5. The Role of a Qualified Intermediary — Your 1031 Secret Weapon

Welcome to Part 5 of our 1031 Exchange Blog Series. So far, we’ve covered what a 1031 Exchange is, the deadlines you can’t miss, and what qualifies as “like-kind” property.

Now let’s talk about the person who holds the entire exchange together—your Qualified Intermediary (QI).

This isn’t just a helpful partner.
Your QI is the one who makes your 1031 Exchange legal.
Without one, the IRS will disqualify your exchange—even if everything else is perfect.

 What is a Qualified Intermediary?

A Qualified Intermediary (sometimes called an Exchange Accommodator) is a neutral third party who:

• Prepares your 1031 Exchange documents

• Holds your sale proceeds in escrow (so you don’t touch them)

• Coordinates the transfer of funds and titles

• Helps you comply with all IRS deadlines and requirements

According to The New York Times, the IRS requires a QI for every 1031 Exchange.
If the proceeds from your sale touch your account—even for a second—your exchange is invalid.

 Why Your QI Choice Matters

Not all QIs are created equal.
There are no federal licensing requirements, which means anyone can call themselves a QI—even without experience or insurance.

That’s why The Real Deal has published cautionary tales about QIs who went bankrupt, mishandled client funds, or failed to file critical documents.

So how do you choose a good one?

✅ Look for:

• A long track record handling 1031 Exchanges

• Strong professional references

• Errors and omissions insurance

• A deep understanding of New York State and NYC real estate

 How the QI Works With Your Team

A great QI doesn’t work alone. They should coordinate directly with:

• Your real estate broker (like me)

• Your attorney

• Your title company

• Your lender or financial planner

The Wall Street Journal notes that many successful investors treat their QI as part of their permanent advisory team—especially those who exchange frequently or across state lines.

 When to Hire a QI

Before your first property closes.
Once your sale is complete, it’s too late to set up the exchange properly.

At Pen Realty, we help clients connect with reliable, vetted intermediaries who’ve successfully closed exchanges in Brooklyn, Manhattan, Staten Island, and across New York.

 Let’s Connect Before You List

If you’re preparing to sell and want to explore a 1031 Exchange, we should talk before you list.

📧 Email: [email protected]
📞 Call/Text: 917.916.5126
▶️ Watch the full vlog series: @pmpenrealty

👉 Coming Up Next: Using 1031 Exchanges to Build Wealth Over Time