Qualified Intermediary Coordination

The headline fee on a QI engagement letter is rarely the full cost. Wire fees, document preparation charges, and rush fees for tight closings often sit in a schedule attached at the back, not in the number quoted over the phone. A reverse exchange or an improvement exchange typically carries a separate, higher fee than a standard forward exchange, and that difference is not always disclosed until the paperwork is already drafted.

Fund security is the bigger gap. Some engagement letters describe a qualified escrow or qualified trust account in detail; others describe the exchange funds sitting in a general account with vague reference to a fidelity bond. Whether the funds are held in a segregated account, whether they earn interest for the investor, and whether the QI carries insurance against its own insolvency are all facts an investor should see before wiring proceeds, not after.

Before wiring exchange proceeds to any qualified intermediary, the investor or their coordinator should get written answers to:

• Is the account a qualified escrow, a qualified trust, or a general account, and who else has signing authority
• What is the complete fee schedule, including wire, rush, and multi-property identification charges
• Does the QI carry a fidelity bond or errors-and-omissions coverage, and at what limit
• Who releases funds at closing, and what documentation triggers that release
• What happens to unused exchange funds if the exchange fails or a deadline is missed

A QI that answers these clearly in the engagement letter is a different proposition than one that answers them only when asked directly.

The identification notice has to reach the QI, not merely get drafted, within the 45-day window, and the QI's own internal process for logging and confirming that notice can add days if it is not coordinated in advance. Waiting until day 40 to confirm how the QI wants identification delivered is a common, avoidable delay.

This service does not perform the QI's statutory role and does not give tax advice. It keeps the paperwork moving between the investor, the QI, and closing counsel so the exchange mechanics the QI is responsible for are not held up by miscommunication on the investor's side.

At closing, a well-coordinated exchange produces a wire that goes out on time, to the right party, against a fee that matches what was disclosed at engagement. That sounds basic, but it is the exact sequence that breaks down when the fee schedule was never fully reviewed and the fund-security terms were taken on faith.

The goal is not to distrust every QI by default. It is to treat the engagement letter with the same scrutiny an investor would apply to a lease or a purchase contract, since exchange funds sitting with the wrong intermediary is a risk that is entirely avoidable with a plain reading of the fee schedule.