Choosing the right qualified intermediary is one of the most important decisions you'll make in your 1031 exchange. Your QI holds your exchange proceeds — often hundreds of thousands or millions of dollars — and is responsible for ensuring your exchange is IRS-compliant. Not all QIs are created equal.
What to Look for in a QI
The QI industry is largely unregulated at the federal level. Anyone can call themselves a qualified intermediary. When evaluating a QI, look for professional credentials, legal expertise, financial security, and a track record of successful exchanges.
- Certified Exchange Specialist (CES®) designation
- Member of the Federation of Exchange Accommodators (FEA)
- Licensed attorney with deep 1031 exchange expertise
- Fidelity bond and errors & omissions insurance
- Segregated exchange accounts (not commingled)
- Verifiable track record and client references
Why an Attorney QI Is Different
Most QI companies are escrow services — they hold your money but have no legal or tax background. When you work with 1031 Federal Exchange, you're working with a licensed attorney who understands the full legal and tax framework of your exchange, not just the mechanics of fund-holding.
Questions to Ask Any QI
Before engaging a qualified intermediary, ask about their credentials, how they hold exchange funds, their insurance coverage, and their experience with your specific type of exchange. A reputable QI will welcome these questions.
How to Choose a Qualified Intermediary: 7 Questions to Ask
Steve explains what separates a great QI from a mediocre one, the risks of working with an unqualified intermediary, and the specific questions you should ask any QI before entrusting them with your exchange proceeds.
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