Qualified Intermediary
A qualified intermediary is an independent third party that holds 1031 exchange proceeds and handles the paperwork so the investor never touches the cash.
Definition
A qualified intermediary (QI), also called an accommodator or exchange facilitator, is the independent party that makes a 1031 exchange work. IRS rules say that if the investor takes possession of the sale proceeds, even briefly, the exchange is disqualified and the gain becomes taxable. The QI holds the funds in escrow between the sale and the purchase.
The QI also prepares the exchange agreement, assignment documents, and instructions, and coordinates with the closing agents. It must be genuinely independent; your own attorney, accountant, agent, or relative generally cannot serve as your QI because they are considered disqualified persons.
Choosing a reputable, well-capitalized QI is critical because the firm holds potentially millions of dollars of your money with limited federal regulation. Investors should confirm the QI carries a fidelity bond and errors-and-omissions coverage, and holds client funds in segregated, qualified escrow accounts.
Key points
- Independent party that holds exchange proceeds in escrow
- Required so the investor never constructively receives the cash
- Cannot be your attorney, CPA, agent, or a relative
- Prepares the exchange documents and coordinates closings
Related terms
Jerry Baker founded Baker 1031 Investments to help exchange investors move from active property ownership into passive, institutional-quality real estate through DST, 721 exchange, mineral royalty, and Opportunity Zone strategies. He holds the FINRA Series 22 and Series 63 registrations and the Securities Industry Essentials (SIE) qualification. Read full bio →
Reviewed by the Aurora Securities, Inc. compliance team — Aurora Securities, Inc., member FINRA/SIPC. Last reviewed July 2026. Securities are offered through Aurora Securities, Inc.; Baker 1031 Investments, LLC is independent of Aurora Securities, Inc.
This glossary entry is educational and is not investment, tax, or legal advice, or an offer to sell or a solicitation to buy any security. Definitions are general and may not reflect your specific circumstances — consult your own CPA and attorney. Past performance does not guarantee future results.