1031 Exchange - Mortgage Escrow Overage Check

[Nick Ferguson]

I'm currently in the middle of my first 1031 Exchange.  I've sold my relinquished property and am under contract for the replacement property.  The closing for the sale was remote so I was not there and the closing/title people needed LOTS of help to understand instructions for wiring funds and properly handling paperwork for the 1031.  

Anyway, sale proceeds are in escrow with exchange company and all is good.  I got a check in the mail though from my previous mortgager that is an overage/refund of about $1,000 buck for the unused escrow (taxes, insurance) on the house. 

I called the bank to ask them to wire to exchange company and they said they can't.  Exchange company says all sale proceeds should have gone directly to them and to call title/closing company.  Title/closing company has been generally incompetent and I don't think understands what a 1031 exchange even is (small, rural town...Not a lot of investment going on down there I'm sure). 

Is the escrow from the house that was sent to me even part of the exchange?  Like, since this money wasn't sale proceeds and wasn't part of the loan or anything, am I good to cash it or not?  My exchange company said not to cash it (but this sounded like general "never cash anything" advice as opposed to actually, "I heard what you said and this is my professional opinion") but they also said they couldn't take it directly so it's just sitting on my table.