Qualified Intermediary Coordination

An Orlando exchange typically runs through separate teams: a broker on the START EXCHANGE REVIEW, a title company closing both sides, a lender on the replacement purchase, and the qualified intermediary holding the exchange funds in between. None of those teams naturally talk to each other on their own schedule, so someone has to keep the notices and deadlines moving between them without a gap.

The exchange agreement between the investor and the qualified intermediary assigns the investor's rights in the START EXCHANGE REVIEW contract to the QI, which is what keeps the sale proceeds out of the investor's direct control. That same assignment structure repeats on the replacement purchase contract, so the paperwork has to be in place before either closing, not signed as an afterthought at the closing table.

Getting that assignment language into the purchase and sale agreements early, rather than negotiating it during closing week, is what keeps the exchange itself from becoming the reason a deal slips.

The same short list of notices has to reach every party on the file at the right moment, so a standing checklist runs the same way on every closing rather than being reconstructed from memory each time.

• QI contact information delivered to both title companies
• Assignment language confirmed in both contracts
• Written identification delivered to the QI inside 45 days
• Lender notified of the exchange structure before underwriting
• Closing statements reviewed for proration and funds flow
• Final exchange documentation archived after closing

A qualified intermediary needs to be engaged and the exchange agreement signed before the relinquished property closes, since an exchange cannot be set up retroactively once the investor has already received the sale proceeds. That means the QI selection happens in the same week the listing agreement or purchase contract is finalized, not after an offer is already accepted.

Confirming that timing with the closing attorney or title company ahead of the closing date removes the single biggest risk of losing exchange treatment altogether.

The qualified intermediary holds the exchange proceeds in a segregated account and releases them only for the replacement purchase, which is the mechanism that keeps the investor from having actual or constructive receipt of the money. If funds pass through the investor's own account at any point, even briefly, the exchange can be disqualified.

Reviewing how funds move on the closing statement, line by line, before the closing date confirms that the structure holds up rather than assuming it will.

Once a purchase closes, the qualified intermediary's file becomes part of the permanent record an investor may need years later if a return is examined, since it documents that funds never passed through the investor's control and that the exchange agreement was executed before the START EXCHANGE REVIEW closed. That file typically includes the exchange agreement, assignment documents, the written identification notice, and both closing statements.

Requesting a complete closing package from the QI rather than assuming it will arrive automatically, and confirming the tax advisor has a copy alongside the investor's own records, closes out the file properly instead of leaving documentation scattered across several parties once the transaction is finished. That final step is easy to skip once a deal has closed, but it is the record that matters most if the exchange is ever reviewed later.

What can a qualified intermediary do, and what is outside its role?

A qualified intermediary holds exchange proceeds, prepares the exchange agreement and assignment documents, and receives the investor's written identification, which keeps the investor from having constructive receipt of the sale funds. It does not give tax advice, evaluate replacement properties, or negotiate purchase terms, so those functions stay with the investor's broker and tax advisor.

How early should a qualified intermediary be engaged before a relinquished property sells?

The QI and exchange agreement need to be in place before the relinquished property closes, since the exchange structure cannot be added after the investor has already received the proceeds. Engaging the QI as soon as the sale contract is signed, rather than waiting until closing week, avoids the most common way exchanges get disqualified.

How are qualified intermediary fees typically structured?

QI fee structures vary by provider and usually combine a flat setup fee with interest treatment on the escrowed funds, and the specific terms should be confirmed directly with the QI before the exchange agreement is signed. This is a contract question for the QI and the investor's advisor, not something a broker or coordinator can quote generally.

What happens if exchange funds briefly pass through the investor's own bank account?

Funds touching the investor's account, even for a short time, can be treated as actual or constructive receipt and can disqualify the exchange, which is why proceeds route directly from the closing agent to the qualified intermediary's segregated account. Reviewing the closing statement's funds flow before the closing date is the way to confirm this did not happen.

Does the qualified intermediary's role change in a reverse exchange?

In a reverse exchange, the QI or a related exchange accommodation titleholder may hold title to the replacement property temporarily instead of just escrowing cash, since the replacement purchase happens before the START EXCHANGE REVIEW closes. That structure adds documentation and financing steps beyond a standard forward exchange, and it should be set up with the QI well before a reverse structure is needed.