C1U10 Escrow and Title Insurance

Question 1

To create an escrow, there must be:

a. a binding contract
b. unconditional delivery
c. real property
d. all of these

Answer 1

a. a binding contract

Question 2

Escrow instructions can be:

a. changed by oral agreement
b. only unilateral
c. changed only by written agreement of both parties
d. all of these

Answer 2

c. changed only by written agreement of both parties

Question 3

The escrow holder acts in the capacity of:

a. mediator
b. agent of both parties
c. adviser on the transaction
d. surety

Answer 3

d. surety

Question 4

Which must be licensed as escrow agents to perform such services?

a. Attorneys
b. Title insurance companies
c. Banks
d. Escrow companies

Answer 4

d. Escrow companies

Question 5

In Southern California, escrows are MOST often held by:

a. savings and loans associations
b. escrow companies
c. title insurance companies
d. attorneys

Answer 5

b. escrow companies

Question 6

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

Answer 6

c. be a corporation

Question 7

A real estate broker can serve as an escrow:

a. through associates
b. with other brokers
c. when she represents one of the parties to the transaction
d. under a fictitious business name

Answer 7

c. when she represents one of the parties of the transaction

Question 8

The legal action that may be brought by an escrow holder is:

a. quiet title
b. interpleader
c. adverse possession
d. injunction

Answer 8

b. interpleader

Question 9

Providing a copy of any buyer broker agreement is the responsibility of:

a. the buyer
b. the seller
c. the escrow agent
d. the real estate agent

Answer 9

a. the buyer

Question 10

Providing tenant information is the responsibility of:

a. the buyer
b. the seller
c. the escrow agent
d. the real estate agent

Answer 10

b. the seller

Question 11

Prorations at closing on amounts other than interest payments usually are based on:

a. a 30-day month
b. a 31-day month
c. the actual calendar number of days
d. the number of days indicated by the buyer

Answer 11

a. a 30-day month

Question 12

If closing is on May 19, what amount will be charged to the buyers on a total property tax of $4,320 paid by the sellers for the current tax year? Remember to use the standard number of days in the month.

a. $492
b. $504
c. $1,584
d. $1,728

Answer 12

b. $504

Question 13

Closing is on June 15, and rent of $2,400 has been prepaid for the current month. What amount will the seller be debited at closing if the buyer receives credit for the day of closing?

a. $1,280
b. $1,200
c. $1,350
d. $2,200

Answer 13

a. $1,280

Question 14

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

Answer 14

c. loan origination fees

Question 15

The MOST thorough method of title check results in:

a. an abstract of title
b. a certificate of title
c. a guarantee of title
d. a policy of title insurance

Answer 15

a. an abstract of title

Question 16

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

Answer 16

b. a title company’s lot books and general indexes

Question 17

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

Answer 17

c. of closing

Question 18

Title insurance protects a buyer against:

a. all claims from any source
b. all claims except those excluded by the policy
c. claims arising from the buyer’s future actions
d. any claims the buyer already knows about

Answer 18

b. all claims except those excluded by the policy

Question 19

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

Answer 19

a. a standard policy of title insurance

Question 20

Lender’s title insurance typically is paid by:

a. the buyer
b. the seller
c. the lender
d. the broker

Answer 20

a. the buyer