Can a 1031 intermediary suggest an investment?

[Anthony Barbato]

We are syndicating a property and we wanted to see if 1031 intermediaries are legally allowed to suggest deals to their clients. If so, what is the typical commission that a syndicator would pay them for the service? Thank you!

[Bill Exeter]

The Qualified Intermediary should not be giving any kind of investment advice or recommendations.  They should focus on making sure they put their clients' interests first and not on recommending investments.  Best case it would be a conflict of interest and worst case it could result in the Qualified Intermediary being deemed an agent of the taxpayer and therefore a disqualified party.  You must be very careful if/when a Qualified Intermediary is recommending investments.  They are usually getting paid and not putting the clients' interest ahead of their own.