Qualified Intermediary
QI. A third party that holds the proceeds of the surrendered property sale in a 1031 exchange and uses those proceeds to acquire the replacement property on the sellers behalf. The QI requirement exists because the seller cannot have constructive receipt of the cash without disqualifying the exchange. The QI is one of the four mechanical pillars of a valid 1031 (alongside the 45-day identification deadline, the 180-day closing deadline, and the equal-or-greater value/debt requirement). Choosing a reputable QI with proper bonding is essential because QI failures have triggered both lost exchanges and outright fraud losses in the past.
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