The role of a Qualified Intermediary (QI) is essential to completing a successful IRC Section 1031 tax deferred exchange. The Exchanger must assign to the QI their interest as seller of the relinquished property and their interest as buyer of the replacement property. Because the QI becomes an actual principal in the transaction, a reciprocal trade is created, even when there are three or mor parties involved in the exchange.

If the Exchanger actually or constructively receives any of the proceeds from the sale of their relinquished property, those proceeds will be taxable. To prevent this occurance, the QI will hold the proceeds from the sale in an separate exchange account until the funds are used to acquire the replacement property.

In addition, the QI prepares the legal documents that are necessary to properly complete an exchange. These documents include an Exchange Agreement, Assignment of Purchase and Sale Agreement and exchange closing instructions for the settlement officer handling the transaction.

Although the process of completing an exchange is simple, the rules are complicated and can be filled with potential pitfalls. Exchange Services, Inc., an Idaho Corporation, and Montana Exchange Services, Inc. have developed a reputation for service in our industry and have extensive experience in coordinating exchange transactions. We will work closely with all parties, including real estate agents, lenders, CPA's, attorney and escrow officers to ensure a smooth transaction.