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Errors & Omissions (E&O) Insurance for 1031 Exchanges
We offer errors and omissions (E&O) insurance and fidelity bonds to 1031 exchanges in select states.Section 1031 of the Internal Revenue Code allows capital gains or losses to be deferred when certain types of "like-kind" properties are exchanged.
E&O insurance coverage is available in the following states:
Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Utah, Vermont, Washington, Wisconsin, Wyoming.
Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Utah, Vermont, Washington, Wisconsin, Wyoming.
In real estate, the properties must be commercial or investment properties as primary residences or second homes are not eligible. The transactions are handled by qualified intermediaries (aka 1031 exchanges) who basically function as escrow officers. The transaction typically involves the seller of the property relinquishing the property to the qualified intermediary, who then sells it to the buyer. The funds are held by the intermediary until a replacement property is purchased.
Just as other real estate professionals, 1031 exchange intermediaries are subject to being sued, even if no error or omission was committed. This is why they should always carry errors and omissions insurance.