Fidelity & Crime
Qualified Intermediary (1031 Exchange) Bond
A fidelity bond that a 1031 exchange company (qualified intermediary or exchange facilitator) carries to protect client funds it holds during a tax-deferred property exchange.
- Required by
- State law in some states, such as California, Nevada, Washington, and Maine
- Bond amount
- Set by whoever requires the bond. We confirm it.
What this bond guarantees
The bond protects the exchange clients whose sale proceeds the intermediary holds. If the intermediary or its employees steal or misuse the exchange funds, clients can recover their loss up to the bond amount.
Who needs it
- Qualified intermediaries
- 1031 exchange facilitators
- Title and escrow companies that act as exchange facilitators
What the underwriter looks at
- Volume of exchange funds held
- Internal controls and audits
- Financial statements
- Owner background
Requirements vary by state and by who asks for the bond. Send us the request you received and we will confirm exactly what it calls for.
Common questions
What does California require?
California Financial Code 51003 requires an exchange facilitator to keep a fidelity bond of at least $1,000,000, or a $1,000,000 deposit, or to hold all exchange funds in a qualified escrow or trust.
Does federal law require a bond?
No. The bond requirement comes from state law. Many intermediaries carry one anyway because clients ask for it.