The short answer
Yes. The federal definition of a qualified intermediary in Reg. Section 1.1031(k)-1(g)(4)(iii) has no location test: it requires a written exchange agreement and a person who is not you or a disqualified person. The intermediary works by assignment, notices and wires, so it never needs to attend either closing. Where location does matter is state law: some states regulate exchange facilitators by where the relinquished property sits, so an out-of-state intermediary handling a sale there must meet that state's bonding, escrow or notice rules.
At a glance
| Federal location rule | None; the definition turns on the agreement and independence |
|---|---|
| Closings | Handled by local title, escrow or attorney closers; the QI works by assignment and wire |
| Washington | Facilitator law reaches relinquished property located in the state |
| Washington protection | Fidelity bond of at least one million dollars, or qualified escrow or trust |
| California | Definition reaches relinquished property in the state, an office there, or advertising there |
| California notice | Change-of-control notice to clients with California relinquished or parked property |
| Practical risk | Wire instructions, time zones and holidays, not legal status |
Federal law asks who the intermediary is, not where it is
The safe harbor in paragraph (g)(4) requires that the intermediary not be you or a disqualified person, that it enter into a written exchange agreement with you, and that the agreement restrict your access to the money as paragraph (g)(6) describes. Nothing in that text refers to the intermediary's state of organization, office or license. The disqualification tests in paragraph (k) look at agency and family or ownership ties to you, which have nothing to do with geography either.
The same is true of the properties. Section 1031(h) draws only one geographic line, between real property inside and outside the United States, which is why exchanging into another state works for federal purposes.
The intermediary does not need to be at either closing table
Under paragraphs (g)(4)(iv) and (v), the intermediary is treated as acquiring and transferring each property when it is assigned your rights in the contract and all parties are notified in writing on or before the transfer. The deeds go directly between the real parties, closed by a local title company, escrow agent or attorney.
So an intermediary in another state signs the assignment and notices electronically, receives the sale proceeds by wire, and wires the purchase funds to the replacement closer. What it needs from you, and when, is in what the QI needs to open my exchange.
The practical issues are wires and calendars. Confirm wire instructions by phone with a known number, and allow for time zones and the intermediary's holiday schedule near day 45 and day 180.
Some states regulate facilitators by where your property sits
Washington's chapter 19.310 RCW defines an exchange facilitator to include a person who, for a fee, takes over the right to sell a taxpayer's 'relinquished property located in this state', or who maintains an office in the state to solicit that business. Such a facilitator must keep a fidelity bond of not less than one million dollars or hold all exchange funds in a qualified escrow account or qualified trust, and must state that choice on its website and in its agreement.
California's Financial Code section 51000 uses a similar test, reaching facilitators that take on relinquished property located in California, keep an office there, or advertise to the public there. Section 51001 requires notice of any change in control to clients whose relinquished property, or replacement property parked with a titleholder, is in California.
So the question is not whether the intermediary is local but whether it complies with the rules of the state where your sale happens. Ask which states' facilitator laws it operates under and how your funds will be held.
A hypothetical: an Oregon intermediary for a Washington sale
Hypothetical facts: you sell a Tacoma building for $1,200,000 and hire an intermediary based in Oregon. Because the relinquished property is in Washington, the Washington facilitator law applies to that intermediary for your exchange, so it must have the bond or deposit your funds in a qualified escrow or trust, and its agreement must carry the required disclosure.
The Tacoma title company closes the sale and wires the proceeds to the intermediary's account; your purchase in Idaho closes with an Idaho escrow agent, funded by the intermediary's wire. Nothing about the Oregon address affects your deferral. Run your own numbers with your CPA.
Choosing an out-of-state intermediary, and buying a DST from anywhere
Judge an intermediary on how it holds money, not where it sits: a qualified escrow or trust account, bonding and insurance, and a written answer on segregation. The checklist is in how to choose a safe qualified intermediary, and what can go wrong is in if your QI goes bankrupt or steals the money.
Location matters even less when the replacement is an interest in a Delaware Statutory Trust: the intermediary wires your funds to the offering's escrow, wherever the trust's property is.
Related questions
Does an intermediary need a license in my state?
There is no federal license. A few states regulate facilitators through bonding, escrow and disclosure rules rather than a general license; check the law of the state where your relinquished property is.
Can a local title company be my intermediary instead?
Possibly, if it is not a disqualified person; routine title and escrow services do not disqualify it under Reg. Section 1.1031(k)-1(k)(2). It still needs a written exchange agreement.
Does state withholding change if my intermediary is out of state?
Withholding rules follow the property and the seller, not the intermediary's address; see state withholding at closing.
Is a remote intermediary riskier for wire fraud?
Any intermediary that works by wire carries that risk. Confirm instructions by phone using a number you already have, never one in an email.
What if my sale is in one regulated state and my purchase in another?
The Washington and California tests turn mainly on the relinquished property, so the sale state's rules govern the facilitator; California's notice rule also covers replacement property parked there.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.