Exchange Resource Group

Best Practices to Protect Your Money

In the last quarter of 2023, the two largest title companies in the nation had their systems hacked and a lot of client information compromised. The first was just before Thanksgiving and the second occurrence happened just before Christmas. In both instances, the title companies were forced to close down much of their operations, notify federal authorities and work with federal investigators and IT personnel to remedy the cybersecurity breaches.

These events are scary for everyone and the thing of nightmares for many individuals and business owners. It could happen to any company, especially a financial institution. In the case of these two institutions, not only was their security breached, but they had to cease many business operations for about a week. In a time when tensions are high surrounding the security of information and our finances, it’s important to make sure we are adhering to best practices surrounding the security of our information and money.

As technological advancements continue to streamline and expedite processes, we need to check ourselves and make sure we are not compromising safety and security for the sake of convenience. Many financial institutions have moved to secure systems and electronic verification systems when handling the movement of funds. These systems have been beneficial to both the client and the institution, but if no system is fail proof. In every transaction, you are selecting institutions to trust with holding and handling of your funds, including a 1031 Exchange company. Qualified Intermediaries (QI) operate differently, so you will see variances as to how they hold and process your funds during your exchange. The following are three considerations that you should always verify when selecting your QI.

1.     Always verify their reputation and experience. Make sure the QI you select is a well-established and experienced company with years of experience in completing successful exchanges.

2.     Require your QI to hold your funds in segregated, dual signature accounts. In the early 2000’s, many QI’s pooled the funds from all their exchanges in one account. This compromised the security of the funds and led to extensive issues in the fall out of the recession. Always ensure your QI does not comingle your funds with the proceeds of other exchanges and that your signature is required to move the funds.

3.     Verify the QI’s wire procedures. Many title companies and Qualified Intermediaries utilize encrypted emails and secure systems. Over the last couple years, they have been touted as being the most secure way, but as this last year has taught us, they cannot be solely relied upon. Every taxpayer should insist that their QI call and verbally verify the wire instructions with the recipient of the wire. While it may seem old school, it is a tried-and-true method to confirm both the security and accuracy before sending wires, and it cannot be replaced by electronic systems.

Why you can trust ERG

Here at ERG, we make every effort to protect your funds. Each exchange will have a separate, dual signature segregated account, requiring our signature and our client’s signature to move any funds. We also do not send a wire unless we receive the written wire instructions and are able to verbally verify them with the recipient of the wire. You can trust that ERG will provide you with the guidance and security to confidently complete your 1031 Exchange. With years of experience dating back to 1977, you can trust the expertise and guidance that you will receive when working with ERG. We specialize in both simple and complex exchanges and our team will be there every step of the way.

To learn more about ERG and our team, click the link below.

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Upcoming Classes

2 Hr CE 1031 Exchange Advanced

Topics, hosted by Denver Metro Association of Realtors


January 16, 2024


Zoom Only


9:00am – 11:00am (MST)


Lewis Shingleton, (303) 300-8485

Basics of the 1031 Exchanges with

Lu Ann Blough


January 18, 2024


In Person


11:00am – 2:00pm (CST)


Rachel Jones, 817-243-1218

ERG Contact: Lu Ann Blough -

Client Spotlight: James H.

James was a teacher in the Denver area and wanted to sell a property he acquired years prior. He didn’t want to pay the capital gains taxes from the sale but didn’t know where to start. He contacted ERG and we were able to walk him through the process and the regulations. He completed his exchange and was able to take advantage of the tax deferral benefits of a 1031 exchange.

"Thank you ERG so much for helping me through my first 1031 exchange. As a school teacher, I did not have a ton of knowledge about how exchanges worked and the benefits therein. Your team was incredibly helpful walking me through all the rules and regulations of the exchange. Please know that you changed the trajectory of my life with this exchange. I was looking at a large tax burden from the sale of my vacant lot, and now I am reaping the benefits of deferring those funds into a cash flowing rental property."

-- James H.

Sold a lot in Denver, CO

Sales Price: $230,000

Basis: $15,000

Capital Gains: $215,000

Purchased a house in Lakewood, CO

Purchase Price: $230,000

Capital Gains Tax Deferral: $42,033.00

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