Washington Rules for Exchange Facilitators
State law requires facilitators to prove bonding and insurance before you sign an agreement.
Bonding or Trust Protection
Washington law, RCW 19.310.040, requires facilitators to hold at least a $1 million fidelity bond, or keep your funds in a qualified escrow or trust that meets the statute. Ask which option your facilitator uses and get written proof before you sign anything.
Insurance Requirement
RCW 19.310.060 requires facilitators to carry at least $250,000 in errors and omissions insurance, or meet the statutory alternative. This protects you if the facilitator makes a mistake. Request current proof of coverage as part of your due diligence, not after funds move.
Disclosures Before You Sign
The statute requires facilitators to give you evidence of bonding or insurance, plus required disclosures, before the agreement is signed. It also requires a notice stating facilitation is not regulated by a Washington or federal government agency. Read that notice carefully.
What This Means for Your Timeline
These safeguards do not change the federal deadlines for identifying and receiving replacement property. They protect your funds while the exchange is in process. Confirm bonding, insurance, and disclosures early so they do not slow down your closing schedule.
Sources
Educational only, not tax advice. Your CPA must confirm tax treatment, timing, participation, basis, and filing before you act.
Common questions
Clear answers first. If one question changes the deal, bring it into the review before you move money.
Q1Does Washington require a bond for 1031 exchange facilitators?+
Yes. Washington law requires facilitators to hold at least a $1 million fidelity bond, or hold your funds in a qualified escrow or trust that meets the statute. Ask your facilitator which method they use and request written evidence before signing.
Q2What insurance should a Washington facilitator carry?+
State law requires at least $250,000 in errors and omissions insurance, or the statutory alternative. This protects you if the facilitator makes an error handling your exchange. Ask for current proof of coverage before you sign any agreement.
Q3Is a 1031 facilitator regulated by the state?+
Washington's statute requires a notice stating that facilitation is not regulated by a Washington or federal government agency. That is why bonding, insurance, and written disclosures matter so much. Verify them yourself before you commit funds.
Want Help Vetting Your Facilitator?
Book a Real Estate Review to review your property and timeline, then use the 1031 Readiness Checklist to confirm bonding, insurance, and disclosures before you sign.
Want Help Vetting Your Facilitator?
Book a Real Estate Review to review your property and timeline, then use the 1031 Readiness Checklist to confirm bonding, insurance, and disclosures before you sign.
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Keep moving forward
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Follow a step by step interview and verification process before you choose a Seattle exchange facilitator. Educational only, not tax advice.
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