How to choose a SAFE 1031 Exchange qualified Intermediary

By: andrewstephensceo

You should not select your 1031 exchange Qualified Intermediary based only on their 1031 exchange fees, costs and charges or the size of the institution. Other criteria to consider for same are

Things to keep in mind while choosing a QI

First thing to note is that there is no regulating body for exchange QI so they are not under control of any authority so basically anybody can work as a QI. So you should perform a thorough research while choosing a QI. Do not choose a QI totally based on the 1031 exchange fees, office location or rate of return on investments. Some of the other factors to be taken into consideration are as follows:

1. Evaluate the expertise of the QI: Once the transaction is closed nothing can be done so it is very important that the exchange QI excels in finding possible problems in your draft beforehand and giving you appropriate solutions and suggestions while drafting your 1031 exchange agreements.
2. Check if internal audits done to keep your exchange money safe: Well defined policies and internal audits during the whole procedure help in minimizing the risk to your funds. Best way to do that is by retaining good employees in the company which will keep clients interests in mind and work with a mindset that will protect your 1031 exchange funds. Companies like LLC, Exeter 1031 Exchange Services always do a background check before hiring new employees.
3. Check how your funds are being invested: A good exchange QI will not just look into rate of interest while making an investment but also see how much risk you are taking while investing in it. Aim should be to keep your funds relatively secure .Also they should invest more in short term policies so that your money remains liquid.
4. How safe are your funds: While there is no regulatory authority for exchange QI yet it is their duty to safeguard your fund while receiving and managing them. You should check if there is any insurance cover or any other protection for your investment in case some unfortunate error or loss occurs to your funds.
5. Check if your funds are protected from mistakes of QI: Though there may be fool proof policies and audits done for your funds yet because of some human error your transaction may get disallowed .To safeguard against human error your company should have taken the elusive Errors & Omissions (E&O) insurance coverage.
6. Funds should be protected against theft or cheating: They should have bought the Fidelity bond coverage in required amount to insure 1031 exchange QI against potential losses. You should enquire if the insurance is not expired and if it is ‘in aggregate’ that is there will be a fixed policy limit for 12 month period irrespective of the  number of times theft has taken place or ‘per occurrence’ which means policy limit will be applicable individually for each theft or fraud.

About the Author

Written by Andrew Stephens, CEO and Founder of AJS Promotional Media, a Web Development Firm in Cincinnati, Ohio. http://www.bristol1031.com

(ArticlesBase SC #1469467)

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