A direct deed refers to the legal document that transfers the ownership of a property from the seller (relinquishing party) to the buyer (acquiring party) in a 1031 exchange transaction.
In a 1031 exchange, the direct deed is important because it is used to convey title of the relinquished property to the buyer, who will then transfer that title to the qualified intermediary (QI) or accommodator, who will hold it until the replacement property is purchased. Once the replacement property is acquired, the QI will transfer the title to the acquiring party by way of another direct deed.
The use of a direct deed in a 1031 exchange transaction helps to ensure that the transfer of the relinquished property and the acquisition of the replacement property are properly documented and legally sound, which can help to minimize the risk of any disputes or legal challenges arising down the line.