The qualified intermediary holds the exchange funds and the paperwork that keeps a sale from being taxed as a straight disposition, and coordinating with that party is closer to running a submittal log than a single phone call. On a Park City transaction, that log usually spans a title company, an escrow officer, a lender, and the investor's own CPA, all working off the same document set. Keeping that group aligned on dates matters more than any single document in the file.
QI Selection and Engagement Scope
Not every intermediary handles every asset type equally well, and a firm accustomed to single-family relinquished property sometimes moves slower on a commercial parcel with multiple tenants or a reverse structure. Scope of engagement is confirmed before the relinquished property closes, not after, so the exchange agreement matches what the transaction actually requires.
Fee structure, funds handling procedure, and the intermediary's process for identification notices are all reviewed at engagement rather than assumed to be standard across providers.
A short reference call with the intermediary's operations team, rather than only the sales contact, usually surfaces whether their process fits a commercial closing before the engagement is finalized.
Document Submittal Sequence
The paperwork moves in a set order, and missing a step out of sequence creates rework rather than saving time. A typical submittal sequence includes:
- exchange agreement execution before relinquished property closing
- assignment of the relinquished property sale contract
- notice to the buyer of the assignment
- funds transfer instructions to the intermediary
- identification notice within the forty-five-day window
- assignment of the replacement property purchase contract
- closing instructions to escrow for the replacement purchase
Each step is confirmed in writing as it happens rather than assumed complete, since a verbal confirmation from an escrow assistant does not hold up the same way a countersigned notice does.
Constructive Receipt Safeguards
Constructive receipt is the failure mode this whole coordination exists to avoid: if exchange funds pass through the investor's control at any point, the exchange can be disqualified. Escrow and closing instructions are drafted so funds move directly between the intermediary, title company, and closing parties, with the investor's signature authorizing but never touching the transfer.
Even a brief deposit of exchange proceeds into an investor-controlled account, intended only as a temporary step, can create a constructive receipt problem, which is why fund flow is mapped out before closing rather than handled ad hoc. That mapping is reviewed with the intermediary line by line before any wire actually goes out.
Coordination Touchpoints With Escrow and Lender
A Park City closing often involves a title company unfamiliar with exchange funding mechanics on the replacement side, so a short coordination call between the intermediary and the escrow officer ahead of closing prevents last-minute questions about wire instructions. The lender is looped in separately, since loan proceeds and exchange funds need to be kept distinct in the closing statement.
Scheduling that call a week ahead of closing, rather than the morning of, gives the title company time to adjust their settlement statement template if the exchange language is unfamiliar to them.
Where This Fits the 180-Day Calendar
The intermediary's involvement does not end at the forty-five-day identification mark; funds sit with them until the replacement purchase closes, which must happen within the one-hundred-eighty-day exchange period. Coordination continues through that entire window, with the intermediary confirming fund availability as each replacement closing date is set.
A running calendar shared among the investor, intermediary, and advisor keeps everyone working from the same deadline rather than relying on separate calculations of how many days remain.
If more than one replacement property is named on the identification notice, the intermediary tracks partial fund releases as each individual closing occurs, rather than treating the exchange as a single all-or-nothing transfer.
Common 1031 Exchange Questions
When should a qualified intermediary be engaged relative to the relinquished property sale?
The exchange agreement needs to be signed before the relinquished property closes, since a QI cannot be added after the fact to fix a closed sale. Engagement is typically confirmed while the relinquished property is still under contract.
What is constructive receipt and why does it matter here?
Constructive receipt happens if exchange funds pass through the investor's control at any point, which can disqualify the whole exchange. Closing instructions are structured so the intermediary, title company, and closing parties move funds directly without routing through the investor.
Does the lender need to coordinate directly with the qualified intermediary?
Loan proceeds and exchange funds need to stay distinct on the closing statement, so a lender is typically looped in alongside the intermediary rather than left to reconcile the numbers independently at the closing table.
How long does the intermediary hold exchange funds?
Funds generally stay with the intermediary from the relinquished property closing until the replacement purchase closes, which has to happen within the one-hundred-eighty-day exchange period. Coordination continues through that entire window rather than ending at identification.
What if the intermediary has not handled a commercial or multi-tenant property before?
That gap is worth surfacing at engagement, since some intermediaries specialize mainly in single-family relinquished property and move slower on assignments involving multiple tenants or a reverse structure. Confirming process fit early avoids delay later in the transaction, and a short reference call is usually enough to settle the question.
