Qualified Intermediary Coordination

A qualified intermediary is a required participant in nearly every 1031 exchange, since the exchanger cannot have actual or constructive receipt of the sale proceeds from the relinquished property and still qualify for exchange treatment. Qualified intermediary coordination service works with the Jacksonville area exchanger's chosen bonded qualified intermediary to ensure escrow is established correctly, identification notices are properly documented, and closing coordination between the qualified intermediary, title company, and lender proceeds smoothly through both the forty-five day and one hundred eighty day deadlines.

Why the qualified intermediary must be an independent party

The Internal Revenue Code disqualifies certain parties from serving as a qualified intermediary, including the exchanger's employee, attorney, accountant, real estate agent, or broker who has acted in that capacity for the exchanger within the two years preceding the exchange, as well as certain related family members. This independence requirement exists because the qualified intermediary holds the exchange proceeds and facilitates the transaction specifically to prevent the exchanger from having access to the funds. We help confirm that a chosen qualified intermediary meets these independence requirements and is properly bonded before the exchange agreement is signed.

Coordinating documentation from relinquished sale through replacement closing

The qualified intermediary's role begins with the exchange agreement, assignment of the relinquished property sale contract, and instructions to the closing agent to direct net proceeds to the qualified intermediary's escrow account rather than to the exchanger at the relinquished property closing. From there, the qualified intermediary receives the written identification notice within the forty-five day deadline, and coordinates the transfer of funds to the replacement property closing, including assignment of the purchase contract, within the one hundred eighty day deadline. We track each of these handoffs and confirm documentation is complete at each stage.

For exchanges involving more complex structures, such as a reverse exchange with an Exchange Accommodation Titleholder or an improvement exchange, qualified intermediary coordination becomes more involved, since additional entities and agreements are layered onto the standard forward exchange documentation. We work with the qualified intermediary and, where applicable, the EAT provider to confirm all required agreements are executed in the correct sequence.

We also confirm reporting coordination between the qualified intermediary and the exchanger's tax advisor, since the qualified intermediary typically provides a settlement statement and exchange summary that the tax advisor needs to accurately prepare Form 8824 for the exchange.

Throughout the exchange, we serve as a coordination point between the qualified intermediary, the exchanger, the lender, and the closing agents, so that documentation requests are answered promptly and no single missed communication delays either the forty-five day identification or the one hundred eighty day closing deadline.

We also help exchangers evaluate qualified intermediary options before the relinquished property closes, since fee structures, bonding and insurance coverage, and experience with the exchanger's specific property type and any reverse or improvement exchange needs can vary meaningfully between providers. Selecting a qualified intermediary with the right experience and financial safeguards in place before the exchange begins reduces risk throughout the transaction, rather than defaulting to the first provider recommended without independent review.

Our process typically begins with reviewing the exchanger's chosen qualified intermediary, or helping select one, confirming independence and bonding requirements are met, followed by coordination of the exchange agreement and contract assignments at the relinquished property closing. From there we track identification notice delivery, monitor escrow status, and coordinate closing documentation through the replacement property acquisition, keeping the exchanger informed at each stage.

Because the qualified intermediary sits at the center of every deadline and every dollar in the exchange, from escrow through identification and final disbursement, strong coordination with this party from the outset reduces friction across every other workstream in the transaction, including financing and closing coordination.

We remain available throughout the exchange as a coordination point between the exchanger, the qualified intermediary, and every other party involved in closing, so documentation requests are answered promptly and the exchanger is not left managing multiple relationships alone during a time-sensitive transaction.