Qualified Intermediary Coordination

The qualified intermediary holds exchange proceeds and paperwork between the START EXCHANGE REVIEW and the replacement purchase, and coordinating with that office correctly is what keeps a Portland exchange from tripping on a procedural detail rather than a market one.

What the QI Actually Holds

Between the two closings, the QI holds sale proceeds in a segregated account and prepares the assignment documents that route the transaction through the exchange rather than a direct sale. The taxpayer never has access to those funds during the exchange period; any deposit, withdrawal, or informal instruction outside the QI agreement risks the entire exchange. Coordination means making sure escrow, the taxpayer, and the QI are working from the same document set and the same dates.

Most QI firms provide online account confirmations that let the taxpayer verify funds are on deposit without ever having signing authority over the account, which is worth confirming with a chosen QI before the START EXCHANGE REVIEW closes.

Selecting and Engaging the QI Before Closing

The QI has to be engaged and the exchange agreement signed before the relinquished property closes, not after. Waiting until after closing to set up the exchange is one of the most common ways an otherwise qualifying transaction fails outright. Selecting a QI early also gives time to review the specific exchange agreement language rather than signing a standard form under closing-day time pressure.

Fees vary between QI firms, and a lower fee is not the only factor worth weighing; responsiveness during the identification window and familiarity with the specific asset class, whether that is a DST placement or a straightforward net lease purchase, matters as much as price when a deadline is close.

Coordination Checklist

A clean handoff between escrow and the QI follows a short, repeatable list.

• Confirm the exchange agreement is signed before the relinquished property closing.
• Provide the QI's assignment language to escrow before the closing package is finalized.
• Confirm the QI's wiring instructions directly with the QI by phone, not by email alone.
• Track the 45-day identification deadline against the actual relinquished closing date.
• Route replacement property purchase agreements through the QI for assignment before that closing.
• Request written confirmation once replacement funds have released to the new closing.

Where Oregon Escrow Practice Matters

Oregon closings are typically handled through escrow and title companies rather than attorney closings, so the QI's assignment documents need to fit into that local closing process cleanly. An escrow officer unfamiliar with exchange assignments can hold up a closing simply by not knowing where the QI's paperwork belongs in the file; flagging the exchange early in the transaction avoids that friction.

Some escrow officers handle exchange transactions regularly and others rarely see them, so asking the escrow company directly about its experience with 1031 assignments before the relinquished property goes under contract can save time later in the process.

Common Coordination Failures

The failures that show up most often are not exotic: funds accidentally routed to the taxpayer instead of the QI, identification notices sent to the wrong party, or assignment language that does not match the actual purchase agreement. Each of these is preventable with a short pre-closing checklist and a phone call to confirm wiring instructions rather than relying on email alone, given how often wire fraud targets real estate closings specifically.

Another common failure is a mismatch between the vesting on the relinquished property and the entity expected to take title on the replacement side; keeping the same taxpayer identity across both transactions, unless a different structure is specifically planned with the CPA in advance, avoids a late discovery that the exchange does not line up correctly.

Common 1031 Exchange Questions

How do I choose between competing qualified intermediary firms?

Compare fee structure, but weigh it against responsiveness during the identification window, experience with the specific asset class involved, and whether the firm carries fidelity bond coverage on the funds it holds; price alone is a poor way to choose a QI for a transaction this important.

When does the qualified intermediary need to be engaged relative to the sale closing?

Before the relinquished property closes. If the sale closes before the exchange agreement is signed, the exchange generally cannot be completed for that transaction, regardless of intent.

Can the same escrow or title company that closes the sale also serve as the QI?

Generally no; the QI has to be independent of the taxpayer and, under the rules, cannot be someone who has acted as the taxpayer's agent in specific capacities within the prior two years, which can include certain closing agents. Confirm eligibility with your qualified intermediary directly.

What happens if exchange funds are released to me directly by mistake?

Direct receipt of the funds, even briefly, can be treated as constructive receipt and can disqualify the exchange. This is why wiring instructions should be confirmed directly with the QI and never altered based on an email alone.

How does the QI agreement interact with Oregon escrow closing practice?

The QI's assignment documents need to be provided to the closing escrow office in advance so they are included in the closing package correctly; flagging the exchange to the escrow officer early prevents last-minute confusion over where funds should be routed.

What should I ask a QI before signing the exchange agreement?

Ask how funds are held, whether the account is segregated per client or commingled, what fidelity bond and errors-and-omissions coverage the firm carries, and how quickly the firm typically turns around wiring instructions once a replacement closing is scheduled.

Ready to organize the exchange file?