Sun Title founders launch new firm National 1031

After nearly 20 years of facilitating commercial property deals, the co-founders of a Grand Rapids-based title agency have launched a complementary business to securely manage 1031 property exchanges.

Thomas Cronkright and Lawrence Duthler, who co-founded Sun Title in 2005 and the real estate cybersecurity firm CertifID in 2017, have founded a separate company called National 1031 that will be based at Sun Title’s main offices at 385 Leonard St. NE.

Cronkright and Duthler are both attorneys, and Duthler also is a certified public accountant. They will leverage their backgrounds and real estate experience at National 1031, which will help property investors and companies securely navigate 1031 exchanges. 

A 1031 exchange is a type of transaction under U.S. tax code that lets property owners defer capital gains taxes on the sale of an investment property by reinvesting the proceeds into a “like-kind” property. The transaction allows investors to preserve capital for future reinvestment.

Keep up with all things West Michigan business. Sign up for our free newsletters today.

“It’s a phenomenal provision in the tax code,” said Cronkright, adding it requires legal expertise because of the compliance steps involved in the process.

Cronkright said National 1031 will differentiate itself from other 1031 exchange intermediaries by using the CertifID platform and other security measures to ensure the transactions are made securely and the parties’ information is protected.

“We wanted to create the most secure 1031 exchange intermediary in the country,” Cronkright said. “We’re also the co-founders of CertifID, and we wanted to bring that level of protection as people are moving 1031 exchange funds, which typically are $1 million or more. … We saw a gap where 1031 intermediaries are relying on more antiquated, not tech-enabled best practices.”

Cronkright said this is especially important in an era when high-dollar transactions like real estate deals are often vulnerable to scammers. In 2023 alone, the Federal Bureau of Investigation’s Internet Crime Complaint Center (IC3) received more than 21,000 complaints related to business fund transfers with adjusted losses totaling more than $2.9 billion. 

In addition to using CertifID to validate the identities of all parties to a transaction and protect fund transfers, National 1031 will use email filtering, endpoint detection and response, and email eavesdropping prevention tools to secure and encrypt all communications, Cronkright said.

National 1031 facilitates both forward and reverse exchanges. Forward exchanges let sellers close on a relinquished property and identify a replacement property within 45 days, whereas reverse exchanges are deals in which the replacement property is acquired before selling the relinquished property.

Both commercial and residential properties can leverage 1031 exchanges as long as the properties are held as investments. An example of a residential 1031 exchange would be a house that’s used as a long- or short-term rental for investment income.

Cronkright said the new firm soft-launched in June and has helped many clients since then.

“There was a natural request that evolved from our client base, saying, ‘Hey, have you guys thought about a 1031 company,’ or ‘It would be nice not to have to work with another party on the replacement side or the exchange side,’ so that did factor into the timing of when we launched National 1031,” he said. 

Drew Born, a commercial brokerage associate with Re/Max of Grand Rapids, worked with Cronkright and Duthler on a forward 1031 exchange deal that’s closing this week. It involved selling a property he owned, Thunder Falls Auto Wash in Holland Township, then acquiring an undisclosed multifamily apartment complex in Byron Center via an exchange.

“I have worked with Sun Title on the title side for many, many years (as a commercial broker), and so when I had the opportunity to work with them from a 1031 standpoint, I was thrilled,” Born said. “Lawrence took extremely good care of me.”

Born said he’d helped clients with numerous 1031 deals, but this was his first time doing one for a property he owns.

“Doing it myself really gave me a different insight as to the back-end process of how the whole process works,” he said. “It was really informative, and they did a really good job of explaining everything and walking me through exactly how it was going to work.”

For now, Duthler and Cronkright are running National 1031 on their own with assistance from Sun Title employees. They are hiring a full-time dedicated employee for the new business by the end of this month, with plans to hire two to three more by the end of the year. 

Eventually, they hope to hire about 10 to 15 legal and finance employees who would work on deals throughout the U.S.

Although National 1031 complements Sun Title’s services, the company also works with other title companies to facilitate their clients’ transactions.

“We’re involved in transactions where we may have represented the client when they sold the property, but we have other title companies outside of Michigan, or even in Michigan, representing them on the repurchase, so absolutely it is completely agnostic to title company or geographical location across the country,” Cronkright said.

More from Crain’s Grand Rapids Business:

Administrative law judge orders Trinity Health to restore union at Grand Haven hospital

New ferry aims to ease traffic backups to Michigan outdoor recreation hotspot

Developer proposes demolishing downtown Grand Haven building for new housing