Qualified Intermediary Requirements
A 1031 exchange is the process that takes place between two parties, but Qualified Intermediary is the person who is important for this exchange. A QI is generally a real estate firm that helps investors in finishing the 1031 Exchange. In a 1031 exchange agreement, a Qualified Intermediary is named as the principal, which means that they sell and purchase properties on behalf of the investors. Therefore, it is necessary to involve a Qualified Intermediary in 1031 exchanges.
So, before involving a Qualified Intermediary we should firstly know what are the requirements of a Qualified Intermediary?
- The QI involved in the 1031 Exchange process must not be a relative or known person of the investor. Neither the QI must be his attorney nor accountant.
- The QI does not require any license; only the must requirement is that he should be a citizen of the USA.
- In a real estate business, experience plays a vital role. So, an investor should look for a knowledgeable, Qualified Intermediary.
- The investor should see how experienced the firm is. 1031 exchanges are quite complex, a budding firm may find it hard to complete the exchange smoothly without the involvement of QI.
5. The Qualified Intermediary must have a good number of contacts as it will be beneficial for the investor to have his investment in good real estate.