From an Oregon Land Specialist Who Helped Structure a $4M 1031 Exchange and Knows What a Compliant Intermediary Actually Looks Like
A qualified intermediary receives and protects your exchange proceeds between the sale and purchase of your properties. If they fail to meet federal and Oregon requirements, they could jeopardize your 1031 exchange. Oregon regulates exchange facilitators under its Exchange Facilitator Act, so verify their compliance before signing an agreement.
I’ve personally helped structure a $4 million 1031 exchange, and the qualified intermediary’s setup — not just their reputation, but their actual compliance posture — was one of the first things we confirmed before moving forward.
What a qualified intermediary actually does
The qualified intermediary receives your sale proceeds directly at closing, holds them in a qualified escrow or trust account, and uses them to acquire your replacement property on your behalf — all so that you, the taxpayer, never have actual or constructive access to the funds in between.
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Oregon’s Exchange Facilitator Act, and why it exists
Oregon passed the Exchange Facilitator Act in 2013 specifically because qualified intermediaries, nationally, were an unregulated role holding large sums of client money with very little oversight — which had led to real cases of intermediary insolvency or fraud wiping out exchange funds entirely in some states.
Oregon’s law, found in ORS 696.600 through 696.785, imposes specific requirements on anyone acting as an exchange facilitator for Oregon transactions: maintaining exchange funds in a qualified escrow account or qualified trust, carrying fidelity bond coverage or maintaining funds with specific security requirements, carrying errors and omissions insurance, and following restrictions on commingling client funds with the facilitator’s own operating funds.
Read more: What Is the Oregon Clawback Provision on 1031 Exchanges?
What to actually ask a prospective qualified intermediary
Before you sign an exchange agreement, ask these four questions:
- How will you protect my funds? Use a qualified escrow account at an independent institution, not the intermediary’s general operating account.
- Do you have the required bond and insurance? Ask for proof of fidelity bonding and errors and omissions insurance. Confirm the coverage limits.
- How much Oregon experience do you have? Ask how long you’ve worked as an exchange facilitator in Oregon.
- Can you provide references? Request references from completed Oregon exchanges, preferably involving land or farmland if that matches your transaction.
Red flags that should stop you before signing anything
Watch for these red flags before choosing a qualified intermediary. They can’t explain how they’ll protect your funds. Also, they refuse to provide proof of bonding or insurance. They offer an unusually high interest rate on your exchange funds. They lack experience handling Oregon real estate exchanges. Ask questions and verify their credentials before signing an agreement. None of these alone is necessarily disqualifying, but any of them should prompt more questions before you commit your exchange proceeds to that intermediary’s care.
Read more: Can I 1031 Exchange Land I Inherited in Oregon?
Why your qualified intermediary shouldn’t be someone with a conflicting role
The qualified intermediary generally can’t be your attorney, your accountant, your real estate agent, or anyone else who has acted as your agent in the two years before the exchange — this is a federal requirement, not just a best practice, because the IRS requires genuine independence from the taxpayer’s existing representation. This is worth confirming explicitly, since a well-meaning but non-independent intermediary can disqualify the entire exchange.
How the timing of engaging an intermediary actually matters
Your qualified intermediary needs to be under a signed exchange agreement and ready to receive funds before your relinquished property closes — not after. Setting this up in the final days before closing, rather than weeks ahead, adds unnecessary risk to a process that already has tight deadlines once the clock starts running. I generally recommend having your intermediary selected and under agreement as soon as you’ve decided to pursue an exchange, well before you’re even in contract on the sale.
Read more: What Happens If I Miss the 45-Day 1031 Deadline?
What happens if your intermediary isn’t actually compliant
If an exchange facilitator lacks the required bond, insurance, or qualified escrow account, your exchange funds could be at risk. The facilitator might mishandle, mix, or lose your money if financial problems arise. Oregon passed its 2013 law to help prevent these problems. Verify the facilitator’s compliance before entrusting them with your funds.
