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39 Cards in this Set
- Front
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Define: Bulk Sale |
Any transfer in bulk (and not a transfer in the ordinary course of the seller's business) of a major part of the materials, inventory or supplies of an enterprise. |
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The escrow holder's duties may include (a)verification that all required documents and funds are on hand before the necessary transfers are made.(b)preparation of the necessary documents.(c)calculation of the prorations, adjustments, and charges to be assessed against each party are made.(d)All of the above |
(D) is correct. The escrow holder is a neutral third person that acts as a fiduciary and retains documents and entrusted assets until specified conditions are fulfilled. All of the choices above are among the possible duties of the escrow holder. |
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Which of the following is required for the existence of a valid escrow? (a)A binding contract and conditional delivery of the necessary documents and funds(b)The services of a licensed real estate broker(c)A complete chain of title(d)Complete escrow instructions |
(A) is correct. To create a valid escrow for a real estate sale, two requirements must be met: a binding contract and conditional delivery of the necessary documents and funds. |
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Which of the following statements is correct regarding the agency relationship between the escrow holder and the principals? (a)The escrow agent is the exclusive agent of the seller at all times.(b)The escrow agent has no fiduciary responsibility to either party to the transaction.(c)The escrow holder has a limited agency relationship with the principals to the transaction as set out in the escrow instructions.(d)The escrow agent is a corporate entity and cannot have a traditional agency relationship with either party to the transaction. |
(C): A limited agency relationship is established between the escrow holder and the principals to the transaction, defined by the responsibilities set out in the escrow instructions. When escrow is first established, the escrow holder is the agent of both parties. As the conditions to the transaction are performed, the escrow holder acts as the agent of each party as necessary to complete the transaction. |
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Which of the following may NOT engage in the escrow business? (a)An individual who is not a real estate broker or attorney(b)Bank(c)Domestic corporation(d)Foreign corporation |
(a)An individual who is not a real estate broker or attorney |
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A broker can, without being licensed as an escrow, handle the escrow on transactions where he or she (a)acts as a principal.(b)represents the buyer.(c)represents the seller.(d)Any of the above |
(D) is correct. A broker may act as an escrow on his or her own sales or on sales in which he/she acts as a principal. |
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If the escrow holder receives information that would be considered a material fact concerning the transaction, he/she should (a)withhold that information from both parties until after close of escrow.(b)disclose that information immediately to the relevant parties.(c)inform the seller if the information represents a non-disclosure violation.(d)inform the buyer if the material fact has the potential to cause the seller to panic. |
(B) is correct. Because of the escrow holder's position, material facts concerning the transaction that are unknown to the parties may come to the escrow holder's attention. If the escrow holder does receive any such information, it should be disclosed immediately to the relevant parties. |
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Which of the following is considered a responsibility of the buyer in escrow? (a)Deposit the cash needed to cover down payment, closing costs, and other expenses(b)Sign escrow instructions(c)Obtain hazard insurance(d)All of the above |
(D) is correct. All of the choices above are among the responsibilities of the buyer in escrow. |
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If the subject property is a rental, it is the seller's responsibility to provide escrow with (a)tenant names.(b)rent and deposit information.(c)proof that the tenants have been notified of the change of ownership.(d)All of the above |
(D) is correct. It is the seller's responsibility to provide tenant information, including their names, rent and deposit information, assignment of all leases to buyer, and the fact that tenants have been notified of the change of ownership. |
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In general, the real estate agent's responsibility in escrow is to (a)contribute a portion of his/her commission if necessary to close the escrow.(b)personally lend money to the buyer if conventional financing is not available.(c)keep light pressure on both parties to the transaction so escrow closes on time.(d)keep informed of the progress of the escrow and assist the escrow officer when necessary. |
