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FEA Responds
Over the past several months there has been much troubling news in the 1031 exchange industry. Consumers who put their faith and their money with Southwest Exchange and the 1031 Tax Group companies are now caught in a battle to recover these funds. The actions surrounding these two organizations have shed a negative light on the 1031 industry – one that is not reflective of the manner in which the FEA and its member companies conduct business.
The FEA is working diligently to assist several legislative bodies with the development of laws to protect consumers. We have set up a task force in California as a resource to lawmakers who need to learn about 1031 Exchanges quickly and effectively. We are continuing to monitor the news and information and to provide a framework for understanding what is happening and how the industry can move forward increasing consumer confidence and weeding out exchange companies that are not properly acting on behalf of their clients.
Every member of the FEA commits to a background check and to abiding by a stringent Code of Ethics. The organization stays abreast of developments and has a process for filing complaints. When it is determined that complaints are justified and a member company has ( breached) its obligation to its clients and not held themselves to the stringent guidelines and standards of the FEA, our Board of Directors takes swift and decisive action. In both the Southwest Exchange and 1031 Tax Group situations, the FEA immediately reviewed the complaints that were filed and, after verifying their accuracy, suspended the membership of these two companies.
Consumers should continue to have faith that 1031 Exchanges are a safe, effective and smart way to defer tax on the equity realized following the sale of investment property. We encourage consumers to enter into these transactions with as much information as possible about the company they have chosen to handle their exchange. The FEA will continue to develop resources and tools to assist consumers in making an educated decision on companies to work with – to begin this process we are creating a document called The 10 Questions To Ask When Selecting a QI. Additional resources are in progress and will be made available upon completion.
We encourage consumers to look for the FEA logo when seeking a 1031 Exchange firm, this logo is the first step to knowing that the firm you select participates in ongoing education, stays abreast of legislative and regulatory developments, adheres to the strictest industry standards and Code of Ethics, has had a complete background check, and is committed to safe, effective exchanges.
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