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30 Cards in this Set
- Front
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General property taxes must be paid January 1 each year in advance January 1 each year in arrears Not later than June 15 in arrears Monthly beginning the last day of February |
A: Not later than June 15 in arrears They must be paid totally by June 15 and property taxes are paid in arrears |
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The process by which taxes are handled at the settlement of a real estate transaction, so that both the buyer and the seller pay a portion of the annual tax burden, is called: lien proration assessment exemption |
A: proration Prorating is the process of dividing fees, taxes and other charges equitably between buyer and seller. |
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A broker would be in violation of the rules of the Real Estate Commission if he/she: failed to provide a signed copy of a listing agreement to the seller failed to provide a signed copy of the settlement statement to the seller failed to provide a signed copy of the settlement statement to the buyer all of the above |
A: all of the above A broker must provide a copy of any documents signed, to all parties who have signed the documents. |
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In closing a real estate transaction, the costs of standard title insurance will usually fall to: the seller the buyer the broker the seller and the buyer equally |
A: the seller The standard title insurance policy is paid for by the seller and names the buyer as a beneficiary. The mortgagee’s title policy is paid for by the buyer and names the lender as a beneficiary. |
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A house is sold on June 15. The annual taxes of $850 for the current year have not been paid. What does the seller owe the buyer at closing? 315.21 381.92 384.25 475.18 |
A: 384.25 $850 / 365 = $2.3288 tax per day x 165 days seller owned house = $384.25 |
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The Real Estate Settlement Procedures Act provides: a secondary market for mortgage loans that real estate advertisements must include the annual percentage rate that the mortgagor must be given an estimate of closing costs that the mortgagee must be given an estimate of closing costs |
A: that the mortgagor must be given an estimate of closing costs RESPA requires the disclosure within three days of loan application, of the good faith estimate of closing costs. |
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A real estate broker is legally responsible for: searching the title records preparation of the settlement statements the wire transfer from the borrower's lender all of the above |
A: preparation of the settlement statements The Title Company searches the title records and handles the wire transfer; it is the broker who is responsible for the preparation of the legal documents; the Title Company acts only as a scrivener for the broker. |
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A requirement of RESPA is that: licensees be tipped for recommending a good title company no seller may require the buyer to purchase title insurance from a particular title company buyers are not required to purchase a mortgagee’s title policy title insurance is always a requirement for all transactions |
A: no seller may require the buyer to purchase title insurance from a particular title company RESPA eliminates kickbacks, and prevents sellers from requiring the use of a specific title company. |
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A broker is attending a closing. He notices a mistake on the settlement sheet, the purchaser rather than the seller, has been charged for the title insurance. He should: do nothing as he works for the buyer suggest that changes be made on the settlement statement and initialed by both parties insist on a new settlement statement insist that the seller reimburse the buyer for the title insurance |
A: insist on a new settlement statement A new settlement sheet is the proper way to correct an error. |
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In a real estate transaction it is possible to represent as an agent, only one party to the transaction when: the agent is the designated agent for either buyer or seller there is more than one broker involved in the transaction there is more than one company involved in the transaction all of the above |
A: all of the above |
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An escrow account is: always under the jurisdiction of the broke rbeyond the control of either party to the escrow always under the control of the title company under the control of the seller |
A: beyond the control of either party to the escrow The escrow account is established by written instructions in the purchase and sale contract. It is beyond the control of the buyer or the seller individually, but may be modified by mutual agreement. |
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Based on the contract to buy and sell loan discount points: Are tax deductible only by the seller. Are always paid by the seller because of Truth in Lending Laws May be paid by either party or a combination of both Are always paid by the buyer since he/she is obtaining the loan |
A: May be paid by either party or a combination of both Whatever is agreed upon in the contract, determines who will pay for the discount points. |
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If the individual who has personally established a brokerage relationship with a buyer or seller is unavailable to attend a closing, and selects another licensee to attend the closing, who is responsible for the accuracy of the closing and documents? The employing broker The individual who has personally established a relationship with the buyer or seller The alternate who has attended the closing The individual who has personally established a relationship with the buyer or seller and the alternate who attended the closing jointly |
A: The individual who has personally established a relationship with the buyer or seller and the alternate who attended the closing jointly The individual who establishes the brokerage relationship shares the responsibility with the individual who attends the closing. |
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Who has the final responsibility for the settlement statements at a closing if the Title Company prepares them? The title company The broker who attended the closing The employing broker The responsibility is shared by all of the above |
A: The broker who attended the closing The broker who attends the closing is responsible for the accuracy of the closing. |
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To close in escrow means: some of the parties to the transaction are out of state title, all paperwork, and funds are held in an escrow account until all documents are received by the closing agents and reviewed by the brokers. title, all paperwork, and funds are held in an escrow account for an indefinite time the parties to the transaction are not available to close at the same time |
A: title, all paperwork, and funds are held in an escrow account until all documents are received by the closing agents and reviewed by the brokers. To close in escrow means that all parties provide the necessary documents to the closing agent. When the closing agent decides all is in order, he/she conducts the closing. The parties are not normally present. Escrow is for a definite period of time. |
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The closing statement is prepared to: determine the amount of money the seller will receive at the closing compute the amount of money the purchaser must bring to the closing serve as a receipt for all money that changes hands at the time of closing all of the above |
A: all of the above The closing statement is a detailed accounting of every dollar that changes hands at a closing. |
