The qualified intermediary holds your exchange proceeds and prepares the paperwork that keeps the transaction from becoming a taxable sale followed by a separate purchase. Our job is making sure the QI has what they need from your closing attorney, your lender, and the buyer's side before each deadline, not the day it is due. On Long Island, that usually means coordinating with two or three attorneys' offices at once, since both sides of most commercial closings here are represented by counsel rather than working straight through a title company.
Getting The QI Onboarded Early
We push to have the exchange agreement, assignment of the relinquished property contract, and escrow instructions in place before the relinquished sale closes, not after.
On Long Island, closings run through attorneys rather than escrow-only title companies in most cases, so the QI, the seller's attorney, and the buyer's attorney all need to be working off the same timeline.
We send the exchange agreement draft to the closing attorney as soon as the contract of sale is signed, rather than waiting for a closing date to be set, because attorney review can take longer during busy stretches of the year on Long Island than a client's calendar expects.
The Forty-Five Day Notice
Once the relinquished sale closes, the clock starts, and the identification notice has to reach the QI in writing before day forty-five.
- unambiguous legal description or address for each identified property
- signed and dated by the exchanger
- delivered to the QI in writing, never only discussed on a call
- consistent with whichever identification rule, three-property, two hundred percent, or ninety-five percent, the exchange is using
A verbal mention of a property to your QI does not count. It has to be the written notice, and we build that notice with you well before the deadline, giving you time to review it rather than signing it under pressure on day forty-four.
Funding Instructions For The Replacement Purchase
When a replacement property goes under contract, the QI needs funding instructions that match the closing attorney's settlement statement exactly: same entity name, same wire details, same purchase price.
A mismatch here is one of the more common reasons a closing gets pushed a day or two, and on Long Island, where several exchanges are often racing the same one hundred eighty day calendar, a delay of even a few days matters.
We proofread the entity name on the funding instructions against the deed and the loan documents ourselves before anything goes to the QI, since a client's LLC name and the name on an old bank account do not always match, and that mismatch can hold up a wire on closing day itself.
Multi-Party Closings And DSTs
If part of the exchange proceeds are going into a Delaware statutory trust alongside a direct property purchase, the QI's paperwork gets more complex: multiple assignments, multiple funding instructions, sometimes multiple closing dates.
We map that structure out with the QI before the identification notice goes out so the notice itself reflects what is actually being pursued. If the direct property falls through and the DST portion needs to absorb a larger share of proceeds, we want the QI already aware that scenario is on the table, not hearing about it for the first time at day one hundred sixty.
One Record, Not Five
Closing counsel, the buyer's lender, the listing broker, your tax advisor, and the QI all end up touching this file. We keep one shared timeline and document set so nobody is working from an outdated version of the purchase contract or an old identification list.
When a contract gets amended, even on price or a small closing date shift, we push the updated version to every party the same day rather than letting each side find out at a different point in the week. That one habit alone has prevented more scheduling conflicts on Long Island closings than any other step in our process.
Common 1031 Exchange Questions
Can you use your own attorney as the qualified intermediary?
No. Federal rules disqualify your attorney, accountant, or real estate agent from serving as your QI if they have represented you in the two years before the exchange. The QI has to be an independent party.
What happens if you take control of the sale proceeds even briefly?
That is constructive receipt, and it can disqualify the entire exchange. The proceeds need to go from the closing directly to the QI's escrow account, and we make sure the closing attorney's wire instructions route that way from the start.
How much notice does the QI need before a replacement closing?
As much as possible. In practice we aim to have funding instructions to the QI at least a few business days before closing so any mismatch between the settlement statement and the QI's records gets caught early.
Do you need a new QI for each exchange?
Not necessarily. Some exchangers use the same QI across multiple transactions, which can simplify onboarding, and we coordinate with whichever QI you have engaged.
Who decides the language on the identification notice?
The exchanger signs it, but we help draft the property descriptions so they are specific enough to hold up if the identification is ever questioned, and your QI confirms it meets their format requirements.
