The short answer
Yes. Reg. section 1.1031(k)-1(k)(2) ignores 'routine financial, title insurance, escrow, or trust services' by a title insurance company or escrow company when it tests whether someone is your agent, and the regulation's own example approves an intermediary owned by an escrow company that has served you before. What matters is the role: the title company, or its exchange affiliate, must sign a written exchange agreement that limits your access to the money as paragraph (g)(6) requires. Ordinary escrow instructions you can change are not enough.
At a glance
| Routine title or escrow work | Not counted when testing for a disqualified person |
|---|---|
| Exchange affiliate | A subsidiary of an escrow company can serve, per the regulation's example |
| Required document | A written exchange agreement with the paragraph (g)(6) limits |
| Ordinary escrow | Money held as your agent is treated as received by you |
| Family ties | A firm related to you at the 10% level is disqualified |
| State statutes | California, Washington and Virginia regulate a title company that facilitates exchanges |
Title and escrow work is carved out of the disqualified person test
The intermediary cannot be you or a 'disqualified person'. Under Reg. section 1.1031(k)-1(k)(2), anyone who has acted as your employee, attorney, accountant, investment banker or broker, or real estate agent or broker in the two years before your sale is treated as your agent and is disqualified. Your own advisers are covered in can my attorney, CPA or agent be my QI.
Title companies sit outside that list for routine work. The regulation says two kinds of service 'will not be taken into account': services on section 1031 exchanges, and 'routine financial, title insurance, escrow, or trust services for the taxpayer by a financial institution, title insurance company, or escrow company.' Insuring your title or closing your last purchase does not taint the firm.
Example 2 in paragraph (k)(5) settles the affiliate question. An intermediary that is 'a wholly owned subsidiary of an escrow company that has performed routine escrow services' for the taxpayer, and that has served as intermediary on earlier exchanges, 'is not a disqualified person'.
The role must be intermediary under a written agreement, not escrow holder for you
Paragraph (g)(4)(iii) defines a qualified intermediary as a person who is not disqualified and who 'enters into a written agreement with the taxpayer' under which it is treated as acquiring and transferring both properties. Paragraph (g)(4)(ii) adds that the agreement must expressly limit your rights to 'receive, pledge, borrow, or otherwise obtain the benefits' of the money.
A title company holding your proceeds on ordinary escrow instructions is different. Paragraph (f)(2) says receipt 'by an agent of the taxpayer', determined without the paragraph (k) carve-outs, is receipt by you. If you can direct the escrow officer to pay you, the money is yours for tax purposes. The same risk on the sale side is explained in can the buyer wire proceeds to the title company.
There is a second, narrower role. Paragraph (g)(3) lets cash that secures a buyer's obligation to deliver replacement property sit in a 'qualified escrow account', whose holder is not you or a disqualified person and whose agreement limits your rights in the same way. A title company can fill that role, but it secures a deal in which the buyer itself must deliver the replacement; it is not a substitute for an intermediary assigned into both contracts.
State exchange facilitator laws treat a title company that facilitates exchanges like any other intermediary
California, Washington and Virginia exclude a title insurance, underwritten title or escrow company only when it acts solely as a qualified escrow holder or trustee and is not facilitating exchanges. One that acts as intermediary falls under the same bond, insurance and fund-handling rules as an independent firm.
So ask the same questions you would ask anyone. Which entity signs the exchange agreement? Is the money in an account in your name and taxpayer number, or in a pooled account? Who must sign before funds move? The full checklist is in how to choose a safe qualified intermediary.
Worked example: the same $500,000, two outcomes
Hypothetical, round numbers; run your own numbers with your CPA. Your sale nets $500,000 and your title company closes it.
In version one, the title company's exchange subsidiary signs an exchange agreement before closing, your contract is assigned to it with written notice to the buyer, and the agreement bars you from the funds except as paragraph (g)(6) allows. The $500,000 is held by a qualified intermediary, and the exchange can proceed.
In version two, the escrow officer simply keeps the $500,000 in escrow 'until you find something', on instructions you can amend at any time. Nothing limits your right to the money, so under paragraph (f)(2) you are treated as receiving the full proceeds and the transaction is a sale.
A related-party link can still disqualify the firm
The carve-out covers routine services, not family or ownership ties. Paragraph (k)(3) disqualifies a person related to you under section 267(b) or 707(b), using a 10 percent threshold instead of 50 percent, so a title agency you or a relative own a meaningful stake in cannot serve. See who is a related party.
Using the title company's affiliate does not change the closing itself; does a 1031 delay my closing covers what the intermediary does at the table. If your replacement is a Delaware Statutory Trust interest, the same intermediary can fund the subscription, and your CPA or attorney should confirm the agreement names it as intermediary before closing.
Related questions
Is it a problem that the title company also closed my sale?
No. Closing and title insurance are routine services that Reg. section 1.1031(k)-1(k)(2) tells you to ignore.
Can the escrow officer just hold the money in a separate escrow?
Only if that escrow is a qualified escrow account whose agreement expressly limits your rights as paragraph (g)(6) requires; otherwise the money is treated as yours.
Does the title company have to be in my state?
Federal rules set no location requirement. Some state statutes apply when the relinquished property is located in that state, so ask which statute the firm follows.
Can my real estate agent's affiliated title company serve?
Check ownership carefully. A person related at the 10 percent level to someone who acted as your agent can be disqualified under paragraph (k)(4).
Will using the title company cost less?
Not necessarily. Compare the written fee schedules, and weigh account structure above price.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.