Good faith deposit and QI

[Russell Sherman]

I am taking offers on a property I intend to do a 1031 with.  The realtor wants to use a local escrow company to hold the good faith deposit, although I want a different QI to handle the exchange.  Does the QI need to hold the deposit as well?  I don’t want to blow the exchange

[Juan V Lopez]

Hey Russell, I would run this question directly through the QI you want to use. I've done 2 1031's and if something goes wrong, you want to be able to hold them accountable.

With all due respect, if your realtor has given you incorrect advice, you will be unable to hold them accountable for anything and you will be left holding the bag (and tax bill).

I used First American Exchange Company for both of my 1031s in Chicago. Very helpful and educated me on the process. Plus, they're up to date on the latest 1031 laws. Hope this helps, good luck.

[Bill Brandt]

Ask the QI you plan to use but I don’t see it being a problem. YOU can’t have material control over the money. YOU don’t. You can’t go down to the title company and say give me that money. Or I want to spend that money. If your current QI can’t answer that simple question find another one immediately. 

[Dave Foster]

@Russell Sherman, The QI doesn't need to hold the money before closing.  As a matter of fact, they shouldn't.  It should go through the regular escrow process.  And the title company chosen to handle the closing (or your realtors office) should hold the proceeds until closing.  The QI has documents as part of the closing.  And Once the closing is complete funds are transferred directly to the QI.

[Russell Sherman]

Thanks all.  Just wanted to make sure.  I will be exposed to significant Capitol gains tax if I overlook something