Who holds the money in a 1031 exchange?

The qualified intermediary holds the money. In the exchange trade the same role is often called the accommodator, which is why buyers searching for an accommodator in Miami are asking this question. The intermediary holds the proceeds from the sale of the relinquished property for the whole exchange; the seller never touches them, and a seller who does ends the exchange. The intermediary is engaged before the sale closes, the sale contract carries a cooperation clause and an assignment of the seller's rights to the intermediary, and the exchange documents name the holder. On the Miami side the same structure runs in reverse: the buyer signs the purchase agreement, assigns their rights under it to the intermediary before closing, and the intermediary directs the funds to the developer's closing agent. The exchange itself, and whether a new condo can be a replacement property at all, is set out in can you buy a Miami condo with a 1031 exchange. None of this is advice; it is the list a buyer takes to the intermediary and to tax counsel before the relinquished sale closes.

Qualified intermediary is the term the exchange documents use; accommodator is the name much of the trade trades under, and exchange companies present themselves under both. They are the same seat at the table: an independent holder who is not the seller, not the seller's agent and not the buyer of the replacement property, engaged to hold the proceeds and to direct them, on the exchange's instructions, to the purchase closing. The practical question for a buyer is not the label but the engagement itself: who the company is, what account the proceeds sit in, and what the exchange agreement says about how and when funds are released. Those three items are written in the exchange documents, and a buyer reads them before the sale closes, when the holder can still be changed, rather than after, when it cannot.

The timing is the trap in this question. The intermediary is engaged before the relinquished sale closes, because the proceeds must pass to the holder at the closing without the seller receiving them first. A seller who closes, receives the funds and then looks for an intermediary has already broken the structure the exchange depends on. The sale contract carries a cooperation clause and an assignment of the seller's rights to the intermediary, so the closing itself routes the money to the holder. A buyer selling an investment property in another state while shopping in Miami runs the engagement and the building search in parallel, and the identification clock below is why the order matters. Where money of a more ordinary kind sits in a Miami purchase is read in where your deposit actually sits.

The intermediary holds the proceeds against two clocks that start at the same closing. The replacement property is identified in writing to the intermediary within 45 days of the sale, and it is received within 180 days of that same closing, or by the due date of the tax return with extensions if sooner. The holder is the addressee of the identification and the source of the purchase funds, which is why the exchange documents, not the buyer's notebook, are the record of both dates. The 180 days is the clock a new building cannot stretch: the replacement is received when the deed is delivered, and a developer delivers a deed at closing, after the certificate of occupancy, on the date the purchase agreement sets. A finished home, or a building whose published date falls inside the window, can be received in time; a pre-construction contract with delivery two years away cannot, in the ordinary form of the exchange.

Two Miami mechanics complicate the holder's work. First, deposits. A developer requires deposits at contract and at milestones, and those deposits can fall due before the sale that funds the exchange has closed, so how they are treated is a question the buyer puts to counsel and the intermediary before signing, not a detail settled at the closing table. Second, escrows. The developer's escrow for deposits is not the exchange escrow; they are different accounts under different agreements, held by different parties for different purposes. The buyer's own deposits sit with the developer's escrow agent under the purchase agreement, the mechanics of which are in moving funds to a Florida escrow account, while the exchange proceeds sit with the intermediary under the exchange agreement. Confusing the two accounts is the commonest reading error in this corner of a purchase, and the documents separate them cleanly when they are read side by side.

Every deadline and eligibility question in an exchange is framed here as a question for the buyer's tax counsel, because the answers turn on the buyer's own facts. Is the Miami condo held for investment in the form the exchange requires, and what does the buyer's planned personal use do to that? The same taxpayer must sell and buy, so in what name does the purchase agreement stand: the question behind LLC, trust or personal name. A furnished home carries furniture the exchange does not cover, so how is the price of a furnished residence allocated, the mechanics of which appear in from offer to recording on a furnished Miami condo? And for the non-resident buyer, the exchange sits beside the separate exposure read in estate tax exposure for non-resident owners. The intermediary holds the money; counsel holds the answers; the desk holds the building side of the calendar, and the three are engaged in that order. The full shelf is in the questions buyers ask and the notes hub.

Mechanics as carried on the site's published pages: can you buy a Miami condo with a 1031 exchange, and estate tax exposure for non-resident owners, including the counsel framing used there. Compiled by the desk at Miami Dossier.