In general, the real estate agent's responsibility in escrow is to (a)contribute a portion of his/her commission if necessary to close the escrow.(b)personally lend money to the buyer if conventional financing is not available.(c)keep light pressure on both parties to the transaction so escrow closes on time.(d)keep informed of the progress of the escrow and assist the escrow officer when necessary. |
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The final responsibility of the escrow holder in the overall escrow process is to (a)accept the purchase contract and formulate escrow instructions.(b)prepare and deliver settlement statements and transfer funds and documents of title.(c)order a final title search.(d)receive and review preliminary report. |
(B) is correct. The final responsibility of the escrow holder is to close the sale by preparing and delivering settlement statements and transferring funds and documents of title. |
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A document that describes the property and any existing encumbrances is called a (a)preliminary report.(b)abstract of title.(c)title plant.(d)binder. |
(A) is correct. The preliminary report describes the property and current owner of record, as well as any recorded liens or other encumbrances. The escrow holder reads the report to verify the legal description and to determine if there are any child support liens, taxes, or judgments for which a release will be required prior to the close of escrow. The buyer is required to review and sign acceptance of the preliminary report. |
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On an escrow closing statement, property taxes are listed as (a)a credit to the buyer only.(b)a debit to the seller always.(c)either a debit or credit to the buyer or seller depending on the situation.(d)None of the above |
(C) is correct. Upon closing of a transaction, various expenses are prorated between the buyer and the seller to ensure that each is responsible for operating expenses of the property during his or her ownership. Tax prorations will depend on whether the tax has been paid. Prepaid taxes will be a credit to the seller and debit to the buyer. If current tax due has not been paid, the seller will be debited and the buyer credited the amount of tax owed up to the day of closing. |
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An escrow prorates based on a (a)300 day year.(b)360 day year.(c)365 day year.(d)none of these. |
(B) is correct. Escrow prorates using a 360 day year and a 30 day month. |
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When the escrow officer requests the appropriate party to deposit the required funds in the escrow account, it is referred to as (a)appropriation.(b)funding.(c)procurement.(d)allocation. |
(B): During the funding phase of the escrow process, the escrow officer requests the appropriate party to deposit the required funds in the escrow account. The lender provides the committed percentage of the purchase price. The buyer (borrower) will provide whatever amount is necessary to cover the remainder of the purchase price, taking into account any deposits already made as well as additional costs of closing, such as fees and prorations. |
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All of the following will prevent an escrow from closing EXCEPT (a)agreement of the parties.(b)demand of the broker.(c)inability to meet a contingency.(d)None of the above |
(B): Since a broker is not a party to the transaction, he/she cannot order an escrow terminated. |
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A title officer of a title insurance company is familiar with an "Abstract of Title" and would know that it is (a)where the legal description of the property is found in the title policy.(b)a written summary of the various recorded documents relating to the title of the subject property.(c)a standard form of title insurance that is used by most title companies.(d)an opinion of the title officer as to the condition of the title. |
(B): An abstract of title is a written summary of the recorded documents relating to a particular property. It is no longer used today in favor of a policy of title insurance. |
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A standard policy of title insurance covers all of the following EXCEPT(a)easements and liens not shown in the public records.(b)incompetent grantor.(c)incorrectly given marital status.(d)forged deed. |
(A): The standard policy of title insurance specifically excludes easements and liens not shown in the public records. Generally, a standard policy of title insurance will protect the insured against losses arising from such title defects as:Forged documents such as deeds, releases of dower, mortgages;Undisclosed heirs;Mistaken legal interpretation of wills;Misfiled documents, unauthorized acknowledgments;Confusion arising from similarity of names;Incorrectly given marital status. |
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An ALTA policy of title insurance primarily protects the (a)buyer.(b)seller.(c)lender.(d)all of these |
(C): The ALTA policy is used to protect lenders and usually requires a survey. It expands the standard policy to include:Rights of parties in possession;Unrecorded liens;Easements;Claims that a correct survey or inspection would show;Mining claims and water rights. |
