The security of your funds is of the utmost importance to us, and is not something you should have to worry about while completing your 1031 Exchange. For over 20 years now the safety of client proceeds has been of prime importance to us. And in today's world, with bank failures and facilitator bankruptcies & fraud, client funds safety has become a major concern. Here's what we're doing about it.
There are two primary areas of concern:
1. The Bank where client funds are deposited
(The Bankcorp Bank).
2. The Qualified Intermediary (Realty Exchangers, Inc.).
1.) The Bank: Bancorp is considered strong and very well-capitalized but the only real safety for bank accounts today is "FDIC" (Federal Deposit Insurance Corporation) insurance. ALL OF REALTY EXCHANGERS ACCOUNTS ARE NOW "FDIC" INSURED WITH A MAXIMUM LIMIT OF $250K.
2.) The Qualified Intermediary: As we have seen, with all the recent bankruptcies and business failures, neither size, a prestigious name, belonging to a trade group, or hiding behind a title company or other large entity, will assure the safety of your funds. We are Licensed and Insured in the State of Washington, but none of that will really protect you either. The only real protection is a QUALIFIED ESCROW AGREEMENT. This is a separate signed agreement between you, us, and the bank, which requires you to approve in writing any withdrawal of your 1031 funds. At the same time it keeps control of the 1031 funds with Realty Exchangers, Inc. thereby meeting the IRS's §1031 requirements (see note below). ALL EXCHANGE ACCOUNTS INCLUDE A QUALIFIED ESCROW AGREEMENT.
Washington state law, RCW 19.310.040, requires an exchange facilitator to either maintain a fidelity bond in an amount of not less than one million dollars that protects clients against losses caused by criminal acts of the exchange facilitator, or hold all client funds in a qualified escrow account or qualified trust.
Note: The Qualified Escrow Agreement is signed by all parties at the time of closing of the relinquished property. When the 1031 funds are wired into Realty Exchangers account the bank places a hold on the account. Then when the exchanger is ready to close on the replacement property a form is signed by the exchanger (you) that authorizes the bank to release the specified amount to that escrow as requested by Realty Exchangers wiring instructions. Quite simply, the exchanger will have to authorize any use of their 1031 funds.
We want you to feel secure and able to devote your full attention to the structure and completion of your 1031 exchange knowing that your funds will be there when you need them.
Please call if you have any questions. 360-695-8258 or 800-570-1031 * firstname.lastname@example.org