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The owner of a house has paid the advance water charge for three months beginning October 1. The owner sold the house, and it closed November 27. How much credit will the owner receive at closing? The total water bill is $95. 35.10 35.89 36.14 36.94 |
A: 36.14 $95 / 92 days = $1.0326 X 35 days = $36.14 |
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In Colorado, how is proration handled? The day of closing is the buyer's day The day of closing is the seller's day The day of closing is split between the buyer and the seller A coin is flipped to determine whose obligation it will be |
A: The day of closing is the buyer's day In Colorado, the buyer owns the property day of closing and the actual number of days in a year are used. |
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RESPA applies to the activities of: real estate brokers selling commercial property security salespeople when selling interests in limited partnership slender's financing the purchase of a borrower's residence lender's financing the purchase of a commercial property |
A: lender's financing the purchase of a borrower's residence RESPA applies to the purchase of land and a dwelling. |
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Fees that are due to a homeowner's association must be disclosed: In the Purchase and Sale Contract It is the buyers responsibility to investigate In a recorded document all of the above |
A: In the Purchase and Sale Contract The homeowner's association fees must be disclosed in the MLS, in the contract and to the lender. |
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On the settlement statement, the broker's commission appears as a: credit to the seller debit to the seller credit to the buyer debit to the buyer |
A: debit to the seller Typically the real estate commission is a charge to the seller. |
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On a real estate closing transaction involving an exclusive-right-to-sell listing, the commission would be a debit to the: buyer and a credit to the seller seller and a credit to the buyer seller buyer |
A: seller On a real estate closing the real estate commission is a debit to the seller. |
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As provided in an executed, valid sales contract, a real estate sale must be closed. This means that: the seller must remove title objections so the condition of the title complies with the sales contract terms the purchaser must pay the balance of the purchase price to the seller the seller must deliver the deed to the buyer all of the above |
A: all of the above In order for a closing to happen the seller must provide merchantable title, the buyer must bring "good funds” to the closing and the buyer and seller must execute all required paperwork. |
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The individual responsible for the proper closing of the transaction and settlement statement is: the employing broker the individual who has personally established a relationship with the buyer or seller the closing agent representing the title company the representative of the lender |
A: the individual who has personally established a relationship with the buyer or seller The individual, who attends the closing, shares the responsibility for accuracy of documents with the individual who establishes a relationship with the client. |
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The party responsible for the closing fee as paid to the Title Company is determined by: agreement of the parties law broker title officer |
A: agreement of the parties The correct answer is by agreement of the parties. The purchase and sale contracts addresses who will pay the fee to the Title Company for the closing. |
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When a property located in Colorado is sold, it may be subject to state income tax withholding. Which of the following situations would require state tax to be withheld? When the last known address at the time of closing was outside of the state of Colorado When the property is the principal residence of the seller When the sales price is less than $100,000 When the seller is a bank foreclosing on a loan which is in default |
A: When the last known address at the time of closing was outside of the state of Colorado Only out of the state sellers selling property in excess of $100,000 are subject to Colorado tax withholding at the time of closing.Title Companies are generally required to withhold the lesser of (1) two percent of the sales price, or (2) the entire net proceeds, to cover any POTENTIAL tax liability on the sale of Colorado property when the seller has moved or will move out of state.In Simple-eze - the State is worried that they will not get their cut if someone lives out-of-state or is moving out-of-state as they may not file a Colorado Tax Return. Soooo, the State withholds some money from the closing to motivate the seller to file a Colorado Tax Return and settle a tax if any is owed. |
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The tax agreement signed by the buyer and the seller at closing stipulates that the: buyer will give a refund to the seller if the taxes actually decrease for the year seller will reimburse the buyer if the taxes actually increase for the year seller will pay his share of the current year's property tax bill when it comes buyer and seller are reaching a final settlement at time of closing, and no further adjustments will be made in the future |
A: buyer and seller are reaching a final settlement at time of closing, and no further adjustments will be made in the future The tax agreement is a final settlement, no adjustments will be made. |
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If the mailing address of the Seller is out-of-state, the Seller is subject to Colorado income tax withholding. How much will be withheld from the net proceeds of the sale? 0.1 10%, with a maximum of $2,500 0.02 2%, or the net proceeds of the sale, whichever is less |
A: 2%, or the net proceeds of the sale, whichever is less Title Companies are generally required to withhold the lesser of (1) two percent of the sales price, or (2) the entire net proceeds, to cover any POTENTIAL tax liability on the sale of Colorado property when the seller has moved or will move out of state.In Simple-eze - the State is worried that they will not get their cut if someone lives out-of-state or is moving out-of-state as they may not file a Colorado Tax Return. So, the State withholds some money from the closing to motivate the seller to file a Colorado Tax Return and settle a tax if any is owed. |
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Property taxes for the previous year have not been paid, this entry is shown on the settlement statement: Debit buyer, credit seller Debit broker, credit seller Debit seller, credit buyer Debit seller, credit broker |
A: Debit seller, credit broker The key phrase in this question is "Property taxes for the previous year have not been paid." This means the Seller owes back taxes. We take the money from the Seller with a "Debit Seller". But where does this money go? It gets deposited into the Escrow Account - which is "Credit Broker." A constant source of confusion is why is the "Broker" getting the "Credit." Legally, the listing broker is responsible for conducting the closing, but in practice, the Listing Broker delegates this to a Closing Clerk. Although the Closing Clerk is the one who will put the money into Escrow and write a check out of Escrow to the County to pay the taxes, since they are doing it in the name of the Broker - the worksheet says "Credit Broker." It would be easier for everyone if instead it said "Credit Closing Clerk" or Credit Escrow Account" but the State uses the term "Credit Broker." |
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Escrow's for sales transactions are opened for the protection of the: broker title company buyer and seller mortgagee |
A: buyer and seller Escrowing a transaction protects the buyer and the seller until the transaction is perfected. |
