How To Select A Competent Qualified Intermediary - Part 1

When you are executing a 1031 exchange, you will usually require the services of a qualified intermediary (QI). Also known as an exchange accommodator or 1031 exchange facilitator, the role is the same – it is the neutral, disinterested third-party who will:

• Prepare the exchange legal agreements and related transaction paperwork so that the exchange is properly structured;
• Receive, hold and safeguard the 1031 exchange funds during the pendency of the transaction; and
• Advise you during the process to ensure your compliance with all IRS code, regulations and procedures.

Despite the importance of the qualified intermediary’s role, you may be surprised to learn that QIs are not required to be licensed, regulated, audited or otherwise monitored by any regulatory body. Likewise, they are normally not obligated to be bonded, insured or maintain any other safeguards for client protection.

Surprisingly, anyone can call themselves a qualified intermediary and start administering 1031 exchanges. This puts investors in a potentially risky position. Yet once you understand the key factors to scrutinize as you select your own QI, you will be in a strong position to select a QI who is competent and proven.

Stay tuned…tomorrow we will share the key questions to ask to conduct proper due diligence before selecting your next qualified intermediary.

To learn more about 1031 exchanges or our qualified intermediary and replacement property locator services, please visit our website.