Security & Protection
How We Protect Your Exchange Funds
Before you hand over the proceeds of a major real estate sale, you deserve to know exactly how they are held and protected.
Fund Protection
Segregated Exchange Accounts
Your exchange proceeds are wired directly from the closing agent into a dedicated sub-account held exclusively in your name, segregated within a single bank structure. These funds remain secure and separate from our operating account and other clients' proceeds — never pooled, never commingled.
Dedicated Exchange Account
Closing proceeds are wired directly into a dedicated sub-account held exclusively in your name. This account stays segregated within one banking structure — separate from our operating account and other clients.
Direct Funding, Zero Intermediary
Wire transfers move directly from your closing agent to your dedicated sub-account. No routing through our operating funds, no delays, no intermediary holds.
No Commingling — Ever
Your funds are never mixed with another client's proceeds. Your Exchange Agreement prohibits commingling absolutely.
“On your closing day, your funds move into a dedicated account in your name — and stay there until your replacement property closes.”
Employee Dishonesty Protection
Fidelity Bond Coverage
Coverage Status
Bonded & Insured
Coverage details provided on request.
Every exchange is covered by Fidelity Bond insurance. This protects your funds against employee dishonesty.
What the Bond Covers
- Protects against employee dishonesty and fraud
- Covers your dedicated exchange account throughout the transaction
- Renewed annually and verified with each engagement
We provide certificate of bond coverage upon request.
Professional Liability Protection
Errors & Omissions Insurance
Coverage Status
Professionally Insured
Coverage details provided on request.
Our Errors & Omissions Insurance protects you if we make professional mistakes during your exchange.
What E&O Covers
- Covers professional errors and omissions during facilitation
- Includes documentation mistakes and coordination failures
- Provides tail coverage for prior exchanges
- Coverage confirmed with each annual renewal
We provide certificate of E&O insurance upon request.
Legal Compliance
IRS Safe-Harbor Compliance
IRS Revenue Procedure 91-37 establishes the specific requirements a Qualified Intermediary must follow for a 1031 exchange to be valid. We satisfy every requirement — in writing, on every exchange.
IRS Revenue Procedure 91-37
Establishes the safe-harbor rules for qualified intermediaries under IRC § 1031(a)(3). Compliance with Rev. Proc. 91-37 is not optional — it is the legal foundation of every valid deferred exchange. Prospect Exchange follows this procedure on every transaction we facilitate.
Safe-Harbor Requirements We Fulfill
| Requirement | How We Satisfy It |
|---|---|
Written Exchange Agreement | A formal Exchange Agreement signed before your relinquished property closes, naming Prospect Exchange as Qualified Intermediary. |
Assignment of Sale Contract | Your sale contract is formally assigned to Prospect Exchange so that the QI is legally a party to the transaction. |
Notice to All Parties | Written notice of the assignment is delivered to the buyer before closing, satisfying the constructive-receipt prohibition. |
Segregated Qualified Escrow | Your proceeds are held in a qualified escrow or qualified trust account, restricting your access during the exchange period. |
Direct Deed Transfer | The replacement property deed transfers directly to you — the QI never takes title to the property itself. |
The information on this page is for educational purposes and does not constitute legal, tax, or investment advice. Consult a qualified tax advisor and attorney to confirm the validity of your specific exchange structure.
Your Funds Are Protected
Every layer of protection described on this page is in effect for every exchange we facilitate — from day one through final closing.
- Fidelity BondFunds protected
- E&O InsuranceExchange protected
- Cyber-Security InsuranceData & funds protected
- Segregated AccountsYour funds, held exclusively
- IRS Safe-HarborRev. Proc. 91-37 compliant
No commitment required. Most exchanges begin with a 15-minute call.
Prospect Exchange is a Qualified Intermediary only. We do not provide legal, tax, or investment advice. Consult a qualified tax advisor regarding your specific situation.