In a 1031 exchange, Legal 1031’s Qualified Intermeidary services are pivotal in safeguarding your funds during the transaction process. By partnering with reputable national banks such as Citi, HSBC, Barclays, Chase, Wells Fargo, US Bank, and Capital One, we ensure ensure that your funds are safe and secure. Every client’s exchange funds are deposited into a segregated Qualified Escrow Account, which requires your signature to remove the funds. You can call the bank at any time and ask to see an account statement showing your funds on deposit.
Many Qualified Intermediaries are subsidiaries of regional banks, which are subject to bank failures. By using only Major National Banks, we mitigate your risk to give you the confidence that your funds are safe throughout the entire exchange process.
We only use qualified escrow accounts, which are segregated accounts held by a neutral third party, the Major National Bank (e.g. Chase. Wells Fargo, US Bank, or Capital One). The Bank holds your funds as an escrow agent for us as the QI and you as the Exchanger. To be deemed “qualified,” the escrow account must meet certain requirements set forth by relevant regulations or agreements, which in our case is a Qualified Escrow Agreement. This Agreement requires the Major National Bank to hold your funds in a segregated account from which funds can only be removed upon your providing written disbursement instructions to the Bank. We cannot remove your funds without yoru approval. Qualified escrow accounts serve as a secure intermediary, facilitating transactions and providing assurance to all parties involved that funds or assets will be handled and distributed appropriately.
You can contac the bank anytime to check on your funds, and we are unable to remove your funds without your signature, which must be transmitted directly to the Major National Bank holding your funds. Before any of your funds can be removed from your account, you must provide specific written instructions to the Bank directing them where to wire funds, the amount of each wire, and the date on which they should wire funds.
If the Bank allowed us to remove your funds without your knowlege, the Bank will have violated the Qualified Escrow Agreement and you will have the ability to pursue the Bank for all losses resulting from their breach of the Qualified Escrow Agreement. Thus your funds are totally secure and cannot be moved without your written approval.