion cannot yet be reached and what evidence could change that. “Loan package outstanding” is useful. “Cannot confirm the stated cash restriction without the requested schedule” is more useful because it explains the decision impact.

If access is limited, record who saw the file and what they said they reviewed. Ask for a summary they are allowed to share, or answers to specific questions. Seek another lawful way to support the point if needed. Do not say the investor read a file when only another reviewer saw it.

Keep refusal, delay, and nonexistence distinct. A requested report may not exist. A document may exist but not be available to this reader. Or it may be expected later. Those states call for different next steps, and none should be changed to “reviewed” just to finish the table.

Keep both sources when they conflict. Record the claim, exact pages, dates, and the question you sent. An answer should point to evidence or explain what remains unknown. A spoken assurance may help direct the next request. Without a retained basis, it should not erase the conflict from the file.

Set a clear boundary for each professional's response. If a reviewer answers a narrow question, close that question only. For example, a corrected reserve amount may resolve the capital-budget tie while leaving reserve sufficiency open. Keep those as separate tasks.

Close the Review With a Decision Record

At the decision point, save the register and source set together. Add the reviewers' responses and a short note on the choice made. State which version of the planned purchase was reviewed. Say what the work covered and which questions remain open.

Do not write “all documents approved” when the record shows a mixture of receipt and review states. Describe the evidence that supports the next step and any conditions that still need to be met. A conditional conclusion should keep its condition beside it.

Make the record usable by someone who did not attend the calls. They should be able to locate the cited document, understand the reviewed question, and see why a gap remained acceptable or prevented a decision. That is the practical test of a good checklist.

Keep a list of records still to come, such as the final closing file. Follow the planned purchase through to the actual record. The file should preserve what happened and what was reviewed. Its size does not tell you whether the investment is good.

FAQ

Is Receiving the PPM Enough to Complete a DST Review?

No. It supplies an important starting document, but claims may depend on agreements, property evidence, or investor facts outside it. Record the supporting material used and the questions left open. The PPM's length is not a measure of review completeness.

Should Every Professional Review Every Document?

Not necessarily. Agree on tasks and record the actual scope of each engagement. A person may review only certain issues or pages. The checklist should show those limits and any unassigned work rather than imply that everyone approved the whole file.

Can a Sponsor Summary Replace the Underlying Track Record?

It can show the results the sponsor states. It may not let you check how the figures were defined or which programs were counted. State that limit. Ask for the program list and records needed to test the claim. A summary alone does not become independent proof.

What Should I Do if a Loan Document Is Only a Draft?

Label it as a draft and record which conclusions depend on its terms remaining the same. Ask what evidence will establish the final terms. A draft can support planning, but it should not be described as an executed agreement or proof that funding occurred.

Does the Offering's Tax Opinion Cover My Entire Exchange?

Read its scope with your tax adviser. The opinion may address the offering under stated assumptions. Your own exchange has other facts to check. These include who owns the property, the dates, what was identified, and the figures used. Keep the records and findings for each task separate.

Should I Turn the Checklist Into a Completion Percentage?

A count can show how much paperwork has arrived or been read. It does not measure investment quality or show that you are ready to decide. One missing file may matter more than many received items. If you show counts, define the unit and list the key open issues beside them.

What Belongs in the Final Review File?

Keep the exact source versions, register, review assignments, dated responses, open issues, and decision note. Add the final acquisition and closing evidence when available. The file should show both the work completed and the limits on what that work established.

About Sequoia Research

Sequoia Research, LLC provides independent research on DSTs and other real estate investment offerings. This educational library explains how to examine investment evidence, compare claims, and keep the scope of a review clear.

Sources

All sources opened October 17, 2026. Brook Vale, its document states, and every numerical case are invented teaching examples. No actual offering or professional engagement is evaluated here.