CT HB05415

Establishes comprehensive regulatory framework for exchange facilitators who facilitate tax-deferred property exchanges under Section 1031 of Internal Revenue Code, effective October 1, 2012.

Requires exchange facilitators to maintain $1 million fidelity bond and deposit all client exchange funds in separately identified accounts or qualified escrow/trust accounts requiring written authorization from both client and facilitator for withdrawals.

Mandates exchange facilitators maintain errors and omissions insurance of at least $250,000 or deposit equivalent cash/securities or provide irrevocable letters of credit.

Prohibits exchange facilitators from commingling client funds with operating accounts, loaning exchange funds to affiliated parties, and requires investment of funds meeting prudent investor standards prioritizing liquidity and principal preservation.

Establishes civil liability for violations including material misrepresentations, fraudulent dealings, failure to account for client funds, materially failing to fulfill contractual duties, and material violations of regulatory requirements.