Ch 13 - Escrow and Closing

Question 1

One of the essential requirements for a valid escrow is a binding contract. This may be:

Answer 1

Any of the above

Question 2

Which of the following are duties performed by an escrow agent if so directed in the escrow instructions?

Answer 2

Order the title insurance report and policies.

Disburse funds as authorized by the principals.

Question 3

A proper escrow, once established, is:

Answer 3

not subject to the control of any one interested party.

Question 4

Escrow agents must:

Answer 4

remain neutral by acting as agent for both buyer and seller.

strictly comply with the escrow instructions.

treat information as confidential.

All of the above

Question 5

A bill of sale is used to convey title to:

Answer 5

personal property.

Question 6

While a real estate transaction is in escrow, the escrow agent:

Answer 6

acts only on the express written instructions signed by the parties.

Question 7

RESPA requires which of the following for federally related loan transactions?

Answer 7

A copy of a booklet about settlement procedures that explains RESPA, closing costs, and the settlement statement.

A Uniform Settlement Statement.

Question 8

Escrow agents must report every sale of real property to the Internal Revenue Service. The form used to report the seller’s name and social security number is the:

Answer 8

1099-S.

Question 9

Escrow terminates:

Answer 9

when the transaction closes.

if the terms of the escrow instructions have not been fulfilled by the specified closing date.

if the buyer and seller mutually agree to terminate the escrow.

All of the above

Question 10

To prorate means to:

Answer 10

allocate the financial impact of a particular item on the parties as of a particular date

Question 11

When the executed escrow instructions differ from the purchase agreement, which of the following is correct?

Answer 11

The parties must resolve the conflict and confirm the new instructions via a written agreement

Question 12

Which of the following charges is generally a debit to the seller on the settlement statement?

Answer 12

Real estate agent sales commission

Question 13

If a seller has already paid the property taxes for the year, the prepaid taxes will appear on the settlement statement as:

Answer 13

a credit to the seller and a debit to the buyer

Question 14

The money and documents of a real estate transaction are held in trust until closing by:

Answer 14

a neutral third party known as the escrow agent.

Question 15

In most cases, the priority of a lien on real property is established by the:

Answer 15

date of recording.

Question 16

The premium for a title insurance policy purchased by the seller would appear on the settlement statement as:

Answer 16

a debit to the seller.

Question 17

On the HUD-1 Settlement Statement, the purchase price will be listed as:

Answer 17

a credit to the seller and a debit to the buyer.

Question 18

When a buyer assumes an existing mortgage, the mortgage balance will appear on the settlement statement as

Answer 18

a credit to the buyer and a debit to the seller.

Question 19

Items (such as property tax) that have been proportionally allotted on a closing statement as to the financial responsibility of the parties are known as:

Answer 19

prorations.

Question 20

Escrow agents are required to determine whether the seller of property is a U.S. citizen and, if not, withhold 15% of the net proceeds under the provisions of:

Answer 20

FIRPTA.

Question 21

A debit on the buyer’s side of the settlement statement:

Answer 21

is an item that must be paid by the buyer.