Thursday, March 4, 2010

Alert: HB 417 Facilitators Act Established in Virginia

In response to the recent wave of 1031 exchange fraud, highlighted by the Landamerica case, Virginia has enacted a law which it hopes will better protect the integrity of 1031 transactions. Key to the new bill is the establishment of the three requirements, all of which are already standard practices at ES Group:

  • “Exchange facilitators are required to notify exchange clients of change in control of the exchange facilitator”
  • “Maintain exchange funds in separately identified accounts or in a qualified escrow or qualified trust”
  • “Maintain errors and omissions insurance or deposit cash or letters of credit; and to account for moneys and property”

Language is also inserted prohibiting exchange facilitators from participating in various forms of fraud as well as the establishment of a max civil penalty of $2,500 for any infraction.

Click here for the full bill.

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