All proceeds from the initial sale must be turned over to a qualified intermediary (QI), who is the person or company that essentially plays the role of the middleman.
The qualified intermediary must be involved at or prior to the sale of the original investment property.
The qualified intermediary will transfer ownership of the original property from the seller to the buyer and hold the proceeds in escrow. When interviewing or researching exchange providers, one should look first and foremost to the financial backing of your organization. The qualified intermediary can have no other formal relationship with the parties exchanging property.
The qualified intermediary should be a corporation instead of an individual, primarily because a corporation has unlimited life. The cost of the intermediary can vary, depending on the complexity of the situation. The qualified intermediary plays an important role because the seller cannot take possession of the sale proceeds.
Exchanges typically result in sales proceeds being held until replacement property can be purchased and the exchange completed.
A qualified intermediary will advise you in detail about the financing offer by showing you the advantages and disadvantages.
Choosing the right intermediary for your like-kind exchange is essential for the success of your exchange. After the first sale closes, a qualified intermediary holds the sale proceeds in escrow. Once the sale of your property is complete, the qualified intermediary will receive the cash. One of these is rules is that you must deposit the sales proceeds with a qualified intermediary pursuant to a qualified escrow agreement.
Want to check how your Qualified Intermediary Processes are performing? You don’t know what you don’t know. Find out with our Qualified Intermediary Self Assessment Toolkit: