Can exchange funds be used towards an Earnest Money Deposit?
Yes, the Exchanger is able to utilize their exchange proceeds towards their replacement property’s Earnest Money Deposit. The Exchanger will need to first assign the contract to the Qualified Intermediary via an Assignment agreement. Once this is complete, the QI can provide the Earnest Money Deposit funds via wire to the settlement agent or escrow company handling the closing. If for whatever reason the sale is not completed, the Earnest Money Deposit funds should be returned directly to the Qualified Intermediary to avoid actual or constructive receipt.
Can exchange funds reimburse my personal funds that I used for an Earnest Money Deposit?
Yes, if the Exchanger decides to utilize their personal funds for the Earnest Money Deposit, they are able to be reimbursed via exchange funds at the closing of the replacement property as long as there are sufficient funds. This is executed at the closing of the replacement property and requires coordination between the Closing Agent and the Qualified Intermediary. Exchange Funds cannot be specifically allocated so in order for the personal Earnest Money Deposit funds to be refunded, there must be adequate funds to do so. It’s recommended to discuss this with your Qualified Intermediary prior to providing the Earnest Money Deposit.