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Even though the expense of title insurance is negotiable and can be paid by either buyer or seller, the policy fee for title insurance benefiting the lender typically is paid by the (a)agent.(b)buyer.(c)seller.(d)broker. |
(B) is correct. Title insurance is paid for in a single payment. The expense of title insurance is negotiable and can ultimately be paid by either buyer or seller, however, the policy fee for title insurance benefiting the lender typically is paid by the borrower (buyer). |
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Define: Binding Contract |
Executed with proper legal authority, and contains the elements of a valid legal agreement; "a binding contract." |
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Define: Conditional Delivery |
conditional delivery Transfer of documents and funds to escrow agent or settlement officer to be held until the transaction is closed, at which time they are transferred to the designated party. |
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The MOST thorough method of title check results in a(n):(a)abstract of title.(b)certificate of title.(c)guarantee of title.(d)policy of title insurance. |
(a)abstract of title. |
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To create a valid escrow for a real estate sale, there must be:(a)a binding contract and conditional delivery of the necessary documents and funds.(b)the services of a licensed real estate broker.(c)a complete chain of title.(d)complete escrow instructions. |
(a)a binding contract and conditional delivery of the necessary documents and funds. |
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Providing a copy of any buyer-broker agreement is the responsibility of the:(a)buyer.(b)seller.(c)escrow agent.(d)real estate agent. |
(a)buyer. |
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Interest payments are always made in:(a)advance.(b)arrears.(c)perpetuity.(d)installments. |
not c or d, maybe a? |
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Title insurance is paid as of the day:(a)escrow opens.(b)the sales contract is executed.(c)of closing.(d)the buyer takes possession. |
not a not d |
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A buyer's settlement statement includes:(a)only prorations chargeable to the buyer.(b)the borrower's loan application.(c)loan origination fees.(d)all encumbrances of record. |
(c)loan origination fees. |
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Water rights are excluded from coverage in:(a)a standard policy of title insurance.(b)an extended-coverage policy of title insurance.(c)a warranty deed.(d)all residential title insurance policies. |
(a)a standard policy of title insurance. |
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The legal action that may be brought by an escrow holder is:(a)quiet title.(b)interpleader.(c)adverse possession.(d)injunction. |
(b)interpleader. |
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Escrow instructions can be:(a)changed by oral agreement.(b)only unilateral.(c)changed only by written agreement of both parties.(d)all of the above. |
(c)changed only by written agreement of both parties |
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A title plant consists of:(a)all possible title records.(b)a title company's lot books and general indexes.(c)recorded and unrecorded title information.(d)duplicates of county recorder's records. |
(b)a title company's lot books and general indexes. |
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Providing tenant information is the responsibility of the:(a)buyer.(b)seller.(c)escrow agent.(d)real estate agent. |
(b)seller. |
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In Southern California, escrows are MOST often held by:(a)savings and loan associations.(b)escrow companies.(c)title insurance companies.(d)attorneys. |
(b)escrow companies? |
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Prepaid property taxes from the day of closing will be a:(a)credit to the seller and debit to the buyer.(b)debit to the seller and credit to the buyer.(c)wash between the buyer and seller.(d)tax write-off for the seller. |
(a)credit to the seller and debit to the buyer. |
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A real estate broker can serve as an escrow:(a)through associates.(b)with other brokers.(c)when he or she represents one of the parties to the transaction.(d)under a fictitious business name. |
(c)when he or she represents one of the parties to the transaction. |
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By law a licensed escrow agent must:(a)pay a referral fee to a real estate agent.(b)disclose information concerning the transaction to outside parties.(c)be a corporation.(d)have a real estate broker's license. |
(c)be a corporation. |
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Which must be licensed as escrow agents to perform such services?(a)Attorneys(b)Title insurance companies(c)Banks(d)Escrow companies |
(d)Escrow companies |
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In Southern California, escrows are MOST often held by:(a)savings and loan associations.(b)escrow companies.(c)title insurance companies.(d)attorneys. |
(b)escrow companies. |
