Selecting a Intermediary

How to Select & Work with a Qualified Intermediary

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A successful 1031 exchange involves working with a qualified intermediary

The intermediary is essential to satisfy complicated legal requirements required by the 1031 Code and Exchange Regulations

Failure to comply with any of the elements of the regulations can jeopardize the potential tax deferred status of the transaction.

When considering a 1031 Exchange, as an exchangor you should always obtain advice from your tax or legal counsel and seek out the expertise of a Qualified Intermediary.

You need to interview the Intermediary as you would a prospective employee, assess their track record judiciously and astutely.

The Intermediary needs to be experienced in handling all aspects of the exchange process, exhibit expertise in the real estate, legal and tax fields.

It is important to choose an Intermediary who is thoroughly familiar with the exchange process.
The details of the exchange process is vital to the success of the 1031 Exchange.

The intermediary needs to provide legally sufficient exchange documents, monitoring replacement property identification deadlines.

(you have 45 days to identify replacement property using a form that the Intermediary provides, and you have 180 days to close on that property)

The intermediary needs to manage promissory notes, coordinate with closing agents, have experience in engaging in improvement and reverse exchanges, as well as many other areas of exchanges.

As the intermediary will escrow the sales proceeds in a restricted account, you should always inquire about the security of the exchange funds held by the Qualified Intermediary and whether there is sufficient bonding and professional liability insurance.

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