1031 Exchange Company
Why do you need a 1031 Exchange Company? Because of the necessity of having to have a Qualified Intermediary, along with the complexities of a 1031 Exchange, hiring an Exchange Company is essential, and should be done with extreme care and consideration. Not all 1031 Exchange companies are alike. Many companies have jumped on the 1031 bandwagon, however a number of them do not handle 1031 Exchanges exclusively, and therefore might not have the experience you require.
In addition to the legalities of a 1031 Exchange, there can also be substantial sums of money at stake. The Qualified Intermediaries receive and hold money from the sale of property until a replacement property can be found and purchased. During the period of time that funds are held, they must be beyond the control of the investor and under the control of the Qualified Intermediary, or the transaction could become taxable by IRS standards. This is why you must be extremely careful with your choice of an exchange company - choose one that you know is fully qualified, experienced and can be trusted with your investment dollars.
Consider these important tips for choosing your 1031 Exchange Company. When shopping for a 1031 Exchange company, do your homework. With all the instances of fraud in the mortgage and investment arenas in these past few years, you cannot afford to be anything other than diligent in your research. Ask plenty of questions, such as how long they have been handling 1031 transactions exclusively, what type of security is in place for the funds held, how the money is managed and if they are bonded. You may also want to ask for references and check with them for feedback. If you are unsure of where to start in your search for a qualified company, try asking your accountant, attorney, or banker for a few referrals and go on from there (that is, if you trust their judgment). By all means, do not feel that you have to take their recommendations. Your situation may be quite different from the person making the reference and you should to be completely comfortable with your ultimate choice.
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