What is a Qualified Intermediary (QI) and do I need one?

A Qualified Intermediary is a third-party entity that holds your sale proceeds between the two legs of the exchange. The IRS requires one — you cannot receive or control the funds yourself without disqualifying the exchange. Eastern Title coordinates with your QI but does not act as one. If you don't have a QI, we can refer you to licensed intermediaries.

What qualifies as 'like-kind' property?

Under Section 1031, 'like-kind' is broader than most expect. Any real property held for investment or business use qualifies — rental house for a commercial building, raw land for an apartment complex. Primary residences, vacation homes used personally, and flip inventory do not qualify.

Can I use a 1031 exchange for my primary residence?

No. A 1031 exchange applies only to property held for investment or productive use in a trade or business. Primary residences are excluded. However, if you've converted a former primary residence to a rental property and have held it as a rental for a sufficient period, consult your tax advisor — partial exchange benefits may be available.

What happens if I miss the 45-day identification deadline?

Missing the 45-day deadline disqualifies the entire exchange. The held proceeds become taxable as ordinary sale proceeds, and capital gains taxes are due in full. There are no extensions except in cases of federally declared disasters. This is why careful timeline management from day one is critical.

Can I identify more than one replacement property?

Yes. The IRS allows you to identify up to 3 properties without restriction (the 'three-property rule'). You can also identify more than 3 properties if their combined fair market value doesn't exceed 200% of the relinquished property value (the '200% rule'). You only need to close on one.

Does Eastern Title serve as the Qualified Intermediary?

No. Eastern Title handles all title search, title insurance, and settlement services for both legs of the exchange. The Qualified Intermediary role — holding funds, preparing exchange documents, and managing the exchange agreement — must be performed by a separate, independent QI. We work closely with your QI throughout the transaction.

What is 'boot' in a 1031 exchange?

'Boot' is any value received that is not like-kind property — cash, debt relief, or personal property. Boot is taxable in the year of the exchange. To fully defer taxes, reinvest all net proceeds and replace any mortgage paid off on the relinquished property. Our settlement team prepares ALTA statements to help track potential boot.

Can a 1031 exchange work for commercial property?

Yes. Commercial property — office buildings, retail centers, industrial facilities, multifamily (5+ units), and land — is frequently exchanged under Section 1031. Eastern Title handles both the commercial title work and coordination complexity that multi-party commercial exchanges require, including lender coordination and extended curative timelines.

1031 Exchange Title Services

Eastern Title handles the complete title and settlement work for both legs of your like-kind exchange — coordinating with your Qualified Intermediary to keep your transaction on track within IRS deadlines.

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What Eastern Title Handles

We manage the full title side of both transactions — the sale of your relinquished property and the purchase of your replacement property — while working directly with your Qualified Intermediary on exchange fund logistics and deadline compliance.

Relinquished Property (Sale)

Full title search and examination
Title insurance commitment
Deed preparation and recording
ALTA settlement statement
Proceeds routed directly to your QI

Replacement Property (Purchase)

Title search on replacement property
Owner's and lender's title insurance
Closing coordination with your QI
Exchange funds received and applied
Clean title recorded within 180 days

Exchange Coordination

45-day and 180-day deadline tracking
QI communication and fund verification
Multi-property identification support
Simultaneous or delayed closings
Residential and commercial transactions

Critical IRS Deadlines

According to IRS Publication 544, both deadlines begin on the day you close on your relinquished property. There are no extensions — missing either deadline disqualifies the exchange.

45 Days

Identification Period

You must identify potential replacement properties in writing to your QI within 45 calendar days of closing. You may identify up to 3 properties without restriction.

180 Days

Exchange Period

The full exchange — both the sale and the replacement property closing — must be completed within 180 calendar days of the relinquished property closing.

How It Works

A standard forward 1031 exchange follows five stages. Eastern Title is actively involved at the first and fourth — and available throughout.

1
Close on the Relinquished Property
Day 0
Eastern Title handles all title and settlement work for the sale. Proceeds are wired directly to your Qualified Intermediary — you do not touch the funds. The 45-day and 180-day clocks start on closing day.
2
Identify Your Replacement Property
Days 1–45
Within 45 calendar days of closing, submit written identification of up to 3 potential replacement properties to your QI. Missing this deadline disqualifies the exchange.
3
Open Your Replacement Property Order
After Identification
Contact Eastern Title as soon as you're under contract on the replacement property. We begin the title search immediately and coordinate directly with your QI on exchange fund logistics.
4
Close on the Replacement Property
By Day 180
We receive exchange funds from your QI, complete settlement, and record title. The entire exchange — both legs — must close within 180 calendar days of the original sale.
5
Exchange Complete — Taxes Deferred
Done
Your capital gains and depreciation recapture are deferred into the replacement property. Your equity moves forward, preserving your full investment power for the next deal.

Exchange Structures

Eastern Title supports all three primary exchange structures. The right one depends on your timeline, property availability, and investment strategy.

Standard (Forward) Exchange

The most common structure. You sell the relinquished property first, your QI holds the proceeds, and you close on the replacement property within the 180-day window. Works for most residential and commercial investors.

Reverse Exchange

You acquire the replacement property before selling the relinquished property. An Exchange Accommodation Titleholder (EAT) holds title to one property during the exchange period. More complex — requires advance planning.

Improvement (Build-to-Suit) Exchange

Exchange proceeds fund improvements to the replacement property before you take title. Allows you to build equity into a property that is currently undervalued relative to your relinquished property's sale price.

Taxpayer Checklist

Use this checklist to ensure your exchange is structured correctly from the start. Share it with your CPA and Qualified Intermediary.

Retain a Qualified Intermediary before closing on the relinquished property
Do not take constructive receipt of sale proceeds at any point
Calendar the 45-day identification deadline immediately after closing
Identify up to 3 replacement properties in writing within 45 days
Confirm replacement property is like-kind real property (held for investment)
Reinvest the full net proceeds to fully defer all taxes
Notify Eastern Title of the exchange when opening your order
Confirm the same taxpayer appears on both sides of the exchange
Consult your CPA or tax advisor on depreciation recapture implications

Related Title Services

Title Search

Comprehensive examination of public records to verify clear ownership and uncover any liens, encumbrances, or defects on a property.

Title Insurance

Owner's and lender's title insurance policies that protect your investment against hidden defects, fraud, and claims against your property.

Real Estate Settlement

Full-service closing coordination — document preparation, fund disbursement, and recording — for residential and commercial transactions.

Escrow Services

Neutral third-party escrow management for earnest money deposits, purchase funds, and closing proceeds.

Commercial Title

Specialized title search, insurance, and settlement for commercial real estate acquisitions, developments, and portfolio transactions.

Frequently Asked Questions

Common questions about 1031 exchanges and Eastern Title's role.

References

Key Terms

Relinquished Property

The property you are selling in the exchange.

Replacement Property

The property you are purchasing with exchange proceeds.

Qualified Intermediary (QI)

The independent party that holds your funds between legs. Required by the IRS.

Boot

Taxable value received that is not like-kind property (cash, debt relief, etc.).

Like-Kind

Any real property held for investment or business use qualifies — regardless of type.

1031 Exchange Services

Ready to open your exchange order?

Notify us of your exchange at the time you open your order. The earlier we coordinate with your QI, the smoother both closings go.

(240) 403-1285 Start Your Order

Ready to Start Your 1031 Exchange?

Open your order online and notify us of the exchange — the earlier we coordinate with your QI, the smoother both closings go.

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