Realty Exchange Corporation has been a leader in the effort to have all qualified escrow accounts placed in FDIC insured banks in segregated escrow accounts in the Exchanger’s name and tax identification number.
The security and safety of exchange escrow funds is the first priority of Realty Exchange Corporation. Therefore we have established the AlwaysSafeTM escrow security system.
The AlwaysSafeTM System:
- Provides a separate bank account for each exchange in the exchangers name and tax identification number.
- Deposits all exchange escrow funds in separate FDIC insured bank accounts up to the legal limit.
- Requires the approval of BOTH Realty Exchange Corporation and Exchanger to authorize any escrow account disbursement by the bank.
- Provides Errors and Omissions insurance for Realty Exchange Corporation officers and staff.
- Establishes escrow accounts in strict compliance with IRS regulations
- Permits exchangers anytime 24/7 on-line viewing of the separate bank escrow account
- Ensures exchange escrow funds are always liquid and available for disbursement
- Provides an online monthly bank statement for each exchange account. Exchanger may request copies of their monthly bank account statements.
- Performs daily validation of each escrow disbursement and deposit
- Maintains individual registers for each escrow account
- Full compliance with the Virginia Exchange Facilitator Act.
Realty Exchange Corporation:
- Is a member of the Federation of Exchange Accommodators (FEA) and follows its strict Code of Ethics
- Requires each officer to be a Certified Exchange Specialist®
- Provides stability as a second generation Qualified Intermediary since 1990.
A separate FDIC insured bank account is established for each exchange. These separate accounts provide maximum security and visibility of the individual exchanger’s funds. Exchangers can view the funds in the separate bank escrow account at any time by accessing the bank’s anytime on-line system.
The Errors and Omissions insurance defends and pays valid claims alleging negligent acts, errors or omissions in the provision of, or failure to provide, professional services involving or related to 1031 exchange transactions. The policy is issued by underwriters at Lloyd’s of London.
IRS Regulation 1.1031(k)-1(g) clearly provides the safe harbor rules for the establishment of qualified escrow accounts. For the taxpayer to qualify for tax deferral of capital gain, it is essential that the Qualified Intermediary (QI) strictly adhere to the IRS regulation. The party holding the escrow funds must not be a disqualified person, and there must be strict compliance with the “(g)(6) restrictions” in the regulation and escrow agreement.
Exchange escrow funds are only deposited in separate FDIC insured accounts. Realty Exchange Corporation takes very seriously its fidelity responsibility to ensure that the exchange escrow funds are liquid and immediately available for disbursement.
In addition to the ability to view the segregated account on-line twenty-four hours a day, seven days a week, exchangers may request a monthly bank escrow statement.
Each exchanger must authorize the disbursement of escrow funds. A client authorization directly with the bank is our established procedure This authorization can be made through the bank online system or directly with bank personnel.
To ascertain that escrow deposits and disbursements are being properly made and recorded both internally and at the bank, a daily reconciliation of escrow transactions is accomplished. This process permits immediate follow-up if there is a discrepancy or delay in the receipt or recording of escrow funds.
Within our proprietary software system there is an escrow account register for each exchange which mirrors the separate bank account balance. The register shows the receipt of escrow funds from the relinquished property settlement, the disbursement of any requested deposits, the disbursement of funds to purchase the replacement property and the current escrow account balance. This dual tracking system allows Realty Exchange Corporation to double check and track exchange escrow activities.
At any time exchangers may view their account activity and balance directly on the bank account web site. Monthly paper bank statements are also available, or an exchanger may request a copy of the register activity and balance.
Realty Exchange Corporation is a long-time member of the Federation of Exchange Accommodators (FEA). The FEA is the only national trade organization organized to represent professionals who conduct like-kind exchanges. The FEA establishes and promotes ethical standards for qualified intermediaries (QIs), enforces the Code of Ethics, offers required continuing education and promotes the development of uniform terminology and standards. To ensure members are knowledgeable of all new IRS rulings and procedures, the FEA sponsors national and regional conferences and publishes frequent newsletters.
Federation of Exchange Accommodators (FEA) members must comply with a strict code of ethics. The Code stresses the protection of the public and clients against fraud, misrepresentation and other illegal practices. The Code requires the Qualified Intermediary (QI) to direct exchange proceeds to a stable financial institution, provide financial information to the exchanger as requested, and to give a full accounting of funds at the end of the exchange. Realty Exchange Corporation prides itself on membership in the FEA and strict compliance with its Code of Ethics.
In recognition of the need for Qualified Intermediary (QI) personnel to be knowledgeable in all aspects of Section 1031 exchanges, the Federation of Exchange Accommodators (FEA) instituted the Certified Exchange Specialist® program. The program, which is available only to FEA members, certifies professional QI staff members and fosters public confidence in the selection of an exchange accommodator (QI). Candidates must meet specific exchange work experience criteria and pass a comprehensive examination on exchange law and procedures. The examination tests candidates’ competency to perform critical exchange activities. The test also focuses on the ethical issues when QIs control the funds of the taxpayer.
In addition, CES® designees are required to obtain twenty hours of 1031 exchange continuing education every two years. Only courses approved by the FEA may be counted toward this requirement.
All managing officers of Realty Exchange Corporation hold the prestigious Certified Exchange Specialist® designation.
Realty Exchange Corporation is a Virginia corporation established in 1990 by Ed Horan. The company’s sole mission was and is to serve investors and real estate professionals as a 1031 exchange qualified intermediary (QI). Son Bill Horan has been an officer of the firm since the beginning. Today Ed Horan serves as President Emeritus. Ed served 30 years in the U.S. Air Force as a pilot and Comptroller. Our firm is one of the oldest QIs in the country.
We have thus learned that long-term ownership and QI stability are important security attributes. It is important to note that Realty Exchange Corporation is a second generation QI since 1990 and serving as a QI is our only business.