Can anyone be a Qualified Intermediary

[Robert Hetsler]

If you know a little about 1031 exchanges, you might be under the impression that the only real thing you need outside of a property to sell and a property to replace it with, is a third party known as a qualified intermediary. While it is true that you need a qualified intermediary to help you move forward with an exchange, this should not be just any person who calls himself or herself that. You need someone with experience. Read on to learn more.

A qualified intermediary plays an important and professional role in your 1031 exchange. This individual needs to be someone who has experience in playing this role, but also someone who takes it seriously. While anyone could become a qualified intermediary, this is not something you should consider passing off to an individual who does not have the appropriate understanding of how 1031 exchanges work.

Remember that a qualified intermediary is someone who accepts and receives funds on your behalf. This is a critical role, and one that requires a high level of trust and confidence. You need to work with someone who understands the implications this has for your exchange. Being willing to give over this responsibility to someone who does not have the proper background or commitment to it could end up being a mistake. Make sure to do your research about the person you’re hiring and have a conversation before you sign on the dotted line.

One thing to look for if you’re in the market for a qualified intermediary is a person who has served in this role before. Working with other individuals on an exchange demonstrates that the person in question has been deemed trustworthy to carry out this task in the past. While you should, of course, do your own research to determine that it’s the proper fit, getting referrals or contacting references for your qualified intermediary is a good general course of action.

Make sure the qualified intermediary you hire understands how deadlines work in a 1031 exchange. It’s too important of a task to be undertaken by someone who does not realize how missing deadlines can compromise the integrity of your entire exchange. Take it seriously and get help from someone who has played this role before. Set up an initial meeting to chart a game plan and determine the best course of action for moving forward with your 1031 exchange. Forming a relationship with a professional qualified intermediary is beneficial and a smart idea.

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