Why You Need a Qualified Intermediary to Complete a 1031 Exchange

If you’re planning a 1031 exchange, you’ll need a Qualified Intermediary, or QI, on your team. The QI keeps everything on schedule and on track. They act as the go-between for the buyer and seller and make sure the exchange follows the rules. Honestly, without one, completing an exchange is just about impossible.

What Is a Qualified Intermediary?

A qualified intermediary is an independent party. They’re not you, and they’re not anyone too close to you (what the IRS calls a “disqualified person”). You and the QI sign an “exchange agreement,” and from there the QI does the heavy lifting. It takes your relinquished property, hands it to the buyer, acquires your replacement property, and then transfers that property back to you.

QIs Must Be Independent

A QI doesn’t have to be licensed. What they can’t do is hold a financial stake in how your exchange turns out. Beyond staying independent, a good QI handles several key jobs:

• Draws up and signs the agreement that limits your access to the funds or property the QI is holding.
• Takes your relinquished property and transfers it to the buyer.
• Holds the sale proceeds and uses them to buy your replacement property.
• Receives the replacement properties you identify.
• Helps close the purchase of your replacement property.

Thinking about a 1031 or “like-kind” exchange? Then it’s worth having a Qualified Intermediary in your corner to protect the transaction. At WealthBuilder 1031, we give you the guidance and support to get your exchange done right, and we work with clients all over the country. To get started, call our office at 888-508-1901.

Related guides: Why You MUST Use a Qualified Intermediary

Chris Peterson — Texas Licensed Attorney & Founder, WealthBuilder 1031

Chris is the Owner and President of WealthBuilder 1031 and a licensed Texas attorney. He graduated from Wheaton College and the University of Texas School of Law and speaks regularly to realtors, accountants, and title companies about 1031 exchanges. Learn more →