§1031 Exchange QI Selection: Operational Competency Red Flags (Part 2/3)

[Bruce D. Kowal]

 🎯 1031 Exchange QI Selection: Operational Competency Red Flags (Part 2/3)

What's up, BP Nation! 🏢

Following up on security concerns, let's dive into operational competency markers for your Qualified Intermediary. Because sometimes the biggest risks aren't about stolen funds - they're about blown exchanges due to incompetence!

OPERATIONAL COMPETENCY CHECKLIST 📋

DOCUMENTATION HANDLING 📑

Clean, professional exchange documents

Prompt response to document requests

Clear tracking system for deadlines

Written procedures for identification period compliance

STAFF EXPERTISE 👥

Dedicated exchange coordinators

Legal counsel on staff or retainer

Clear escalation procedures

Continuous training programs

WARNING SIGNS OF INCOMPETENCE 🚩

Confusion about basic §1031 rules

Unable to explain identification rules clearly

Missing or inconsistent tracking of key dates

Poor communication during critical periods

No backup personnel for your coordinator

TECHNOLOGY INFRASTRUCTURE 💻

Look for:

Secure client portals

Automated deadline notifications

Electronic document storage

Real-time transaction tracking

COMPLIANCE RED FLAGS 🚨

Suggesting aggressive interpretations of §1031

Unwillingness to provide written guidance

Casual attitude toward identification rules

Pushing timeline boundaries

EXPERIENCE MATTERS! 📚

Ask about:

Years in business

Number of exchanges handled annually

Experience with your property type

Handling of failed exchanges

PRO TIP: Test their knowledge! Ask them to explain:

The 3-property identification rule

The 200% rule

The 95% rule

Under Treas. Reg. §1.1031(k)-1(c)(4)

COMMUNICATION RED FLAGS 📱

Slow response times

Unclear instructions

Poor documentation

No weekend emergency contact

No backup personnel

Remember: Your QI should make you feel confident, not confused!

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