There are no state or federal regulations governing the function of intermediaries, other than the fiduciary responsibilities that govern the conduct of any entity holding or handling other people's money. For this reason, care in selecting an intermediary for your client's exchange is an important process of evaluation. Select the intermediary as you would an attorney for personal representation or a physician to treat your children. Look for experience in handling exchanges and reputation in the real estate, title company, escrow, or legal communities. Talk to escrow officers that handle exchanges and get their opinion. If possible, choose an intermediary who is thoroughly familiar with the process, since many times other aspects of the process will bear significantly on your exchange. For instance, the handling of Promissory Notes, bulk transfers or other variations. Ask the intermediary if their firm handles reverse exchanges. If they do not, the company and its personnel may not be adequately experienced.

Ask about the security of your funds, and what options you as an exchangor may have to assure that your funds will be safeguarded. The following is the exchange agreement language utilized by GITDEC in our standard exchange agreement:

Exchangor and Intermediary expressly agree that any cash proceeds received from the disposition of the relinquished property shall be held and invested in certificates of deposit, cash management, working capital or money market accounts, bankers acceptance or United States obligations in the discretion and through financial institutions of Intermediary. Said investment account shall be in the name of Intermediary and shall require the signature of an authorized officer of Intermediary to permit the withdrawal of any portion thereof. By the terms hereof, Intermediary shall only be required to participate in the withdrawal of funds when instructed by Exchangor and only when the instructions involve the acquisition of the replacement property or the disposition of said proceeds by Intermediary to Exchangor.