Your goal is to provide a smooth closing experience for clients.
Contact Midland 1031, and we will provide you with the appropriate closing instructions and prepare the necessary exchange documentation for the client to sign. Remember, if the client does not have a QI in place before the completion of closing, the opportunity to do the exchange is lost.
Typically the questions closing agents have relate to the technical details involved in preparing for closing. Our FAQ's provide a few points to understand.
Set up a time to meet with us and we'll walk you through the process.
Who signs the closing documents?
The Exchanger would sign the documentation similar to a standard real estate transaction in which no exchange was involved. Midland 1031 would only sign the closing settlement statement as the QI for the Exchanger.
Your documentation references that the contract has been assigned to you as the QI. Am I to prepare a deed from the Exchanger to you, and another from you to the new buyer?
No, you will prepare the deed directly from the Exchanger to the buyer.
Where do we send the proceeds?
The proceeds are to be wired directly to the QI to hold in escrow on behalf of the Exchanger.
The Exchanger has advised that they want to take some funds at closing. Is this OK?
Those funds may be taxable to the Exchanger, but they are allowed to take some of the funds at closing. There would need to be a line item referencing the cash disbursed to the Exchanger. A separate line item will be for the 1031 proceeds going into the exchange.
The Exchanger has advised that they will be taking title of the new purchase in the name of an LLC, which is different from your documentation/instructions. What is the proper protocol?
You are holding more money than we need for closing. Can the excess be disbursed to the Exchanger at closing?
Midland 1031 will only send funds needed for closing. Any excess funds will be disbursed to the taxpayer by the QI at the appropriate time. Any funds returned to the client may be taxable, so it is important to apply for as many funds as possible. There are a couple of options:
If the Exchanger provided the earnest money deposit with personal funds, we could replace that amount with some or all of the overage.
If the Exchanger is obtaining financing on the new purchase, they should seek to reduce the loan amount. In doing so, all of the proceeds apply towards the purchase.
Share These Helpful Resources With Your Clients
Ready to learn more?
Learning the basics of 1031 Exchanges can give you a professional edge over others in the industry. Let us share out knowledge with your office or group.
Schedule an office meeting or a webinar today.