Why I’d rather make an introduction than have you search cold
Because the qualified intermediary role carries this much weight in whether an exchange actually works, I generally think it’s a mistake to find one through a generic online search with no other context. I work alongside a small number of qualified intermediaries who’ve handled Oregon land, farm, and timber exchanges specifically, and who I’ve seen operate compliantly and communicate clearly with clients under deadline pressure.
Making that connection early, before you’re inside your 45-day window and under stress, is a far better position to negotiate and verify compliance from than scrambling to vet someone after your relinquished property has already closed.
Read more: How Long Do I Have to Find a Replacement Property in a 1031 Exchange?
Five things to confirm before choosing your qualified intermediary
- How your exchange funds will be held — a qualified escrow account at an independent institution, not a general operating account.
- Proof of fidelity bonding and errors and omissions insurance, at coverage levels that make sense for your transaction size.
- Specific experience with Oregon exchanges, ideally with land, farm, or timber property if that’s what you’re exchanging.
- Confirmation of independence — no prior agency relationship with you in the past two years.
- A signed exchange agreement in place well before your relinquished property closes, not scrambled together at the last minute.
Why land and farm exchanges need an intermediary who understands rural property
An intermediary who’s only ever handled straightforward commercial or residential exchanges may not have the context to understand why a farmland or timberland exchange sometimes needs extra time to properly vet a replacement property, or why water rights, farm deferral status, or timber value documentation are routine parts of the diligence. This doesn’t mean every qualified intermediary needs rural real estate expertise themselves — their core job is the same regardless of property type — but it does mean working with one who’s handled Oregon land specifically tends to make the whole process smoother, since they already understand the pacing and documentation these transactions actually need.
Where I help clients make this connection
Across Marion, Polk, Yamhill, Linn, Benton, and Clackamas counties, I work alongside qualified intermediaries regularly enough to know which ones have real experience with Oregon land and farm exchanges specifically, and I’d rather make that introduction early than have a client choosing one cold, under time pressure, once their clock has already started.
Frequently asked questions
Can my real estate agent also act as my qualified intermediary?
No — federal rules require genuine independence from anyone who’s acted as your agent in the prior two years, which rules out your real estate agent, attorney, or accountant in most cases.
Does Oregon require qualified intermediaries to be licensed?
Oregon’s Exchange Facilitator Act imposes specific operational and financial requirements rather than a traditional licensing scheme, but those requirements function as the real compliance bar to check against.
How much does a qualified intermediary typically charge?
Fees vary by intermediary and transaction complexity, and it’s worth getting this in writing up front rather than assuming it’s standardized across providers.
What happens to the interest earned on my funds while they’re held?
This depends on your exchange agreement — some structures pass interest earned back to the taxpayer, others don’t, and this should be spelled out clearly before you sign.
Should I choose a local Oregon intermediary or a national one?
Either can work, but either way, confirming their specific compliance with Oregon’s Exchange Facilitator Act requirements and their actual experience with Oregon real estate matters more than whether their office is local.
Let’s find the right intermediary for your exchange, early
If you’re planning a 1031 exchange, I can help you find an experienced, compliant qualified intermediary before your sale closes. This gives you time to verify their credentials and avoid a last-minute rush.
About Al Cronemiller — Oregon Land Specialist, MORE Realty, Salem, Oregon. Started working timber with his father at age 12 — cruising timber, running property lines, building logging roads. His grandfather was Oregon State Forester in the 1930s and helped write Oregon’s reforestation bylaws; Cronemiller Lake near Corvallis is named after him. Al spent five years in the City of Salem survey department, owned a construction and remodeling company for 30 years as a licensed general contractor, and worked as a commercial property buyer for institutional hedge fund clients. He holds Land Specialist and Multi-Family Specialist designations and has spent 20+ years selling Oregon bare land, EFU farmland, timberland, and investment property.
This is Al Cronemiller, your Salem Oregon Bare Land Specialist. I always answer.
503-949-5025 | al@cronemiller.com | HomesForSaleSalemOregon.net
This article is educational and general in nature. It is not legal or tax advice — talk with a qualified attorney or CPA about your specific transaction.
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