Complete Guide To Corporate Finance

The Business Finance Guide

If you want to buy a 1031 property, then you should know that it is, as you will receive an interest-free loan from the government. But if you want to do this action, then you should know that you will have to collaborate with a qualified intermediary. It is important to hire a person who has not been your agent within the last 2 years, and this means that you will have to find a reliable person that who will act as your intermediary. It is important to know from the beginning that you do not have to hire a licensed intermediary, because the rules do not state so. There are no regulations that state that the intermediary should submit an audit. Therefore, when you want to hire one of the 1031 Exchange Specialists, then you have to make sure that you collaborate with a trustworthy one, so you should ask them a few questions.

Do you maintain omissions or errors coverage?

In case you do not already know, the intermediary will perform three functions. They are the person responsible for preparing the legal documents and any other paperwork related to the 1031 transaction. Also, they will be the ones that will hold the funds required by the exchange until the moment of the transaction. And they will offer you advice on the way you should carry out and structure your transaction. The 1031 transaction can be quite complicated so there is likely to appear mistakes during the process. However, these mistakes can affect the exchange and you have to make sure that the intermediary you collaborate with will offer you insurance. Make sure that you ask them to offer you a copy of the insurance, because it is important to read and understand it.

Do you have a fidelity bond coverage to insure against theft?

You should know that the cases of theft when working with an institutional 1031 intermediary are quite rare. However, you have to check if the one you want to hire has a fidelity bond insurance cover, because this will offer you peace of mind. So you should ask them if they have a per occurrence or in aggregate coverage. In case it is per occurrence then the intermediary is covered for a certain sum. In this case, you will have to see if the amount is enough to cover the funds you will entrust them.

Do you have experience in this industry?

It is important to ask them if they have experience, because in this way you are sure that they will not make mistakes during the process, because they know already what the process implies. Also, this means that they are a financially strong company, and they are able to cover the expenses in case of issues. You should also ask them how many similar exchanges they have administered, because the paperwork and process may slightly differ, and they have to be in touch with all the details implied by it. Ask them to offer you a few referrals, so you can contact their former clients and see if they are satisfied with the services they received.

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