Qualified Intermediary (QI)

A Qualified Intermediary (QI), such as 1031 CORP., acts as the facilitator or middleman in a 1031 like- kind exchange. The word “qualified” refers to the QI’s relationship to the Taxpayer or Exchanger. To be a “qualified” intermediary, the party must not be the actual Taxpayer nor the Taxpayer’s employees, partners or a close relative or within the past two years served as the Taxpayers accountant, attorney, real estate professional or financial advisor.

Some of the important tasks the QI handles in the exchange transaction include:

• Prepares all required exchange documentation, including the Exchange Agreement, the Assignments of the Agreements of Sales and applicable Acknowledgements among others.
• Coordinates details with the closing agent to ensure the transaction is documented as a 1031 exchange and not a taxable sale. Written instructions will be provided to the closing agent and the closing statements will be reviewed by your Exchange Officer in advance of the closing.
• Holds exchange funds in a segregated, interest-bearing exchange account until the replacement property is acquired. Numerous safeguards are in place to protect your funds during the Exchange Period.
• Keeps you aware of the important timelines and provides timely reminders.
• Answers all questions throughout the exchange process to help keep the exchange process worry-free and easy.

When Must the 1031 Exchange Be Initiated?

Ideally, you will notify 1031 CORP. one to two weeks prior to the scheduled closing of the relinquished property. This allows your Exchange Officer to prepare and forward the exchange documents to you with sufficient time to review and execute them. It also enables your Exchange Team to provide the closing agent ample notice that the transaction is part of a 1031 exchange. If the exchange was not planned in advance, 1031 CORP. can initiate an exchange at the last minute, even while you are sitting at the closing table. However, once the closing is complete and title of the relinquished property is conveyed to the buyer and funds disbursed, it is too late to initiate the exchange and the sale will be a taxable event.